EXCHANGE 


DOCUMENTS 
DEPT. 


ff  i   :  ','  J.  /-•         >>J^*j 

**-**  ,    ^jL-w^^rri^C  J'  *  -  ' 


AU 

REPORT 


THE   JOINT   COMMITTEE   OF  THE 

SENATE  AND  HOUSE  OF  REPRESENTATIVES 

OF  THE   COMMONWEALTH   OF   PENNSYLVANIA 

TO  CONSIDER  AND  REPORT  UPON   A  REVISION  OF 

THE  CORPORATION  AND  REVENUE  LAWS 

OF   THE  COMMONWEALTH 

TO   THE    LEGISLATURE 
Pursuant  to  Joint  Resolution  of  May  13,  1909 


WITH 

Containing  the  Testimony  taken  before  the  Committee 


Index    to    Report,    F»aee    115Q 
Index    to   Testimony,    F»aee   1165 


OEPT. 


To  the  Senate  and  House  of  Representatives 

of  the  Commonwealth  of  Pennsylvania: 

Gentlemen:  By  concurrent  resolution  of  your  Honor- 
able Bodies,  approved  by  the  Governor,  May  13,  1909, 
P.  L.,  944,  it  was  provided  as  follows: 

IN  THE  HOUSE  OF  REPBESENTATIVES,  MAECH  30,  1909. 

A  CONCUBRENT  BESOLUTION  PROVIDING  FOB  THE  APPOINTMENT  OF 
A  JOINT  COMMITTEE  OF  THE  SENATE  AND  HOUSE  OF  REPBE- 
SENTATIVES  TO  CONSIDER  AND  BEPOBT  UPON  A  REVISION  OF  THE 
IAWS  OF  THIS  COMMONWEALTH  RELATING  TO  CORPOBATIONS 
AND  TO  BEVENUE;  FOR  THE  EMPLOYMENT  OF  COUNSEL  AND  OTHEB 
NECESSABY  OFFICERS  AND  EMPLOYEES,  AND  GIVING  IT  THE  AU- 
THOBITY  TO  COMPEL  THE  ATTENDANCE  OF  PEBSONS  AND  THE 

PRODUCTION    OF    BOOKS    AND    PAPEBS. 

Resolved  (if  the  Senate  concur),  That  the  President  pro 
tempore  of  the  Senate  shall  appoint  three  Senators,  and  the 
Speaker  of  the  House  of  Representatives  shall  appoint  three  of 
its  members,  which  shall  constitute  a  joint  committee,  whose 
duty  it  shall  be  to  consider  the  laws  of  this  Commonwealth 
relating  to  corporations  and  to  revenue  and  the  practical  work- 
ing thereof,  and  to  report  to  the  next  Legislature  whatever 
changes  may  be  deemed  necessary  therein,  together  with  the 
draft  of  an  Act  or  Acts  of  Assembly  to  accomplish  said  changes, 
and  together  with  such  recommendations  as  may  be  deemed 
necessary  relative  to  the  administration  of  existing  laws  or  as 
to  the  enforcement  of  said  suggested  Act  or  Acts.  Said  Com- 
mittee shall  have  power  to  elect  its  own  chairman,  to  sit  after 
the  adjournment  of  the  Legislature,  to  employ  legal  counsel 
and  such  other  officers  and  employes  as  may  be  needed  to  enable 
it  to  properly  perform  its  duties  as  aforesaid;  but  its  expendi- 
tures shall  be  limited  to  the  amount  provided  therefor  in  the 
general  appropriation  bill  to  be  passed  at  this  session  of  the 
Legislature,  and  shall  be  paid  out  of  the  State  Treasury  upon 
vouchers  signed  by  the  Chairman  of  said  Committee. 

Said  Committee  shall  also  have  power  to  issue  subpoenas 
signed  by  its  Chairman,  requiring  the  attendance  of  persons 
and  the  production  of  books  and  papers,  as  in  its  judgment 
will  assist  in  the  performance  of  its  duties  as  aforesaid. 

i 


.  .  Sajd,  Committee,  shall  make  a  full  report  in  writing  to  the 
&6yeni(>r%ptf/th,e-<  Commonwealth  of  its  findings,  with  such  rec- 
ommendations as  it  may  deem  proper,  six  months  prior  to  the 
meeting  of  the  General  Assembly  in  the   session  of  1911. 
Approved,  the  thirteenth  day  of  May,  A.  D.  1909. 

EDWIN    S.    STUART. 

In  compliance  with  the  said  resolution  your  committee 
has  the  honor  to  report: 

Pursuant  to  the  direction  of  the  resolution  your  Com- 
mittee, July  1,  1910,  submitted  a  report  to  the  Governor, 
and  in  it  expressed  the  views  of  the  Committee  of  the 
proper  course  to  be  pursued  in  the  performance  of  their 
duties  and  their  action  thereabout  and  it  will  not  be  amiss 
to  repeat  here. 

After  reciting  the  above  Resolution  the  report  pro- 
ceeded: 

It  will  be  noted  there  are  two  subjects  submitted  for  our 
consideration:  Kevenue,  and  a  Revision  of  the  laws  of  the 
Commonwealth  relating  to  Corporations,  each  of  almost  unlim- 
ited magnitude  and  of  vital  interest  and  importance  to  the 
people.  For  present  consideration  we  will  reverse  their  order 
in  the  Eesolution. 

The  collection  of  revenue  for  the  support  of  the  Government 
is  a  problem  the  solution  of  which  has  enlisted  the  best  efforts 
of  man  from  the  beginning  of  civilization,  and  divers  are  the 
methods  which  have  been  used  in  the  belief  or  hope  that  sat- 
isfactory results  would  be  attained;  but  whilst  we  have  pro- 
gressed in  this,  as  in  all  else,  and  are  nearer  to  the  solution  than 
ever  before,  there  is  much  yet  to  be  done  to  accomplish  that 
uniformity  and  equalization  contemplated  by  our  Constitution 
and  laws. 

We  have  approached  the  performance  of  the  work  entrusted 
to  us  as  respects  State  revenues  fully  appreciative  of  the  fact, 
which  is  conceded  by  the  best  informed  authorities  upon  the 
subject,  that  our  "revenue  laws  have  put  us  easily  in  the  front 
rank  of  American  Commonwealths,"  and  yet  we  know  that  there 
is  room  for  improvement,  but  just  how  changes  can  be  made 
which  will  effect  a  closer  approach  to  equalization  upon  and 
uniformity  among  all  upon  whom  taxes  should  be  imposed  for 
the  support  of  the  Commonwealth  and  for  its  legitimate  ex- 


penditures,  is  a  subject  of  the  gravest  concern  to  those  who 
would  make  the  attempt. 

This  is  not  astonishing,  for  taxation  is  of  all  things  a  matter 
in  which  the  people  of  a  popular  Government  are  least  willing 
to  depart  from  the  long-accepted  theories.  They  require  first  to 
be  convinced.  But  as  taxation  is  a  complex  subject,  and  not 
popularly  entertaining,  it  is  difficult  to  overcome  the  public 
fear  of  making  bad  matters  worse  by  new  departures. 

A  law  which  has  not  the  support  of  the  great  body  of  public 
sentiment  would  not  be  wise  or  practical,  and  this  is  especially 
true  of  legislation  relative  to  taxation. 

To  the  end  that  the  opinions  of  all  our  people  should  be  had 
we  have  mailed  upwards  of  forty-two  thousand  letters,  sub- 
stantially as  follows: 

*  *  *  *  *  *  * 

DEAR  SIR: — The  Legislature  of  Pennsylvania  on  May  13,  1909 
(P.  L.s  944),  adopted  the  following  resolution: 

"Resolved,  That  the  President  pro  tempore  of  the  Senate 
shall  appoint  three  Senators  and  the  Speaker  of  the  House 
of  Eepresentatives  shall  appoint  three  of  its  members,  which 
shall  constitute  a  Joint  Committee  whose  duty  it  shall  be 
to  consider  the  laws  of  this  Commonwealth  relating  to 
corporations  and  to  revenue,  and  the  practical  working 
thereof,  and  to  report  to  the  next  Legislature  whatever 
changes  may  be  deemed  necessary  therein,  together  with 
the  draft  of  an  Act  or  Acts  of  Assembly  to  accomplish  said 
changes,  and  together  with  such  recommendations  as  may 
be  deemed  necessary  relative  to  the  administration  of  ex- 
isting laws  or  as  to  the  enforcement  of  said  suggested 
Act  or  Acts.  *  *  * 

"Said  Committee  shall  also  have  power  to  issue  subpoenas 
signed  by  its  Chairman,  requiring  the  attendance  of  per- 
sons and  the  production  of  books  and  papers,  as  in  its 
judgment  will  assist  in  the  performance  of  its  duties  as 
aforesaid." 

******* 

The  Committee  is  collecting  data  upon  the  formation,  regu- 
lation and  taxation  of  corporations  and  the  appropriation  of 
State  Eevenue  for  all  purposes,  in  this  State,  in  all  of  the 
United  States,  by  the  Federal  Government,  and  by  other  nations. 
These  subjects  are  being  specially  discussed  and  legislated  upon 
at  the  present  time  throughout  the  world. 

The  Committee  desires  the  co-operation  of  all  interested  in 
these  subjects,  and  requests  your  opinion  as  to  any  defexsts  in 


the  present  laws  of  the  Commonwealth  relating  to  the  forma- 
tion, regulation  and  taxation  of  corporations,  associations, 
partnerships  or  individuals,  the  exemption  of  them  or  any  of 
them  from  taxation,  the  appropriation  of  the  revenue  of  the 
State,  and  any  changes  therein  which  you  may  think  necessary. 
You  will  notice  that  the  Resolution  requires  a  report  of  the 
Committee  to  be  filed  with  the  Governor  in  July,  1910,  and  we 
therefore  request  an  early  reply,  as  it  is  important  that  all  sug- 
gestions be  received  for  consideration  prior  to  the  public 
meetings  which  the  Committee  may  hold.  We  should  also  be 
glad  to  have  from  you  the  names  and  addresses  of  any  persons 
whom  you  may  know  who  are  specially  qualified  to  give  to  the 
Committee  information  or  assistance  in  the  consideration  of 
these  most  important  subjects. 

Very  truly   yours, 

GABRIEL    H.    MOYER, 
Secretary. 

These  letters  were  mailed  to  all  of  the  individuals,  institu- 
tions and  associations  and  corporations  in  the  State  as  fol- 
lows: 

National  Banks, 

State  Banks, 

Trust  Companies, 

Savings  Institutions  and  Bankers  in  the  State, 

Members  of  the  Lawyers'  Club,  and  of  the  Law  Association 
of  Philadelphia,  and 

Members  of  the  County  Bar  Associations  and  representative 
Lawyers  of  Pennsylvania, 

Newspapers  in  Pennsylvania, 

Trade  Journals, 

Commercial  Journals, 

Medical  Journals, 

Dental  Journals, 

Legal  Journals, 

Members  of  the  Pennsylvania  Bar  Association, 

Trade  Associations, 

Business  Associations, 

Building  and  Loan  Associations, 

All  Judges  of  all  Courts, 

Insurance  Companies, 

State  Officials, 

County  Officials    (every  county), 

Members   of  State   Senate, 

Members  of  House  of  Representatives, 


Mayors   of  principal  cities,  boroughs,   &c., 

Officials  of  Hospitals, 

Homes,   State   Institutions,   semi-State   Institutions, 

Manufacturing-  Companies, 

Gas  Companies, 

Water  Companies, 

Land  Companies, 

Land  Improvement  Companies, 

Homestead   Companies, 

Hotel  Companies, 

Miscellaneous  Companies, 

Brick  Companies, 

Clay  Companies, 

Stone  Companies, 

Slate  Companies, 

Quarry  Companies, 

Bridge  Companies, 

Turnpike  Companies, 

Brewing  Companies, 

Distilling  Companies, 

Coal  Companies, 

Coke  Companies, 

Coal  Mining  Companies, 

Oil  Companies, 

Mining  Companies, 

Light,  Heat  and  Power  Companies, 

Market  Companies, 

Railroad  Companies, 

Railway  Companies, 

State  Grange, 

Transportation  Companies, 

Ferry  Companies, 

Telephone  Companies, 

Telegraph  Companies, 

Fertilizer  Companies, 

Electric  Light  Companies, 

Foreign    Corporations    registered    with    the    Auditor    General. 

And  to  thousands  of  representative  citizens  throughout  the 
State  known  to  iis,  or  of  whom  we  were  informed,  as  being 
interested  in  the  subjects  involved. 

In  fact,  every  interest  of  the  Commonwealth  affected  by  the 
payment  to,  \>r  expenditures  by,  the  Commonwealth,  or  having 
to  do  with  the  creation  and  regulation  of  corporations  was  so 
recognized ;  and  appreciation  of  this  recognition  was  duly  ex- 
pressed in  several  thousands  of  communications  containing 


6 

opinions,  suggestions  and  recommendations  almost  as  varied  as 
the  number  of  writers,  to  all  of  whom  we  have  replied,  and 
with  many  of  whom  we  have  discussed  the  subjects  written  of 
to  elicit  the  fullest  exposition  of  their  views. 

We  have  also  collected  data  upon  both  of  the  subjects — the 
formation  and  regulation  of  corporations  and  State  revenues, 
from  all  of  the  United  States,  from  the  Federal  Government  and 
from  Foreign  Countries. 

We  have,  after  due  notice  published  in  all  of  the  newspapers 
of  the  respective  localities,  held  public  meetings  as  follows : 

IN  PHILADELPHIA,  at  which  were  heard  Committees  and  repre- 
sentatives from  all  Hospitals  and  all  Charitable  Institutions  in 
that  City  and  surrounding  Counties,  Medical  Societies,  semi-State 
Institutions,  Educational  Institutions,  State  Board  of  Public 
Charities,  Philadelphia  College  of  Physicians,  Financial  Institu- 
tions, Trust  Companies,  Section  of  American  Bankers'  Associa- 
tion, Real  Estate  Brokers'  Association,  Association  of  Life  In- 
surance Presidents,  Private  Bankers'  and  Brokers'  Associations, 
Board  of  Revision  of  Taxes,  County  Officials,  Manufacturers' 
Club,  Pennsylvania  Manufacturers'  Association,  Pennsylvania 
Tax  Reform  Association,  Corporations  of  all  classes  and  repre- 
sentative men  prominent  in  general  activities,  and  county  tax 
officials  from  Montgomery,  Chester,  Lancaster,  Berks,  Delaware 
and  Bucks  Counties. 

IN  PITTSBURGH,  PA.,  at  which  were  heard  Committees  and 
representatives  from  all  Hospitals,  Homes  and  all  other  Chari- 
table Institutions  in  that  city  and  surrounding  counties,  Manu- 
facturers, Bankers,  Trust  Companies,  Savings  Institutions,  Coal 
operators,  Brokers  and  City  officials,  County  officials,  County  Tax 
Revision  Board,  Lawyers,  Committees  of  Allegheny  County  Bar 
Association,  Real  Estate  Brokers,  Single  Tax  Society,  Educa- 
tional Institutions,  Chamber  of  Commerce,  Board  of  Trade, 
Chamber  of  Commerce  of  McKeesport,  Pa.,  Chamber  of  Com- 
merce of  N.  S.  Pittsburgh,  Insurance  Companies,  Allegheny 
County  Laundrymen's  Association,  Manufacturers'  Association, 
Corporations  of  all  classes,  the  Mayor  and  representative  men  of 
that  locality. 

IN  WILLIAMSPOBT,  PA.,  at  which  were  heard  Committees  and 
representatives  from  all  Hospitals,  Homes,  and  all  other  Chari- 
table Institutions  in  Williamsport,  Universities,  Bar  Associa- 
tion, Board  of  Trade,  Financial  Institutions,  Business  and  Trade 
Associations,  City  and  County  Officials,  Pennsylvania  State 
Grange,  Manufacturing  Companies,  Corporations  of  all  classes, 


Board  of  Assessors,  Board  of  Revision  of  Taxes,  Lawyers  and 
representative  men  of  the  locality. 

IN  ERIE,  PA.,  at  which  were  heard  Committees  and  representa- 
tives from  all  Hospitals,  Homes  and  all  other  Charitable  Institu- 
tions in  Erie  and  surrounding  counties ;  Financial  Institutions, 
City  and  County  Officials,  Manufacturers'  Association,  Board  of 
Trade,  Chamber  01  Commerce,  Business  Men's  Association,  Bar 
Association,  Associated  Charities,  Manufacturing  companies, 
Corporations  of  all  classes  and  representative  men  of  the  locality. 

IN  SCBANTON,  PA.,  at  which  were  heard  Committees  and  rep- 
resentatives from  all  Hospitals,  Homes  and  Charitable  Institu- 
tions, City  and  County  officials,  Board  of  Associated  Charities, 
Board  of  Trade,  Board  of  Control,  Medical  Societies,  Bar  Asso- 
ciations, Merchants'  Associations,  Public  Service  Corporations, 
Coal  companies,  Financial  Institutions,  Brokers,  Manufacturing 
companies,  Corporations  of  all  classes  and  individuals  who  were 
the  representative  men  of  the  locality. 

These  public  meetings  were  given  the  widest  publicity  by  the 
newspapers  in  the  several  localities,  and  were  the  subject  of 
favorable  editorial  and  news  comment.  We  were  cordially  re- 
ceived in  these  several  cities,  and  the  interest  of  the  people  in 
our  proceedings,  and  their  knowledge  and  discussions  of  the 
subject  considered,  were 'remarkable  and  helpful. 

As  the  State  should  not  collect  revenue  in  excess  of  its  re- 
quirements and  as  there  has  been  some  criticism  of  appropria- 
tions to  Hospitals,  Homes  and  other  Charitable  Institutions  not 
under  State  control  (a  total  of  $26,402,778.99,  and  for  the  years 
1909-1910,  $5,446,900),  we  have  made  inquiry,  and  are  still  in- 
vestigating, as  to  the  propriety  of  such  appropriations  and  the 
methods  of  the  disposition  thereof.  Much  valuable  information 
has  been  obtained  which  we  believe  will  enable  us  to  make  rec- 
ommendations to  the  Legislature  which  will  be  of  benefit  to 
the  Commonwealth  and  to  the  institutions. 

To  the  subject  of  the  revision  of  the  corporation  laws  of  the 
Commonwealth  we  have  given  much  consideration.  The  Penn- 
sylvania Bar  Association  and  the  County  Bar  Association  and 
others  believed  to  be  specially  qualified  have  been  appealed  to 
for  co-operation,  to  the  end  that  our  present  system  of  laws  for 
the  creation  of  corporations  and  their  government  may  be  im- 
proved. We  have  received  many  suggestions  for  amendments  to 
present  laws  and  for  legislation  covering  subjects  not  heretofore 
included.  These  suggestions,  like  those  affecting  the  State  reve- 
nue, are  many  and  varied,  but  we  have  deemed  it  unwise  to  at- 


8 

tempt  at  this  time  to  conclude  our  action  thereon,  believing1  that 
the  importance  of  the  subject  justifies  tne  iise  of  all  of  the  time 
possible  for  their  consideration,  and  we  will,  as  soon  as  practi- 
cable, submit  to  you  a  report  thereon. 

We  have  concluded  that  in  view  of  the  magnitude  of  the 
subjects  submitted  to  us  a  proper  and  comprehensive  considera- 
tion thereof  at  this  time  would  be  not  only  impracticable,  but, 
so  far  as  to  the  attainment  of  beneficial  results,  impossible. 

Before  and  at  the  time  of  the  creation  of  this  Committee  there 
were  pending  in  Congress  several  measures  affecting  both  the 
subjects  under  consideration,  notably  the  Act  imposing  an 
excise  tax  on  corporations,  joint  stock  companies,  associations 
and  insurance  companies,  which  was  approved  August  5,  1909, 
and  it  was  not  until  December  3,  1909,  that  the  Secretary  of  the 
Treasury  promulgated  the  regulations  for  the  enforcement  of 
that  Act,  and  litigation  thereunder  is  still  pending. 

This  and  other  proposed  Federal  legislation  and  the  discussion 
and  litigation  relating  to  the  enforcement  thereof  have  caused 
before  and  during  the  whole  of  the  time  of  the  existence  of 
the  Committee  much  unrest  and  anxiety  among  the  corporations 
of  this  State,  from  which  the  largest  part  of  the  State  revenues 
are  derived.  It  is  the  consensus  of  opinion  of  those  qualified 
to  know,  in  which  we  concur,  that  it  is  for  the  best  interest  of 
the  Commonwealth  and  for  the  general  welfare  of  our  people 
that  there  should  be  no  haste  in  the  filing  of  our  conclusions 
until  all  possible  investigation  can  be  had.  For  these  reasons 
and  in  view  of  the  numerous  recent  requests  for  further  hear- 
ings from  associations  and  interests  including  nearly  every 
business  activity,  we  have  deemed  it  wise  to  defer  our  findings 
and  will  present  them  to  you  at  the  earliest  time  practicable, 
in  the  meantime  continuing  our  inquiry.  We  beg  to  direct  your 
attention  to  the  accompanying  notes  of  testimony  taken  before 
us,  and  a  summary  thereof. 

Respectfully  submitted, 

JAS.    P.    McNICHOL, 

Chairman . 
WM.  II.  KEYSER, 
WM.  C.  SPROUL. 
JAS.    F.    WOODWARD, 
D.   HUNTER,   JR., 
GABRIEL   II.   MOYER, 
Vice-Chairman  and  Secretary. 


Since  the  making  of  the  report  to  the  Governor  your 
Committee  has  given  further  publicity  to  the  hearings  and 
to  the  subjects  of  their  labors  in  general.  All  the  news- 
papers and  journals  of  the  State  have  have  been  requested 
to  give  such  notice  and  have  generally  complied.  In  all 
to-date  upwards  of  82,000  letters  requesting  suggestions 
and  advice  have  been  sent  to  persons  and  corporations 
throughout  the  United  States. 

The  result  has  been  the  receipt  of  a  great  number  of 
briefs,  drafts  of  Acts,  tables  of  statistics  from  public  of- 
ficials, pamphlets  and  the  like. 

Various  tax  reform  associations  have  furnished  your 
Committee  with  the  results  of  their  work  and  have  re- 
quested co-operation.  By  direct  communication  with  the 
officials  of  the  several  States  your  Committee  has  been  fur- 
nished with  State  publications  of  corporations  and  taxes, 
and  much  information  as  to  the  practical  experience  in  the 
operation  of  laws  of  other  States  has  been  obtained. 

Since  the  report  of  July  1,  your  Committee  has  held 
public  meetings  in  Philadelphia  and  taken  a  large  amount 
of  testimony  from  those  voluntarily  appearing  before 
them,  which  is  transmitted  herewith,  together  with  that 
previously  taken  and  submitted  to  the  Governor. 

In  all  177  persons  spoke  at  these  hearings,  gave  their 
opinions  and  suggestions,  and  were  questioned  by  your 
Committee  and  Counsel.  They  included  representatives 
from  tax  reform  associations,  business  men's  associations, 
boards  of  trade,  the  Pennsylvania  State  Grange,  factories, 
financial  institutions,  public  service  corporations,  hospitals 
and  various  public  officials,  county  commissioners  and  con- 
trollers, judges,  county  treasurers  and  professional  men, 
such  as  lawyers,  doctors,  real  estate  brokers  and  in- 
terested citizens  in  general.  Many  thousands  appeared 
as  spectators  but  affected  by  the  subjects  under  considera- 
tion. Many  important  suggestions  were  made.  Your  Com- 
mittee gave  the  utmost  latitude  for  discussion  and  sug- 
gestion, both  at  the  public  hearings  and  by  means  of  letters 
2 


10 

and  arguments  submitted  to  it  in  written  form,  and  the 
public  hearings  were  a  great  practical  success. 

Counsel  for  the  Committee  attended  all  the  hearings 
and  aided  in  questioning  those  who  appeared,  and  in  gen- 
eral consulted  with  your  Committee  in  all  the  steps  taken 
and  conclusions  arrived  at. 

At  a  meeting  of  the  International  Tax  Association,  held 
in  Milwaukee,  Wisconsin,  on  September  2,  1910,  Francis 
Shunk  Brown,  Esq.,  the  counsel  of  your  Committee,  at- 
tended as  a  delegate  of  the  Commonwealth  of  Pennsyl- 
vania by  appointment  of  the  Governor,  and  obtained  valu- 
able information. 


11 


CORPORATION   LAWS. 


While  most  of  the  information  and  argument  addressed 
to  your  Committee  was  on  the  subject  of  the  revenue  laws 
of  the  State,  yet  a  great  deal  of  material  was  gathered 
on  the  subject  of  the  corporation  laws  generally  which 
was  entrusted  to  them  by  the  Resolution. 

Aside  from  the  Acts  applying  specially  to  all  varieties 
of  corporations,  and  particularly  to  railroad,  insurance 
and  banking  corporations,  some  of  which  are  incorpor- 
ated under  statutes  existing  prior  to  1873,  corporations 
of  the  class  known  generally  as  business  corporations  are 
incorporated  in  our  State  under  the  Act  of  April  29,  1874, 
and  its  very  numerous  amendments  and  supplements, 
which  amount  to  the  number  of  fifty-seven.  In  addition 
there  are  over  a  hundred  other  Acts  which  apply  to  the 
same  subject. 

It  is  an  undoubted  fact  that  in  the  thirty-six  years  dur- 
ing which  the  law  has  been  in  existence,  in  consequence  of 
these  supplements  and  amendments,  the  law  has  unavoid- 
ably fallen  into  a  state  of  contradiction  and  confusion  on 
many  points  (particularly  by  reason  of  subsequent  amend- 
ments ignoring  those  previously  made),  and  is  in  some 
other  points  not  in  accord  with  the  modern  trend  of  legisla- 
tion. Many  matters  have  been  suggested  as  to  which  these 
laws  may  be  improved;  and  these  have  commended 
themselves  to  your  Committee.  But  they  do  not  feel 
that  the  situation  is  one  which  calls  for  a  piece-meal  re- 
vision. The  laws  are  familiar  and  have  been  construed 
on  most  moot  points,  so  that  their  operation  upon  every- 
day matters  is  well  understood.  It  is  not  deemed  advis- 
able to  recommend  any  radical  changes  until  a  complete 
revision  of  the  whole  body  of  the  law  can  be  presented 


12 

as  a  corporation  code  or  system,  and  such  few  matters  as 
need  to  be  cleared  up  or  supplied  can  be  deferred  until 
that  time.  Such  changes  from  the  settled  policy  of  the 
State  as  are  deemed  presently  advisable  can  be  better 
made  in  this  way,  and  be  better  fitted  to  the  body  of  the 
existing  law. 

A  uniform  business  corporation  law  is  now  under  con- 
sideration by  the  Conference  of  Commissioners  on  Uniform 
State  Laws.  The  first  draft  of  such  a  law  was  made  and 
printed  in  December,  1909,  and  presented  for  public  dis- 
cussion and  your  Committee  has  been  much  interested  in 
its  perusal.  At  the  same  time  this  is  not  the  final  draft 
of  the  law,  some  parts  of  it  having  since  been  further  re- 
vised and  furnished  to  your  Committee;  and  a  further 
revision  is  to  follow.  The  Commissioners  have  themselves 
advised  your  Committee  under  date  of  October  21,  1910, 
to  defer  action  in  this  regard.  In  view  of  the  very  general 
adoption  of  many  of  the  laws  recommended  by  this  Con- 
ference, Pennsylvania  having  adopted  the  Negotiable 
Instruments  law  (1901,  P.  L.,  194)  and  the  Warehouse 
Receipts  law  (1909,  P.  L.,  19),  your  Committee  feel  that 
before  a  general  revision  of  the  corporation  law  is  under- 
taken, the  proposed  uniform  business  corporation  law 
should  have  careful  consideration. 

Following  the  report  of  a  special  committee,  the  Penn- 
sylvania Bar  Association,  at  its  meeting  in  1910,  adopted 
a  resolution  for  the  appointment  of  a  committee  to  draft 
and  present  an  Act  to  the  next  Legislature  for  the 
appointment  of  a  commission  to  revise  and  unify  the 
statutes  of  the  State.  The  majority  of  the  Bar  Association 
Committee  has  determined  that  the  task  of  going  over  the 
whole  statute  law  is  too  much  to  be  done  in  the  first 
instance,  and  has  recommended  that  a  definite  branch  of 
the  law  be  considered  by  such  a  commission  to  report  to 
the  Legislature  of  1913,  and  that  the  branch  of  the  law 
to  be  taken  up  should  include,  among  other  things,  pri- 
vate coroprations,  meaning  by  this  to  exclude  public  ser- 
vice corporations,  insurance  companies  and  the  like. 


13 

If  your  committee  is  continued  it  will  co-operate  with 
that  of  the  Bar  Association  in  the  consideration  of  this 
most  important  subject.  This  action  of  the  committees  of 
the  Bar  Association  successively  narrowing  the  field  of 
proposed  statutory  revision  is  another  evidence  of  the 
very  large  nature  of  the  task,  which  has  made  it  im- 
practicable if  not  impossible  for  your  Committee,  with 
the  means  at  its  disposal,  to  do  aught  but  lay  some  of  the 
ground  for  future  work. 

Your  Committee,  therefore,  does  not  submit  any  recom- 
mendations with  respect  to  the  laws  in  general  governing 
the  organization  and  conduct  of  corporations.  If  the 
duties  of  the  Committee  be  continued,  as  hereinafter 
recommended,  this  and  other  subjects  not  presently  ripe 
for  legislation  can  be  investigated  and  considered  and  re- 
ported upon  to  the  Legislature  of  1913. 


14 


FOREIGN  CORPORATIONS. 


There  is  one  branch  of  this  law,  however,  which  has 
an  intimate  relation  to  State  revenue,  and  has  been  the 
subject  of  much  legislation  in  other  States,  with  the  course 
of  which  this  State  has  not  kept  pace,  to  wit:  the  treat- 
ment of  foreign  corporations.  The  law  relating  to  foreign 
corporations  in  Pennsylvania  is  incomplete,  and  in  some 
particulars  unwise.  Your  Committee,  therefore,  submits 
drafts  of  proposed  Acts  with  regard  thereto  (See  pages 
16  and  36),  together  with  notes  attached  to  each  Act 
explanatory  of  the  provisions  thereof. 

The  first  of  these  Acts  is  a  general  foreign  corporation 
law  relating  to  the  subject  of  the  registration  of  foreign 
corporations  in  order  to  bring  them  within  the  reach  of 
the  process  of  our  courts  for  the  benefit  of  our  citizens 
who  deal  with  them,  and  within  the  reach  of  our  taxing 
authorities.  While  the  existing  laws  provide  for  registra- 
tion, designation  of  office  and  the  appointing  of  agents 
for  the  serving  of  process,  many  corporations  fail  to  com- 
ply with  the  law.  It  is  ineffective  in  not  providing  a  means 
of  reaching  the  corporation  which  ignores  the  law  and  de- 
fies the  penalties.  It  is  well  known  that  there  are  a  great 
many  such  corporations.  This  proposed  Act  (see  page  16), 
therefore  provides  for  a  means  for  regulating  foreign  cor- 
porations by  designating  a  State  officer  upon  whom  pro- 
cess may  be  served,  if  the  corporation  fails  to  make  a 
designation.  This  has  been  the  law  with  regard  to  foreign 
insurance  companies  for  many  years  in  this  State  and 
it  is  a  very  common  provision  elsewhere.  Its  validity 
has  been  sanctioned  by  the  Supreme  Court  of  the  United 
States,  as  stated  in  the  foot  note  to  the  Act.  The  Act  also 


15 

makes  the  modes  of  procedure  uniform  for  all  classes 
of  foreign  corporations. 

Existing  penalties  by  way  of  fine  and  imprisonment  for 
failure  to  register  have  been  preserved  except  the  penalty 
added  to  the  law  by  judicial  construction  which  declares 
contracts  made  by  unregistered  foreign  corporations  TO 
be  void  and  permits  no  recovery  at  law  upon  them,  how- 
ever just  the  claims  may  otherwise  be.  This  drastic  ruling 
has  not  been  effective  to  compel  compliance  with  the  law 
by  the  smaller  and  more  irresponsible  corporations,  and 
has  been  productive  of  great  injustice  in  permitting  the 
escape  of  the  payment  of  just  debts  in  a  way  which 
produced  no  State  revenue  (for  the  defect  could  not  be 
cured  by  registering  and  paying  taxes),  and  put  money 
in  the  pocket  of  those  with  a  sufficiently  small  conscience 
to  permit  them  to  make  the  plea.  This  was  recognized 
by  the  Legislature  of  1907  (P.  L.  205),  which  passed  an 
Act  validating  such  contracts  theretofore  made,  on 
registering  and  paying  taxes  and  penalties.  The  Act  as 
drafted  and  submitted  by  your  Committee  makes  this  the 
law  for  the  future,  and  will  produce  greater  revenue  for 
the  State  and  at  the  same  time  do  justice  between  private 
litigants.  If  the  Legislature  does  not  amend  the  general 
foreign  corporation  law  by  enacting  this  bill,  it  is  recom- 
mended that  they  alter  the  existing  law  in  this  regard  in 
accordance  with  the  policy  previously  announced  by  it, 
and  to  accomplish  this  a  draft  of  Act  is  submitted  herewith 
modeled  on  the  law  of  1907.  (See  page  36.) 

Foreign  corporations  which  comply  with  our  laws  are 
permitted  to  hold  real  estate  in  Pennsylvania  by  the  pro- 
posed Act.  There  have  been  numerous  Acts  permitting 
certain  classes  of  foreign  corporations  to  hold  real  estate. 
These  Acts  have  been  carelessly  amended  so  that  there 
is  much  existing  confusion  in  the  laws,  the  opinion  being 
that  some  Acts  have  been  impliedly  but  unintentionally 
repealed  by  failure  to  refer  to  them  in  amending  Acts. 
If  the  Legislature  is  of  opinion  that  foreign  corporations 


16 

in  general  be  not  permitted  to  hold  real  estate,  it  is  recom- 
mended that  supposedly  existing  laws  on  the  subject 
should  be  put  in  one  enactment  in  order  that  the  law  may 
be  clear  and  for  that  purpose  a  draft  of  Act  is  herewith 
submitted.  (See  page  36.) 

Other  matters  touched  on  in  the  general  Act  relate 
especially  to  foreign  corporations  doing  their  principal 
business  here.  Their  foreign  birth  is  an  accident,  and 
their  internal  affairs  should  be  subject  to  the  jurisdiction 
of  our  courts,  and  they  should  be  forbidden  the  Federal 
Courts  as  far  as  possible. 


[The  numbers  in  the  text  refer  to  the  foot  notes,  beginning  page  27.] 

AN  ACT  TO  REGULATE  FOREIGN  CORPORATIONS,  THAT  IS  TO  SAY.  COR- 
PORATIONS, JOINT  STOCK  COMPANIES.  PARTNERSHIPS  LIMITED, 
PARTNERSHIP  ASSOCIATIONS  AND  ALL  ASSOCIATIONS  HAVING  ANY 
OF  THE  POWERS  OR  PRIVILEGES  OF  CORPORATIONS  NOT  POSSESSED 
BY  INDIVIDUALS  OR  PARTNERSHIPS  ORGANIZED  UNDER  ANY  LAWS 
OTHER  THAN  THQSE  OF  THIS  COMMONWEALTH,  DOING  BUSINESS 

IN   THIS   COMMONWEALTH. 

SECT.  1.  Be  it  enacted,  etc.  A  foreign  corporation  shall  not  do 
any  business  in  this  Commonwealth  until  said  corporation  shall 
have  established  an  office  and  appointed  an  agent  for  the  trans- 
action of  its  business  therein.  (1) 

SECT.  2.  It  shall  not  be  lawful  for  any  such  corporation  to  do 
any  business  in  this  Commonwealth  until  it  shall  file  in  the  office 
of  the  Secretary  of  the  Commonwealth,  and  in  the  office  of  the 
Recorder  of  Deeds  for  the  County  in  which  its  principal  office 
is  located,  a  copy  of  its  articles  of  incorporation  or  of  its  charter 
or  of  the  statute  or  legislative,  executive  or  governmental  acts 
or  other  instrument  of  authority  by  which  it  was  created  and 
all  alterations  and  amendments  thereof.  (2)  duly  certified  by 
the  authorized  officer  of  the  government  under  the  laws  of 
which  such  corporation  was  organized,  (3)  and  in  the  office  of 
the  Secretary  of  the  Commonwealth  a  statement  under  the  seal 
of  said  corporation  and  signed  by  the  president  attested  by  the 
secretary  thereof,  showing  the  title  and  object  of  said  corpora- 
tion, the  location  of  its  principal  office  for  the  transaction  of 
business  in  this  Commonwealth  and  the  name  or  names  of  its 


17 

authorized  agent  or  agents  therein.  (4)  A  fee  of  One  hundred 
dollars  ($100.00)  for  filing  such  statement  shall  be  paid  to  the 
Secretary  of  the  Commonwealth  for  the  use  of  the  State. 

SECT.  3.  Any  person  or  persons,  agent,  officer  or  employee  of 
any  such  foreign  corporation  who  shall  transact  any  business 
within  this  Commonwealth  for  any  such  foreign  corporation 
without  having  complied  with  the  provisions  of  this  Act  shall  be 
guilty  of  a  misdemeanor  and  upon  conviction  thereof  shall  be 
punished  by  imprisonment  not  exceeding  thirty  days  and  by  a 
fine  not  exceeding  one  thousand  dollars  ($1,000),  or  either,  at 
the  discretion  of  the  Court  trying  the  same;  (5)  but  the  said 
person  or  persons,  agent,  officer  or  employee,  shall  not  be  per- 
sonally liable  for  any  acts  done  in  the  transaction  of  business 
within  this  Commonwealth  for  such  foreign  corporation,  except 
in  the  case  of  insurance  companies.  (6) 

SECT.  4.  If  any  foreign  corporation  shall  do  any  business  in 
this  Commonwealth  without  having  complied  with  the  laws  of 
this  Commonwealth  relating  to  the  doing  of  business  in  this 
Commonwealth  by  foreign  corporations  (7)  all  contracts  re- 
lating to  such  business  made  or  to  be  performed  within  this 
Commonwealth  shall  be  void  (8)  and  no  action  at  law  or  in 
equity  for  any  cause  of  action  arising  out  of  such  doing  of 
business  shall  be  maintained  by  it  in  the  Courts  of  this  State, 
(9)  but  if  any  foreign  corporation,  prior  to  the  commencement 
of  an  action  on  any  contract  made  heretofore  or  hereafter 
without  having  so  complied,  or  prior  to  the  commencement  of 
any  other  action,  shall  comply  with  said  laws  and  shall  also 
pay  the  bonus  on  its  capital  stock  required  by  law  and  all  State 
taxes  for  each  year  that  it  shall  have  done  business  in  this 
Commonwealth,  together  with  such  interest  and-  penalties  there- 
on as  shall  have  been  settled  against  it  by  the  officers  of  this 
Commonwealth,  such  contracts  made  prior  thereto  shall  be  vali- 
dated and  such  foreign  corporation  may  maintain  action  thereon 
and  all  other  actions  both  at  law  and  in  equity  in  the  Courts 
of  this  Commonwealth  (10). 

SECT.  5.  The  doing  of  business  in  this  Commonwealth  by  any 
foreign  corporation  shall  be  taken  to  be  its  irrevocable  assent 
to  be  sued  in  the  Courts  of  this  State  upon  any  liability  arising 
out  of  acts  done  in  the  course  of  such  business,  irrespective  of 
Avhether  such  corporation  be  doing  ousiness  in  this  Common- 
wealth at  the  time  suit  is  brought.  (11.) 

SECT.  6.  If  all  the  agents  designated  by  any  foreign  corpora- 
tion shall  die  or  resign  or  be  otherwise  disqualified  to  act  as  the 


18 

agents  of  the  corporation  under  this  Act,  or  if  their  authority 
to  act  as  such  be  revoked,  and  such  corporation  shall  not  within 
thirty  days  thereafter  designate  a  new  agent  or  agents,  (12)  or 
if  such  corporation  shall  cease  to  maintain  as  one  of  its  offices 
the  place  designated  as  its  principal  office,  and  shall  not  desig- 
nate another  office  in  place  thereof,  (13)  or  if  any  foreign  cor- 
poration shall  do  any  business  within  this  Commonwealth  with- 
out the  provisions  of  this  Act  being  complied  with,  (14)  the  said 
corporation  shall  be  taken  to  have  consented  that  the  Secretary 
of  the  Commonwealth  or  his  Deputy  shall  be  its  agent  for  the 
service  of  process,  and  that  service  upon  him  or  his  Deputy  shall 
be  as  effectual  as  though  served  upon  an  agent  specially  desig- 
nated by  such  corporation  under  this  Act,  (15)  provided,  that 
in  case  of  service  upon  the  Secretary  of  the  Commonwealth  or 
his  Deputy  such  process  shall  also  be  served  upon  such  foreign 
corporation,  or  upon  the  officers  thereof  wherever  it  or  they  may 
be  found,  whether  in  this  Commonwealth  or  not,  in  the  same 
manner  as  though  found  in  this  Commonwealth.  (16)  Such 
service  may  be  made  by  any  competent  person  and  proof  thereof 
made  by  his  affidavit.  Such  service  shall  be  made  twenty  days 
before  any  judgment  in  such  suit  shall  be  rendered.  (17.) 

SECT.  7.  Any  foreign  corporation  may  own  or  convey  real  es- 
tate within  this  Commonwealth  as  fully  as  any  corporation 
might  which  was  organized  under  the  laws  of  this  Common- 
wealth for  a  similar  purpose  (18),  Provided,  that  such  corpora- 
tions, at  the  time  of  acquiring  title  to  the  real  estate,  shall  have 
complied  fully  with  the  laws  of  this  Commonwealth  relating  to 
the  doing  of  business  in  this  Commonwealth  by  foreign  corpora- 
tions, and  provided  further,  that  nothing  in  this  Act  shall  be 
construed  to  exempt  said  real  estate  and  such  corporation  from 
taxation  as  otherwise  required  by  law. 

SECT.  8.  The  non-compliance  by  a  foreign  corporation  with  the 
laws  of  this  Commonwealth  may  only  be  taken  advantage  of 
with  respect  to  real  estate  by  the  Commonwealth  itself,  (19) 
and  before  the  same  shall  have  come  into  the  ownership  of  a 
purchaser  for  value  in  good  faith.  (20.) 

SECT.  9.  The  title  to  any  real  estate  in  this  Commonwealth 
now  or  heretofore  held  by,  or  in  trust  for,  any  such  foreign 
corporation,  is  hereby  confirmed  to  tne  same  effect  as  if  the 
said  real  estate  had  been  purchased,  held  or  owned  under  the 
provisions  of  this  Act,  upon  the  said  corporation  complying  with 
the  laws  of  this  Commonwealth  relating  to  the  doing  of  business 
by  foreign  corporations  and  paying  the  bonus  on  its  capital 
stock  required  by  law  and  all  State  taxes  for  each  year  that 


19 

it  shall  have  done  business  in  this  Commonwealtn,  together  with 
such  interest  and  penalties  thereon  as  shall  have  been  settled 
against  it  by  the  officers  of  this  Commonwealth.  (21.) 

SECT.  10.  In  all  actions  the  compliance  by  a  foreign  corpora- 
tion with  the  laws  of  this  Commonwealth  shall  be  taken  as  ad- 
mitted unless  the  party  asserting  non-compliance  shall  put  the 
same  in  issue  by  special  plea  of  appropriate  character;  and 
when  so  put  in  issue  the  burden  of  proving  compliance  shall  be 
on  the  party  asserting  the  same,  and  the  certificate  of  the 
proper  public  officers  as  to  the  facts  connected  with  such  com- 
pliance shall  be  proof  thereof.  (22.) 

SECT.  11.  The  Courts  of  this  Commonwealth,  both  at  law  and 
in  equity,  shall  have  jurisdiction  over  all  matters  concerning 
the  internal  management  of  any  foreign  corporation  doing 
business  in  this  Commonwealth,  the  principal  office  of  which 
for  the  doing  of  its  business  with  the  public  shall  be  in  this 
Commonwealth,  whenever  it  shall  appear  that  the  judgment 
or  decree  of  the  Court  can  be  enforced  in  this  Common- 
wealth. (23.) 

SECT.  12.  If  any  foreign  corporation  which  has  its  principal  of- 
fice for  the  doing  of  its  business  with  the  public  within  this  Com- 
monwealth shall,  without  the  consent  of  record  of  the  adverse 
parties,  remove  to  a  Federal  Court  any  action  pending  against 
it  in  any  Court  of  this  Commonwealth,  excepting  in  such  cases 
as  a  corporation  created  under  the  laws  of  this  Commonwealth 
may  do  so,  or  shall  without  such  consent  begin  an  action  against  a 
citizen  of  this  Commonwealth  in  any  Federal  Court,  or  shall 
upon  the  request  of  the  adverse  party  refuse  to  discontinue 
the  same,  such  action  on  the  part  of  the  corporation  shall  for- 
feit its  right  to  do  any  business  in  this  Commonwealth,  and 
it  shall  thereafter  be  deemed  not  to  have  complied  wih  the  laws 
of  this  Commonwealth.  (24.)  Such  forfeiture  shall  be  declared 
by  proceedings  in  the  nature  of  a  writ  of  quo  warranto  on  the 
suggestion  of  the  Attorney  General.  (25.) 

SECT.  13.  The  term  "foreign  corporation"  as  used  in  this  Act 
shall  be  construed  to  mean  all  corporations,  joint  stock  com- 
panies, partnerships  limited,  partnership  associations  and  all 
associations  having  any  of  the  powers  or  privileges  of  corpora- 
tions not  possessed  by  individuals  or  partnerships,  (26)  or- 
ganized under  any  laws  other  than  those  of  this  Commonwealth. 

SECT.  14.  The  provisions  of  this  Act  shall  apply  to  foreign 
corporations  of  all  kinds  doing  business  within  this  Common- 
wealth, including  those  foreign  corporations  now  doing  business 


20 

in  this  Commonwealth,  which  shall  comply  with  the  provisions 
of  this  Act  within  sixty  days  of  its  passage  (27),  and  is  intended 
to  supply  a  uniform  system  as  to  them.  All  Acts  or  parts  of 
Acts,  general  and  special,  and  Acts  applying  to  particular  clnss 
or  classes  of  foreign  corporations  and  inconsistent  with  the  pro- 
visions of  this  Act  be  and  the  same  are  hereby  repealed.  (28.) 

SECT.  15.  The  following  Acts  and  parts  of  Acts  be  and  the 
same  are  hereby  repealed  as  to  all  matters  arising  after  the 
date  of  the  approval  of  this  Act.  (29.)  (30.) 

So  much  of  Section  3  of  an  Act  entitled  "An  Act  to  facili- 
tate the  collection  of  debts  against  corporations,"  approved 
March  21.  1849  (P.  L.  216),  as  reads  as  follows: 

"And  in  the  commencement  of  any  suit  or  action  against  any 
such  foreign  corporation,  process  may  be  served  upon  any  offi- 
cer, agent  or  engineer  of  such  corporation,  either  personally, 
or  by  copy,  or  by  leaving  a  certified  copy  at  the  office,  depot  or 
usual  place  of  business  of  said  corporation,  and  such  service 
shall  be  good  and  valid  in  law  to  all  intents  and  purposes." 

Section  6  of  an  Act  entitled  "An  Act  relating  to  County 
Prisons,  to  the  Foster  Home  Association,  .  and '  Cawanesque 
Plank  Road  Company,  to  apportion  the  rent  of  wharves  au  * 
docks  in  the  port  of  Philadelphia,  and  relative  to  the  service 
of  process  on  foreign  insurance  companies  and  other  cor- 
porations." Approved  April  8,  1851.  (P.  L.  353.) 

An  Act  entitled  "An  Act  relative  to  insurance  companies." 
Approved  April  24,  1857.  (P.  L.  318.) 

An  Act  entitled  "A  supplement  to  an  Act  in  relation  to  in- 
surance companies,  approved  April  twenty-seventh,  one  thousand 
eight  hundred  and  fifty-seven."  Approved  April  8,  1868.  (P. 
L.  70.) 

Section  13  of  an  Act  entitled  "An  Act  to  establish  an  In- 
surance Department."  Approved  April  4,  1873.  (P.  L.  20.) 

An  Act  entitled  "An  Act  to  prohibit  foreign  corporations  from 
doing  business  in  Pennsylvania,  without  having  known  places 
of  business  and  authorized  agents."  Approved  April  22,  1874. 
(P.  L.  108.) 

An  Act  entitled  "An  Act  amending  an  Act.  entitled  'An  Act 
to  establish  an  insurance  department,'  approved  the  fourth 
day  of  April,  Anno  Domini  one  thousand  eight  hundred  and 
seventy-three."  Approved  June  20,  1883.  (P.  L.  134.) 

So  much  of  Section  7  of  an  Act  entitled  "An  Act  to  further 
provide  for  the  incorporation  and  regulation  of  mutual  assess- 
ment corporations  for  the  insurance  of  lives,  supplementary  to 


21 

an  Act,  approved  May  first,  Anno  Domini  one  thousand  eight 
hundred  and  seventy-six,  entitled  'A  supplement  to  Act  to  es- 
tablish an  insurance  department.' "  approved  June  5,  1883  (P.  L. 
80),  as  reads  as  follows :  "And  it  shall  legally  designate  a  person 
or  agent  residing  in  this  State  to  receive  service  of  process  for 
said  company,  or  in  default  of  such  designation,  service  of 
process  may  be  made  upon  the  Insurance  Commissioner  of  this 
State,  who  shall  be  deemed  its  attorney  for  that  purpose,  and 
he  shall  immediately  notify  any  corporation  or  association 
thus  served." 

Sections  1  and  2  of  an  Act  entitled  "An  Act  to  authorize 
certain  corporations,  incorporated  and  existing  under  the  laws 
of  any  other  State  of  the  United  States,  to  purchase  certain 
real  estate  at  judicial  sales,  and  to  hold  and  convey  the  same 
under  certain  conditions."  Approved  May  23,  1887.  (P.  L.  176.) 

An  Act  entitled  "An  Act  to  amend  an  Act,  entitled  'An  Act 
relative  to  insurance  companies,'  approved  April  twenty-fourth, 
Anno  Domini  one  thousand  eight  hundred  and  fifty-seven,  to 
apply  the  provisions  of  said  act  to  live  stock  insurance  com- 
panies and  to  give  jurisdiction  to  aldermen,  justices  of  the 
peace  and  magistrates."  Approved  May  13,  1889.  (P.  L.  198.) 

An  Act  entitled  "An  Act  to  provide  for  the  person  upon  whom 
service  shall  be  had  by  legal  process  in  the  case  of  fraternal 
beneficial  and  relief  societies  whose  status  is  defined  by  the 
Act  of  Assembly,  entitled  'An  Act  defining  fraternal  beneficial 
and  relief  societies  and  their  status,  authorizing  them  to  create 
subordinate  lodges  and  to  pay  benefits,  upon  the  sickness,  dis- 
ability or  death  of  their  members,  from  funds  collected  by  dues 
and  assessments  therein,  providing  far  their  registration  in 
the  office  of  the  Insurance  Commissioner,  and  requiring  that 
they  shall  make  annual  reports  to  him.  and  exempting  them 
from  taxation  and  from  the  supervision  of  the  Insurance  Com' 
missioner,'  approved  the  sixth  day  of  April,  Anno  Domini  one 
thousand  eight  hundred  and  ninety-three."  Approved  June  25, 
approved  June  26,  1895,  (P.  L.  343),  as  reads  as  follows: 
1895.  (P.  L.  280.) 

So  much  of  Section  2  of  an  Act  entitled  "An  Act  relative 
to  bonds,  undertakings,  recognizances,  guarantees  and  other 
obligations  required  or  permitted  to  be  made,  given,  tendered 
or  filed  with  surety  or  sureties,  and  to  the  acceptance  as  surety 
or  guarantor  thereupon  of  companies  qualified  to  act  as  such," 
approved  June  26,  1895  (P.  L.  343),  as  reads  as  follows: 
"And  if  such  company  is  incorporated  under  the  laws  of  any 
other  State  or  country  than  this  State,  it  shall,  in 


22 

thereto,  file  a  power  of  attorney  appointing-  some  resident  of 
this  State  upon  whom  service  process  may  be  made  as  required 
by  existing-  laws." 

An  Act  entitled  "An  Act  to  extend  for  a  further  period  of 
five  years  the  time  during-  which  corporations  incorporated 
and  existing  under  the  laws  of  any  other  State  of  the  United 
States  are  now  authorized  by  law  to  hold  real  estate  heretofore 
purchased  at  sheriff's  or  other  judicial  sales."  Approved  June 
8,  1897.  (P.  L.  136.) 

So  much  of  Section  3  of  an  Act  entitled  "An  Act  regulating 
foreign  mutual  savings  fund  or  building  and  loan  associations 
doing  business  within  this  Commonwealth,  and  prescribing  an 
annual  license  fee  to  be  paid  by  such  associations,"  approved 
May  11,  1901,  (P.  L.  153),  as  relates  to  the  service  of  process 
and  the  designation  of  an  agent  and  service  upon  the  Com- 
missioner of  Banking. 

An  Act  entitled  "An  Act  validating  the  title  to  real  estate, 
taken  and  held  by  corporations  of  other  States,  without  first 
having  established  known  places  of  business  and  designated 
authorized  agents  for  the  transaction  of  their  business  writhin 
this  Commonwealth."  Approved  April  25,  1907.  (P.  L.  105.) 

An  Act  entitled  "An  Act  validating  contracts,  bonds,  or  obli- 
gations made  by  corporations  of  other  States,  without  first 
having  established  known  places  of  business  and  designated 
authorized  agents  for  the  transaction  of  their  business  within 
this  Commonwealth,  and  providing  for  the  enforcement  of  the 
same."  Approved  May  23,  1907.  (P.  L.  205.) 

An  Act  entitled  "An  Act  relating  to  the  service  of  legal 
process  upon  foreign  insurance  companies."  Approved  April  22, 
1909.  (P.  L.  120.) 

An  Act  entitled  "An  Act  to  enable  foreign  insurance  corpo- 
rations and  joint  stock  companies  to  hold  real  estate  in  this 
Commonwealth."  Approved  June  1,  1881.  (P.  L.  38.) 

An  Act  entitled  "An  Act  authorizing  companies,  incorporated 
under  the  laws  of  any  other  State  of  the  United  States  for 
the  manufacture  of  any  form  of  iron,  steel  or  glass,  to  erect 
and  maintain  buildings  and  manufacturing  establishments,  and 
to  take,  have  and  hold  real  estate  necessary  and  proper  for 
manufacturing  purposes."  Approved  June  9,  1881.  (P.  L.  89.) 

An  Act  entitled  "A  Supplement  to  an  Act,  entitled  'An  Act 
authorizing  companies,  incorporated  under  the  laws  of  any  other 
State  of  the  United  States,  for  the  manufacture  of  any  form  of 
iron,  steel  or  glass,  to  erect  and  maintain  buildings  and  man- 


23 

ufacturing  establishments,  and  to  take,  have  and  hold  real 
estate  necessary  and  proper  for  manufacturing  purposes,'  ap- 
proved the  ninth  day  of  June,  one  thousand  eight  hundred  and 
eighty-one,  authorizing  companies,  incorporated  under  the  laws 
of  any  other  State  of  the  United  States,  for  the  conversion, 
dyeing  and  cleansing  of  cotton,  and  other  fabrics,  to  erect  and 
maintain  buildings  for  such  manufacturing  purposes,  and  for 
offices  and  salesrooms,  or  either,  and  to  take,  have  and  hold 
real  estate  necessary  and  proper  for  such  purposes."  Approved 
June  25,  1885.  (P.  L.  179.) 

An  Act  entitled  "A  Supplement  to  an  Act,  entitled  'A  sup- 
plement to  an  Act  authorizing  companies,  incorporated  under 
the  laws  of  any  other  State  of  the  United  States,  for  the  manu- 
facture of  any  form  of  iron,  steel  or  glass,  to  erect  and  main- 
tain buildings  and  manufacturing  establishments,  and  to  take 
have  and  hold  real  estate  necessary  and  proper  for  manufactur- 
ing purposes,  approved  the  ninth  day  of  June,  one  thousand 
eight  hundred  and  eighty-one,  authorizing  companies,  incorpo- 
rated under  the  laws  of  any  other  State  of  the  United  States, 
for  the  conversion,  dyeing  and  cleansing  of  cotton,  and  other 
fabrics,  to  erect  and  maintain  buildings  for  such  manufacturing 
purposes,  and  for  offices  and  salesrooms,  or  either,  and  to  take, 
have  and  hold  real  estate  necessary  and  proper  for  such  pur- 
poses,' approved  twenty-fifth  day  of  June,  Anno  Domini  one 
thousand  eight  hundred  and  eighty-five,  conferring  similar 
powers  upon  companies,  incorporated  under  the  laws  of  any 
other  State  of  the  United  States  for  the  manufacture  of  lumber 
and  wood  products,  and  pyroligneous  acids,  acetate  of  lime  and 
charcoal,  by  the  process  of  destructive  distillation,  or  the  prepa- 
ration of  cattle  hair  for  use."  Approved  April  28,  1887.  (P.  L. 
77.) 

An  Act  entitled  "An  Act  authorizing  companies  incorporated 
under  the  laws  of  any  other  State  of  the  United  States  for 
the  establishment,  maintenance  and  continuance  of  a  ferry  or 
for  the  maintenance  and  continuance  of  a  bridge,  between  this 
State  and  any  other  State,  upon  or  over  any  river  flowing 
between  said  States,  to  erect  and  maintain  piers  and  certain 
other  buildings  and  structures,  to  hold  real  estate  in  this  State 
and  to  mortgage,  lease  or  convey  the  same."  Approved  June 
6,  1887.  (P.  L.  352.) 

An  Act  entitled  "An  Act  authorizing  companies  incorporated 
under  the  laws  of  any  other  State  of  the  United  States,  for  the 
transportation  of  passengers  and  freight  by  steamboats  or  other 
vessels,  on  rivers  or  other  waters  between  this  State  and  any 


24 

other  State,  to  hold  real  estate  in  this  State,  and  to  lease, 
mortgage  and  convey  the  same."  Approved  the  17th  day  of 
April,  A.  D.  1889.  (P.  L.  35.) 

An  Act  entitled  "A  Supplement  to  an  Act,  entitled,  'A  supple- 
ment to  an  Act  authorizing  companies  incoporated  under  the 
laws  of  any  other  State  of  the  United  States  for  the  manufac- 
ture of  any  form  of  iron,  steel  or  glass,  to  erect  and  maintain 
buildings  and  manufacturing  establishments,  and  to  take,  have 
and  hold  real  estate  necessary  and  proper  for  manufacturing 
purposes,  approved  the  ninth  day  of  June,  one  thousand  eight 
hundred  and  eight3r-one,  authorizing  companies  incorporated  un- 
der the  laws  of  any  other  State  of  the  United  States,  for  the 
conversion,  dyeing  and  cleansing  of  cotton  and  other  fabrics, 
to  erect  and  maintain  buildings  for  such  manufacturing  purposes, 
and  for  offices  and  salesrooms  or  either,  and  to  take,  have  and 
hold  real  estate  necessary  and  proper  for  such  purposes,  ap- 
proved the  twenty-fifth  day  of  June,  A.  D.  one  thousand  and 
eight  hundred  and  eighty-five,  conferring  similar  powers  upon 
companies  incorporated  under  the  laws  of  any  other  State  of 
the  United  States  for  the  manufacture  of  lumber  and  wood  pro- 
ducts and  pyroligneous  acids,  acetate  of  lime  and  charcoal,  by  the 
process  of  destructive  distillation  or  the  preparation  of  cattle 
hair  for  use,'  approved  the  twenty-eighth  day  of  April,  one 
thousand  eight  hundred  and  eighty-seven,  conferring  similar 
power  upon  companies  incorporated  under  the  laws  of  any  other 
State  of  the  United  States,  for  the  manufacture  of  carbon 
dioxide  and  magnesia  and  the  products  thereof,  and  compo- 
sitions, articles  and  apparatus  from  and  in  connection  therewith, 
and  for  the  manufacture  of  cotton,  velvet,  and  other  fabrics, 
and  for  the  manufacture  of  extracts  out  of  wood,  bark,  leaves 
and  roots,  or  any  other  extracts  for  tanning,  cleansing,  dyeing 
or  other  purposes."  Approved  the  30th  day  of  April,  A.  D.  1891. 
(P.  L.  39.) 

An  Act  entitled  "A  Supplement  to  a  supplement  to  an  Act,  en- 
titled, 'A  supplement  to  an  Act  authorizing  companies  incorpor- 
ated under  the  laws  of  any  other  State  of  the  United  States  for  the 
manufacture  of  any  form  of  iron,  steel  or  glass,  to  erect  and 
maintain  buildings  and  manufacturing-  establishments,  to  take, 
have  and  hold  real  estate  necessary  and  proper  for  manufacture 
purposes,'  approved  the  ninth  day  of  June,  one  thousand  eight 
hundred  and  eighty-one,  authorizing  companies  incorporated  un- 
der the  laws  of  any  other  State  of  the  United  States  for  the  con- 
version, dyeing  and  cleansing  of  cotton  and  other  fabrics  to 
erect  and  maintain  buildings  for  such  manufacturing  purposes, 


25 

and  for  offices  and  salesrooms,  or  either,  and  to  take,  have  and 
hold  real  estate  necessary  and  proper  for  such  purposes,  approved 
the  twenty-fifth  day  of  June,  Anno  Domini  one  thousand  eight 
hundred  and  eighty-five,  conferring  similar  powers  upon  com- 
panies incorporated  under  the  laws  of  any  other  State  of  the 
United  States  for  the  manufacture  of  lumber  and  wood  prod- 
ucts and  pyroligneous  acids,  acetate  of  lime  and  charcoal  by 
the  process  of  destructive  distillation,  or  the  preparation  of 
cattle  hair  for  use,  approved  the  twenty-eighth  day  of  April, 
one  thousand  eight  hundred  and  eighty-seven,  conferring  simi- 
lar power  upon  companies  incorporated  under  the  laws  of  any 
other  State  of  the  United  States  for  the  manufacture  of  carbon 
dioxide  and  magnesia  and  the  products  thereof,  and  composi- 
tions, articles  and  apparatus  from  and  in  connection  therewith, 
and  for  the  manufacture  of  cotton,  velvet  and  other  fabrics,  and 
for  the  manufacture  of  extracts  out  of  wood,  bark,  leaves  and 
roots,  or  any  other  extracts  for  tanning,  cleansing,  dyeing  or 
other  purposes,'  approved  the  thirtieth  day  of  April,  Anno 
Domini  one  thousand  eight  hundred  and  ninety-one,  conferring 
similar  powers  upon  companies  incorporated  under  the  laws  of 
any  other  State  of  the  United  States  for  the  manufacture  or 
printing  of  wall  paper,  lithographs  or  prints,  and  for  mining 
and  manufacture  of  clay  into  brick  tile  and  various  other  ar- 
ticles and  products  produced  from  clay,  and  from  clay  and  other 
substances  mixed  therewith."  Approved  the  8th  day  of  June, 
A.  D.  1893.  (P.  L.  389.) 

An  Act  entitled,  "An  Act  to  amend  an  Act,  entitled,  'An  Act 
authorizing  companies  incorporated  under  the  laws  of  any  other 
State  of  the  United  States  for  the  manufacture  of  any  form  of 
iron,  steel  or  glass  to  erect  and  maintain  buildings  and  manu- 
facturing establishments  and  to  take,  have  and  hold  real  estate 
necessary  and  proper  for  manufacturing  purposes,'  approved  the 
ninth  day  of  June  Anno  Domini  one  thousand  eight  hundred  and 
eighty-one,  extending  the  same  to  companies  formed  for  the  pur- 
pose of  quarrying  slate,  granite,  stone  or  rocks  or  for  dressing, 
polishing,  working,  or  manufacturing  the  same,  or  any  of  them, 
and  to  mineral  springs  companies  incorporated  for  the  purpose 
of  bottling  and  selling  natural  mineral  springs  water."  Ap- 
proved the  16th  day  of  June,  A.  D.  1893.  (P.  L.  466.) 

An  Act  entitled,  "An  Act  to  enable  foreign  corporations  engag- 
ed in  this  State  in  the  publication  and  sale  of  books,  tracts, 
newspapers,  etc.,  the  net  profits  of  which  are  by  its  charter  or 
governing  body  required  to  be  applied  to  religious  and  charitable 
uses,  to  hold  real  estate  in  this  Commonwealth."  Approved  the 
24th  day  of  June,  A.  D.  1895.  (P.  L.  238.) 


26 

An  Act  entitled,  "An  Act  To  amend  an  Act,  entitled  'An  Act 
to  amend  an  Act,  entitled,  "An  Act  authorizing  companies  in- 
corporated under  the  laws  of  any  other  State  of  the  United 
States  for  the  manufacture  of  any  form  of  iron,  steel  or  glass, 
to  erect  and  maintain  ouildings  and  manufacturing1  establish- 
ments, and  to- take,  have  and  hold  real  estate  necessary  and 
proper  for  manufacturing  purposes,"  approved  the  ninth  day  of 
June,  Anno  Domini  one  thousand  eight  hundred  and  eighty- 
one,  extending  the  same  to  companies  formed  for  the  purpose  of 
quarrying  slate,  granite,  stone,  or  rocks,  or  for  dressing,  polish- 
ing, working,  or  manufacturing  the  same,  or  any  of  them,  and 
to  mineral  springs  companies  incorporated  for  the  purpose  of 
bottling  and  selling  natural  mineral  springs  water,'  approved  the 
sixteenth  day  of  June,  Anno  Domini  one  thousand  eight  hundred 
and  ninety-three."  Approved  the  19th  day  of  April,  A.  D.  1901. 
(P.  L.  86.) 

An  Act  entitled  "An  Act  to  amend  an  Act,  entitled  'An  Act  to 
amend  an  Act,  entitled  "An  Act  to  amend  an  Act,  entitled,  'An 
Act  authorizing  companies  incorporated  under  the  laws  of 
any  other  State  of  the  United  States  for  the  manufacture  of 
any  form  of  iron,  steel,  or  glass  to  erect  and  maintain  buildings 
and  manufacturing  establishments,  and  to  take,  have,  and  hold 
real  estate  necessary  and  proper  for  manufacturing  purposes,' 
approved  the  ninth  day  of  June.  Anno  Domini  one  thousand 
eight  hundred  and  eighty-one,  extending  the  same  to  companies 
formed  for  the  purpose  of  quarrying  slate,  granite,  stone,  or 
rocks,  or  for  dressing,  polishing,  working,  or  manufacturing  the 
same,  or  any  of  them  and  to  mineral  springs  companies  in- 
corporated for  the  purpose  of  bottling  and  selling  natural  min- 
eral springs  water,"  approved  the  sixteenth  day  of  June,  Anno 
Domini  one  thousand  eight  hundred  and  ninety-three,'  approved 
the  nineteenth  day  of  April,  Anno  Domini  one  thousand  nine 
hundred  and  one;  extending  the  same  to  companies  formed  for 
the  purpose  of  manufacturing  and  selling  chemicals,  foodstuffs, 
cement  and  cement  products,  and  the  quarrying  of  cement  rock.'' 
Approved  the  28th  day  of  May,  A.  D.  1907.  (P.  L.  266.) 

An  Act  entitled,  "An  Act  to  rmend  an  Act,  entitled  'An  Act 
to  amend  an  Act,  entitled  "An  Act  to  amend  an  Act,  entitled  'An 
Act  authorizing  companies  incorporated  under  the  laws  of  any 
other  State  of  the  United  States  for  the  manufacture  of  any 
form  of  iron,  steel,  or  glass,  to  erect  and  maintain  buildings  and 
manufacturing  establishments,  and  to  take,  have  and  hold  real 
estate  necessary  and  proper  for  manufacturing  purposes,'  ap- 
proved the  ninth  day  of  June,  Anno  Domini  one  thousand  eight 


27 

hundred  and  eighty-one,  extending  the  same  to  companies  form- 
ed for  the  purpose  of  quarrying  slate,  granite,  stone,  or  rocks, 
or  for  dressing,  polishing,  working,  or  manufacturing  the  same, 
or  any  of  them,  and  to  mineral  springs  companies  incorporated 
for  the  purpose  of  bottling  and  selling  natural  mineral  springs 
water,  approved  the  sixteenth  day  of  June,  Anno  Domini  one 
thousand  eight  hundred  and  ninety-three,"  extending  the  same 
to  companies  incorporated  for  the  purpose  of  manufacturing, 
supplying  and  sale  of  ice,  approved  the  nineteenth  day  of 
April,  Anno  Domini  one  thousand  nine  hundred  and  one.'  by 
extending  the  same  to  companies  incorporated  for  the  manu- 
facture of  paper,  wood-pulp,  or  chemical  fibre."  Approved  the 
27th  day  of  April,  A.  D.  1909.  (P.  L.  173.) 


NOTES. 

(1).  This  is  taken  from  the  first  section  of  the  Act  of  April 
22nd,  1874,  P.  L.  108,  but  dropping  the  plural  of  the  words 
"office"  and  "agent."  The  constitutional  provision  Article  16, 
Section  5  is  "no  foreign  corporation  shall  do  any  business  in  this 
State  without  having  one  or  more  known  places  of  business,  and 
an  authorized  agent  or  agents  in  the  same  upon  whom  process 
may  be  served."  The  object  of  the  constitution  being  to  provide 
some  one  upon  •whom  process  may  be  served,  one  agent  will  do 
as  well  as  several,  especially  since,  under  the  service  of  process 
Act  of  July  9,  1901,  P.  L.  614,  writs  may  be  served  outside  of  the 
county  where  issued.  The  decisions  of  Wall  Paper  Company's 
Appeal,  15  Superior  Ct.  407,  and  Phoenix  Silk  Manufacturing  Co. 
vs.  Eeilly,  187  Pa.  526,  holding  that  there  must  be  an  agent  in 
each  office  where  business  is  transacted — the  failure  to  do  so 
making  void  contracts  entered  into  at  an  office  where  there  is 
no  such  agent — while  required  by  the  wording  of  the  former 
Act  impose  unnecessary  acts  on  the  corporation.  The  registered 
agent  is  for  service  of  process  and  not  transaction  of  business. 
As  provided  in  the  second  section,  more  than  one  agent  may 
be  designated,  but  not  more  than  one  agent  and  one  office  need 
be. 

(2).  The  requirement  that  the  charter  of  the  foreign  cor- 
poration showing  the  extent  of  its  powers  shall  be  recorded  at 
some  central  place  where  those  doing  business  with  it  in  the  State 
may  have  access  to  it  in  order  to  determine  the  extent  of  its 
powers,  assimilates  the  foreign  to  domestic  corporations.  The 
following  States  have  such  a  reqt. -rement :  Alabama,  Alaska, 
Arizona,  Arkansas,  California,  Colorado,  Connecticut,  Delaware, 
Hawaii,  Idaho,  Illinois,  Indiana,  Iowa,  Kansas,  Maryland,  Massa- 
chusetts, Michigan,  Minnesota,  Mis:issippi,  Missouri,  Montana, 
Nebraska,  Nevada,  New  Jersey,  New  Mexico,  New  York,  North 
Carolina,  North  Dakota,  Ohio,  Oklahoma,  Oregon,  South  Caro- 
lina, South  Dakota,  Tennessee,  Texas,  Utah,  Vermont,  Virginia, 
Washington,  West  Virginia,  Wisconsin,  Wyoming.  (42.) 


28 

Alaska,  Arizona,  Arkansas,  California,  Delaware,  Idaho,  Mon- 
tana, Nevada,  New  Mexico,  Utah,  Virginia,  West  Virginia,  Wy- 
oming- (13)  also  require  the  charter  to  be  recorded  at  the 
principal  place  of  business.  This  assimilates  the  foreign  still 
more  to  domestic  corporations,  and  is  convenient. 

(3).  This  is  stated  in  general  language  so  as  to  cover  special 
cases,  especially  corporations  irom  foreign  countries. 

(4).  This  is  laken  from  Section  2  of  the  Act  of  1874.  The 
corporation  is  required,  however,  to  state  only  its  principal 
office,  for  the  reasons  heretofore  given.  The  agents  may  be  more 
than  one,  so  that  the  contingencies  of  death,  removal,  etc.,  may 
be  provided  against  if  the  corporation  desires. 

The  requirement  that  the  certificate  be  preserved  for  public 
inspection  in  each  office,  contained  in  the  Act  of  1874,  has  been 
stricken  out.  This  was  useless,  as  tLe  object  was  service  of 
process  and  not  transaction  of  business,  and  the  decision  was 
that  the  certificate  might  be  kept  in  the  safe  and  need  not  be 
displayed.  McManus  Contracting  Co.  vs.  McFadden,  33  Superior 
Court,  355. 

(5).  This   is  taken   from   Section  3   of  the  Act  of   1874. 

(6).  Under  the  authority  of  Lasher  vs.  Stimsou,  145  Pa.  30, 
the  agent  of  a  non-registered  foreign  corporation  is  personally 
liable  on  the  contracts  made  for  it  on  the  ground  that  he  im- 
pliedly  warrants  his  authority,  and  can  have  no  authority 
where  he  is  not  officially  registered  as  the  agent.  This  has 
been  limited  to  cases  where  the  othr  party  did  not  know  he 
was  dealing  with  a  foreign  corporation.  Stoner  vs.  Phillipi, 
41  Superior  Court,  118.  The  distinction  is  difficult  to  draw 
from  the  reasoning  given  for  the  decision  in  Lasher  vs.  Stim- 
son,  and  as  the  corporation  cannot  set  up  its  own  failure  to 
register  to  avoid  its  contracts,  Swan  vs.  Insurance  Co.,  96  Pa. 
37,  the  principal  is  really  liable.  The  real  difficulty  is  to  have 
service  of  process  on  the  principal.  Where  service  can  be  ob- 
tained, however,  the  other  party  obtains  an  opportunity  to  sue 
the  very  person  with  whom  he  contracted,  and  a  rule  making 
the  agent  personally  liable  is  a  harsh  one,  giving  the  other 
party  more  than  he  bargained  for.  It  is,  however,  the  statu- 
tory rule  in  Utah ;  and  in  Idaho  and  Virginia  the  officers  are 
liable  with  the  agents  on  contracts  made  before  registration. 

But  this  liability  should  be  preserved  as  to  foreign  insurance 
companies.  The  public  does  not  deal  with  them  on  the  same 
footing-  of  equality,  and  the  agent  should  be  personally  liable 
if  he  assumes  to  deal  on  behalf  of  an  irresponsible  foreign 
company,  which  has  not  provided  for  our  citizens  the  security 
required  by  our  law. 

(7).  This  language  will  cover  failure  to  register  with  the 
Auditor  General  and  to  pay  bonus,  to  make  annual  reports  and 
to  pay  taxes  as  well  as  failure  to  register  under  the  present 
Act. 

(8).  As  the  law  aims  at  the  doing  of  business  within  the 
State,  both  the  making  and  the  performing  of  contracts  with- 
out being  registered  should  be  "doing  business"  and  this  word- 
ing makes  it  clear  that  both  are  included. 

The  law  previously  was  that  such  contracts  were  void.     This 


29 

was  not  because  of  any  express  provisions  in  the  Statute  of 
1874,  although  such  provisions  occur  in  other  States,  to-wit : 
Alabama,  Arizona,  Arkansas,  Florida,  Michigan,  Minnesota  (if 
suit  removed  to  Federal  Court),  Mississippi,  North  Dakota, 
Oklahoma,  South  Dakota  and  Wisconsin.  (11.)  It  was  the  re- 
sult of  judicial  construction  of  the  effect  of  making  the  viola- 
tion of  the  statute  a  misdemeanor.  Delaware  Kiver  Quarry, 
etc.  Co.  vs.  Bethlehem  &  Nazareth  Pass.  Ky.  Co.,  204  Pa.  22; 
Pittsburgh  Con.  Co.  vs.  West  Side  Belt  It.  R.  Co.,  154  Fed.  Eep.  929. 

The  same  conclusion  has  been  reached  in  other  States. 
Boulden  vs.  Organ  Co.  92  Ala.  182 ;  American  Ins.  Co.  vs.  Stoy,  41 
Mich.  385 ;  Gary-Lombard  Lumber  Co.  vs.  Thomas,  92  Tenn.  587. 

On  the  other  hand  certain  States,  (Connecticut,  Maine,  Mary- 
land and  Massachusetts),  expressly  provide  that  the  contract 
shall  not  be  void ;  and  other  States,  including  so  radical  a  State 
as  Kansas,  follow  the  doctrine  that  the  penalty  imposed  by  the 
statute  is  the  only  penalty  for  failure  to  register,  and  the  courts 
will  not  add  a  further  one. 

(9.)  The  denial  of  the  right  of  an  unregistered  foreign  cor- 
poration to  redress  in  the  State  Courts  is  very  common.  The 
following  States  deny  it  in  actions  founded  on  contract:  Ar- 
kansas, California,  Idaho,  Illinois,  Indiana,  Kansas,  Maine,  Mary- 
land, Massachusetts,  Michigan,  Minnesota,  Mississippi,  Missouri, 
Montana,  Nevada,  New  Jersey,  New  Mexico,  New  York,  North 
Carolina,  Ohio,  Oklahoma,  Oregon.  Ilhode  Island,  South  Dakota, 
Tennessee,  Texas  and  Vermont.  (27.) 

And  the  following  in  actions  of  tort :  Arkansas,  California, 
Illinois,  Indiana,  Kansas,  Maryland,  Massachusetts,  Michigan, 
Minnesota,  Missouri,  Nevada,  New  Jersey,  North  Carolina,  Okla- 
homa, Oregon,  South  Dakota,  Tennessee  and  Texas.  (18.)  Some 
States,  (among  others  Hawaii,  Iowa  and  Utah),  deny  to  such 
corporations  the  benefit  of  the  laws,  which  would  seem  to  deny 
access  to  the  State  Courts,  although  it  has  been  decided  to  the 
contrary,  Booth  vs.  Weigand,  30  Utah,  135.  In  New  York,  Okla- 
homa and  Texas,  among  other  States,  the  statute  requires  that 
the  corporation  be  registered  at  the  time  the  contract  is  made 
and  a  subsequent  registration  will  not  cure  the  defect.  The 
law  was  formerly  to  the  contrary.  Neuchatel  Asphalte  Co.  vs. 
N.  Y.,  155  N.  Y.  373.  The  weakness  of  this  provision  is  that 
it  does  not  prevent  a  suit  in  the  Federal  Courts  having  jurisdic- 
tion in  the  State,  Blodgett  vs.  Lanyon  Zinc  Co.,  120  Fed.  893. 
Or  in  the  Courts  of  another  State,  Allegheny  Co.  vs.  Allen,  69 
N.  J.  L.  270;  196  U.  S.  458.  If  the  contract  is  void  where  made, 
however,  no  suit  may  be  brought  on  it  in  another  State,  Alle- 
gheny Co.  vs.  Allen,  supra.  The  effective  provision  is  that  given 
here,  to  declare  the  contract  void  so  that  it  may  not  be  enforced 
anywhere  and  to  forbid  access  to  our  Courts  for  all  causes  of 
action. 

(10).  The  object  of  all  these  provisions,  however,  is  to  force 
the  foreign  corporation  to  comply  with  our  laws,  both  for  pur- 
poses of  taxation  and  to  bring  it  within  reach  of  the  process  of 
our  Courts.  Provisions  such  as  have  just  been  reviewed,  of 
course,  operate  very  powerfully  to  both  ends.  But  if  the  foreign 
corporation  had  not  complied  at  the  time  it  made  a  contract,  and 
there  is  no  way  of  curing  the  lapse,  there  is  no  incentive  to  the 


30 

corporation  to  pay  its  taxes,  and  the  result  is  not  to  benefit 
the  State  but  to  benefit  the  other  party  to  the  contract.  He 
may  take  the  fruits  of  it  and  not  pay  anything-,  and  this  results 
often  in  a  very  unjust  enrichment  of  him,  who  may  himself  be 
an  unregistered  foreign  corporation.  How  unjust  this  is  will  be 
seen  by  the  cases  cited  above.  In  the  Delaware  River  Quarry 
case  a  recovery  of  nearly  $30,000  for  work  done  by  a  construction 
company  was  refused,  and  in  the  West  Side  Belt  Railroad  Com- 
pany case  a  recovery  of  over  $325,000  was  denied  upon  a  claim 
so  far  meritorious  that  it  was  based  on  an  award  of  the  Railroad 
Company's  engineer  acting-  as  arbitrator.  By  the  provisions  of 
this  proposed  Act  the  failure  of  the  foreign  corporation  to  pro- 
vide an  agent  for  the  service  of  process  is  met  by  appointing  the 
Secretary  of  the  Commonwealth  such  agent.  The  best  way  to 
compel  the  payment  of  tax  would  be  to  impose  severe  penalties 
for  failure  to  do  so,  but  permit  relief  upon  full  compliance  with 
our  laws.  This  is  the  policy  of  the  Stamp  Acts  enacted  by  Con- 
gress. Documents  coming  within  their  provisions  which  were  not 
stamped  when  executed  might  be  stamped  on  paying  a  small  pen- 
alty. This  is  also  the  policy  of  the  Pennsylvania  Act  of  May  23, 
1907,  P.  L.  205,  which  validated  contracts  entered  into  by  unreg- 
istered foreign  corporations  upon  registering  and  paying  tax 
before  suit  was  brought.  By  its  provisions,  however,  it  was 
retroactive  only.  The  policy  it  indicates  should  be  made  per- 
manent. 

Your  Committee  feels  that  a  change  of  the  law  in  this  regard 
is  especially  important,  and  submits  herewith  a  draft  of  a 
separate  Act  (see  page  36)  to  accomplish  it,  which  should  be 
enacted  if  for  any  reason  the  general  foreign  corporation  law 
under  discussion  should  not  be  approved. 

(11).  The  necessity  of  this  provision  is  evidenced  by  such 
cases  as  St.  Clair  vs.  Cox,  106  U.  S.  350;  Goldey  vs.  Morning 
News,  156  U.  S.  518 ;  Mutual  Life  Insurance  Co.  vs.  Spratley, 
172  U.  S.  602 ;  Conley  vs.  Mathieson  Alkali  Works,  190  U.  S.  406 ; 
holding  that  it  is  necessary  to  jurisdiction  over  a  foreign  corpora- 
tion that  it  shall  be  doing  business  in  the  State  at  the  time 
suit  is  brought.  But  the  corporation  may  be  sued  with  its  assent 
though  it  is  not  doing  business,  and  the  validity  of  such  a  pro- 
vision as  in  this  proposed  Act  to  secure  such  assent  is  deter- 
mined by  such  cases  as  Hill  vs.  Empire  State  Etc.,  Company,  156 
Fed.  Rep.  797 ;  Home  Ben.  Soc.  vs.  Muehl,  109  Ky.  479 ;  Germania 
Ins.  Co.  vs.  Ashby,  112  Ky.  303;  Groel  vs.  United  EL  Co.  69  N. 
J.  Eq.  397;  Mutual  Reserve  etc.,  Assn.  vs.  Phelps,  190  U.  S.  147. 
It  is  practically  the  law  at  the  present  time  with  regard  to  in- 
surance companies.  Act  of  April  4,  1873,  P.  L.  27. 

(12).  The  Act  ol  1874  contains  no  provision  for  a  substitution 
of  an  agent  in  case  the  one  appointed  be,  for  any  reason,  dis- 
qualified.    The  service  of  process  Act  of  April  3,  1903,  P.  L.  139, 
Eermits  service  of  process  by  leaving  at  the  place  of  business 
f  the  agent  is  not  there   during  business  hours.     It  has  been 
decided  that  if  the  registered  agent  leaves  the  employ  of  the 
corporation  as  its  commercial  agent,  and  is  not  found  at  the 
place  of  business,  the   corporation  nevertheless  maintains  him 
as  its  registered  agent  and  complies  with  the  law  so  long  as  his 


31 

authority  as  registered  agent  is  not  revoked.  De  La  Vergne 
Refrigerator  Co.  vs.  Kolischer,  214  Pa.  400.  But  the  agent  may 
die,  or  he  may  want  to  sue  himself,  and  if  no  provision  for  com- 
pulsory substitution  is  made  the  object  of  the  law  will  be  de- 
feated. 

(13).  So,  also,  if  the  corporation  shall  cease  to  maintain  the 
office  designated  process  cannot  be  served  by  leaving,  or  should 
not  properly  be  so  served. 

(14).  Equally  important  is  a  provision  by  which  corporations 
which  never  comply  with  our  laws  and  yet  do  business  with  us 
may  be  subjected  to  the  process  of  our  Courts. 

(15).  Accordingly  it  is  provided  automatically  in  such  cases 
that  a  public  official  shall  be  the  agent.  A  similar  provision  is 
found  in  a  great  many  of  the  States. 

In  some  the  Secretary  of  State  is  designated  as  agent  for 
service  of  process  if  the  designated  agent  die  or  remove  only: — 
Alabama,  Arkansas,  Idaho,  Michigan,  New  Jersey,  New  Mexico, 
Ohio,  Oklahoma,  Oregon,  Vermont,  Washington.  (11.) 

In  others  the  Secretary  of  State  is  the  agent,  but  the  party 
may  serve  any  other  agent  at  his  option.  This  is  the  present 
law  of  Pennsylvania  with  regard  to  insurance  companies.  Act 
of  April  4,  1873,  Sec.  13  P.  L.  27.  So  in  Arkansas,  Kansas,  Maine 
Massachusetts,  Nebraska,  Pennsylvania  (ins.)  and  West  Vir- 
ginia. (7.) 

In  others  the  Secretary  of  State  is  the  only  agent  for  service 
of  process  on  foreign  corporations  and  no  other  agent  may  be 
served: — Connecticut,  Delaware,  District  of  Columbia  (fraternal 
ins.)  Kentucky  (ins.)  Minnesota  (ins.)  North  Dakota  and  Wis- 
consin. (7.) 

In  others  the  Secretary  of  State  is  the  agent  if  no  appointment 
be  made  by  the  corporation : — Arkansas,  California,  Idaho, 
Louisiana,  Nevada,  North  Carolina,  Oklahoma,  Oregon  and 
Washington.  (9.) 

It  seems  wise  to  permit  the  corporation  to  designate  its  own 
agent  so  that  notice  may  be  more  surely  brought  to  it,  but  it  is 
best  to  provide  very  fully  for  cases  in  which  the  corporation 
fails  to  comply  with  our  law  or  to  maintain  its  compliance. 

The  validity  of  the  provision  is  attested  by  the  case  of  Old 
Wayne  Mutual  Life  Association  vs.  McDonough,  204  U.  S.  8. 

This  sentence  should  be  read  in  connection  with  Section  5 
and  would  only  authorize  such  service  in  suits  growing  out  of 
business  done  within  the  State.  Such  service  in  other  suits 
would  be  invalid,  as  the  McDonough  case  decides.  The  statute 
usually  requires  the  corporation  to  file  a  power  of  attorney 
designating  the  State  officer  as  its  agent.  Of  that  character 
is  the  Pennsylvania  law  as  to  insurance.  It  has  been  decided 
that  on  failure  to  file  the  power  of  attorney  the  State  officer 
nevertheless  becomes  agent  for  service  of  process.  McCullagh 
vs.  Eailway  Mail  Assn.  33  Pa.  C.  C.  529;  Diamond  Plate  Glass 
Co.  vs.  Minn.  M.  F.  I.  Co.,  55  Fed.  27;  Ehrman  vs.  Ins.  Co.,  1 
Fed.  471 ;  Berry  vs.  Indemnity  Co.  46  Fed.  439 ;  Knapp  vs.  Natl. 
M.  F.  I.  Co.  30  Fed.  607 ;  Lathrop  Co.  vs.  Interior  Etc.  Co.,  150  Fed. 
666.  It  seems  simpler  to  make  the  designation  of  agent  au- 
tomatic. 


32 

It  will  be  convenient  at  times  to  serve  the  Deputy,  which 
must,  however,  be  specially  authorized.  Reynolds  vs.  Hepf  asophs, 
9  Dist.  Kep.  622;  McCann  vs.  Old  Wayne  Etc.  Co.  10  J)ist. 
Eep.  560. 

(16).  The  necessity  of  designating  some  known  person  as 
agent  is  that  there  may  be  somebody  within  the  Sate  upon  whom 
the  process  of  the  Courts  can  be  served.  Such  process  does  not 
run  beyond  the  borders  of  the  State,  and  the  Courts  have  no 
jurisdiction  upon  such  service.  While  this  satisfies  the  technical 
requirement  of  the  law,  it  is  really  a  fiction,  and  justice  is 
better  served  by  actual  notice  outside  of  the  State  than  by  con- 
structive notice  in  it.  Therefore,  to  do  justice  and  bring  actual 
notice  to  the  corporation,  service  is  required  also  to  be  made 
outside  of  the  State.  The  usual  provision  of  the  State  Statutes 
is  that  the  Secretary  of  State  or  State  Auditor  or  Clerk  of 
Court  shall  mail  a  copy  of  the  process  to  the  office  of  the  cor- 
poration. These  States  are  Alabama,  Arkansas,  Connecticut, 
Delaware,  (ins.)  Idaho,  Kansas,  Kentucky,  (ins.)  Maine,  Massa- 
chusetts, Michigan,  Nebraska,  New  Jersey,  New  Mexico,  North 
Dakota,  Oregon,  West  Virginia,  and  Wisconsin.  (17.) 

Michigan  requires  the  plaintiff  himself  to  give  mail  notice. 
Other  States  require  nothing  to  be  done  after  serving  the  State 
official.  Mailing  of  notice,  however,  is  not  as  accurate  as  actual 
service,  and  most  of  the  statutes  fail  to  provide  for  a  case  in 
which  the  location  of  the  company's  office  is  not  known  to  the 
State  official,  and  a  still  more  difficult  case  where  the  company 
may  have  no  office.  It  seems  better  to  provide,  as  Maryland 
does,  that  there  shall  be  actual  service,  and  that  this  may  be 
made  as  though  the  corporation  was  in  the  State,  so  that  service 
may  be  made  on  an  officer  of  the  company  or  at  the  company's 
office  as  shall  be  most  convenient. 

(17).  Sufficient  time  should  be  allowed  after  this  actual  notice 
for  the  corporation  to  interpose  a  defense  if  it  has  any.  The 
object  is  not  to  catch  the  foreign  corporation  napping  but  to 
bring  it  within  the  jurisdiction  of  our  Courts.  Michigan  and 
Mississippi  require  thirty  days'  notice,  and  Oregon  forty  days. 

(18).  If  we  permit  foreign  corporations  freely  to  do  business 
in  this  State,  we  should  permit  laem  to  own  the  necessary  real 
estate  and  not  drive  them  to  subterfuges  such  as  domestic  hold- 
ing companies  and  trusteeships.  The  Act  of  April  26,  1855,  P.  L. 
329,  forbade  foreign  corporations  to  hold  real  estate  and  pro- 
vided for  its  escheat  to  the  State.  This  disability,  however,  can 
be  taken  advantage  of  by  the  State  only,  taking  proceedings  to 
escheat;  Leazure  vs.  Hillegas,  7  S.  &  R.  313,  and  in  practice  such 
proceedings  are  not  taken  by  the  Commonwealth.  The  only 
reported  instance  is  Commonwealth  vs.  New  York,  Lake  Erie  and 
Western  R.  R.  Co.,  132  Pa.  591,  overruling  the  same  case  114  Pa. 
340,  which  failed.  Exceptions  have  been  created,  until  in 
practice  they  are  nearly  as  important  as  the  principal  law. 
Foreign  corporations  may  purchase  at  judicial  sales  to  protect 
liens,  Act  of  May  23,  1887,  P.  L.  176.  ttpecial  classes  of  foreign 
corporations  have  been  permitted  to  hold  real  estate :  Insurance 
companies,  Act  of  June  1,  1881,  P.  L.  38 ;  river  transportation 
companies,  Act  of  May  25,  1887,  P.  L.  35 ;  ferry  and  bridge 


33 

companies,  Act  of  May  25,  1887,  P.  L.  269 ;  corporations  for  manu- 
facturing iron,  steel,  paper,  wood-pulp,  chemical  fibre,  glass, 
lumber,  wood,  cotton,  velvet  or  other  fabrics,  for  the  dyeing, 
etc.,  of  cotton  and  other  fabrics,  for  the  manufacture  of  cer- 
tain chemicals,  wood  extracts,  tanning  extracts,  for  the  manu- 
facture of  wall  paper,  etc.,  brick,  etc.,  Act  of  April  27,  1909,  P.  L. 
173,  which  is  the  final  amendment  of  a  long  series  oi  Acts  of 
1881,  1885,  1887,  1891  and  1893,  for  the  quarrying  of  slate,  granite 
and  other  rocks,  the  bottling  of  mineral  spring  water,  the  manu- 
facture of  ice,  the  manufacture  of  chemicals,  foodstuffs  and 
cement,  Act  of  May  28,  1907,  P.  L.  266,  which  was  a  final 
amendment  of  a  series  of  Acts  enacted  in  1881,  1893  and  1901 ; 
religious  publication  societies,  Act  of  June  24,  1895,  P.  L.  238. 

The  provisions  of  these  Acts  have  all  been  collected  in  one 
statute  of  which  a  draft  is  presented  herewith.  Owing  to  con- 
fusion in  the  various  enactments  as  explained  in  a  note  to  that 
draft  it  may  be  desirable  to  re-enact  these  statutes  in  case 
the  provision  now  suggested  is  not  approved. 

The  Legislature  has  also,  by  the  Act  of  June  24,  1895,  P.  L. 
2G4,  validated  all  conveyances  made  by  such  foreign  corporations 
before  proceedings  are  begun  by  the  State.  This  Act  applies 
to  future  as  well  as  past  cases,  and  therefore  makes  unnecessary 
the  very  numerous  retroactive  validating  Acts  which  have  been 
passed  by  the  Legislatures  of  1861,  1S69,  1876,  1878,  1881,  1887, 
1891,  1897,  1903,  1907  and  1909. 

The  laws  of  the  following  States  permit  foreign  corporations 
complying  with  the  laws  to  hold  real  estate : — Arizona,  Arkansas, 
Connecticut,  Hawaii,  Idaho,  Illinois,  Indiana,  Iowa,  (qualified) 
Massachusetts,  Minnesota,  Missouri,  Nebraska,  (railroad  and 
mfg.  and  in  cities)  Nevada,  New  Mexico,  New  Hampshire,  (mfg.) 
New  Jersey,  New  York,  North  Carolina,  North  Dakota,  Oklahoma, 
Oregon,  South  Carolina,  (less  than  500  acres)  South  Dakota, 
Tennessee,  Texas,  Virginia,  (Mfg.  lim.)  Washington,  West 
Virginia,  Wisconsin,  (less  than  320  acres).  (30.) 

Besides  Pennsylvania  only  Nebraska  makes  prohibition  the 
rule  and  permission  the  exception,  and  there  the  exception  is 
a  large  one  applying  to  railroad  and  all  manufacturing  corpora- 
tions and  the  holding  of  real  estate  in  towns.  It  is  evidently 
aimed  at  farm  land  companies.  Georgia  fixed  a  maximum  of 
5,000  acres.  The  Act  of  Congress  in  force  in  the  District  of 
Columbia  and  in  the  former  territories  of  New  Mexico  and  Okla- 
homa forbids  the  holding  of  real  estate  by  corporations  where 
more  than  20  per  cent,  of  the  stock  is  owned  by  aliens.  This  is 
also  a  statutory  provision  in  Wisconsin. 

The  limit  fixed  in  this  Act  is  that  imposed  upon  domestic 
corporations  of  the  same  kind. 

(19).  This  is  the  present  law:  Leazure  vs.  Hillegas,  7  S.  &  R. 
313.  It  seems  wise  to  make  the  provision  iii  order  that  a  con- 
trary construction  may  not  prevail. 

(20).  This  continues  the  policy  of  the  present  Act  of  June 
24th,  1895,  P.  L.  264,  which,  however,  is  not  expressly  repealed. 

(21).  If  this  is  to  be  the  policy  of  the  State  for  the  future, 
it  should  also  be  for  the  past,  and  it  is  in  line  with  the  numer- 
ous validating  Acts  alreadjr  referred  to. 

3 


34 

(22).  The  present  rule  is  that  the  burden  is  on  the  foreign 
corporation  to  show  that  it  has  complied  with  the  law,  and  is 
lawfully  doing  business  in  the  Commonwealth,  in  all  cases.  As 
such  proof  in  most  cases  will  be  a  formal  matter,  it  tends  to 
expedition  and  the  avoidance  of  technicality,  that  a  special  issue 
should  be  made  of  failure  to  comply,  and  it  is  in  harmony  with 
the  Act  of  June  24,  1885,  P.  L.  149,  requiring  an  issue  as  to  tne 
existence  of  a  corporation  to  be  specially  tendered. 

But  the  burden  of  proof  should  be  on  the  person  having  the 
affirmative  of  the  issue. 

(23).  Under  the  rule  of  Madden  vs.  Electric  Light  Co.,  181 
Pa.  617,  and  199  Pa.  454;  McCloskey  vs.  Snowden,  212  Pa.  249, 
the  Courts  of  one  State  will  not  hear  causes  involving-  the  in- 
ternal management  of  corporations  of  another  State.  This  is 
because  it  involves  dealing  with  the  laws  of  another  State,  be- 
cause the  decree  would  only  take  effect  in  this  State  and  there 
would  exist  the  anomaly  of  one  result  in  one  State  where  the 
corporation  operated  and  another  result  in  another  State,  and 
also  because  the  enforcement  of  the  decree  would  be  difficult. 
This  applies  to  corporate  elections,  the  compelling  transfer  of 
stock  by  mandamus,  improper  conduct  of  officers,  and  kindred 
matters.  But  where  a  corporation  is  merely  incorporated 
abroad,  and  comes  into  this  State  to  do  its  principal  business, 
so  that  its  officers  and  stockholders  and  books  are  all  here, 
convenience  and  justice  to  our  citizens  would  lead  us  to  grant 
relief  in  our  courts,  and  not  drive  a  citizen  to  what  is  but  the 
nominal  home  of  the  corporation  which  may  be  on  the  other 
side  of  the  Continent,  'me  practical  difficulties  are  not  insuper- 
able, and  if  in  a  particular  case  they  become  so,  the  Act,  by  its 
express  provisions,  will  not  apply. 

(24).  Provisions  are  found  in  the  statutes  of  many  States  to 
keep,  foreign  corporations  out  of  the  Federal  Courts.  These 
States  are  Alabama,  Indiana,  Kentucky,  Louisiana,  Oklahoma, 
Oregon,  South  Carolina  and  Wisconsin.  (8.) 

A  State  statute  cannot  oust  the  Federal  Court  from  jurisdiction 
of  a  particular  case  nor  can  it  make  the  exercise  of  this  right 
a  penal  offense.  Insurance  Co.  vs.  Morse,  20  Wallace  445.  But 
as  the  State  may  exclude  foreign  corporations  at  will,  it  may 
exclude  them  for  invalid  reasons,  and  a  statute  revoking  the 
corporation's  license  to  do  business  because  it  exercised  its  right 
of  removal  is  valid.  Doyle  vs.  Continental  Ins.  Co.,  94  U.  S.  535; 
Security  Mutual  Etc.  Co.  vs.  Prewitt,  202  U.  S.  246.  Following 
the  policy  of  permitting  bona  fide  foreign  corporations  full  privi- 
leges under  our  laws,  but  encouraging  corporations  that  really 
intend  to  do  business  here  to  incorporate  under  our  laws  rather 
than  the  laws  of  other  States,  the  restriction  is  only  imposed 
on  the  latter  class  of  corporations. 

(25).  While  other  statutes  do  not  require  proceedings  in 
Court,  it  seems  fairer  to  do  this  and  notice  and  hearing  is  then 
provided  for. 

(26).  This  definition  so  far  as  applies  to  the  word  "corpora- 
tion" is  in  part  taken  from  the  Constitution  of  Pennsylvania, 
Article  16,  Section  13,  with  the  addition  of  some  words  to  refer 
to  particular  classes  of  quasi  corporations. 


35 

Complaint  was  made  to  your  Committee  of  the  difficulty  of 
determining  whom  to  sue  in  the  case  of  certain  foreign  partner- 
ships operating  under  a  system  of  quasi  incorporation  unknown 
to  our  laws.  Certain  express  companies  are  of  this  character. 
These,  however,  are  such  special  cases  that  it  is  difficult  to  pro- 
vide for  them  by  any  more  general  words  than  are  here  used. 

(27).  The  retroactive  feature  of  this  Act  may  be  valid  under 
the  decision  of  St.  Mary's  Petroleum  Co.  vs.  W.  Va.,  203  U.  S. 
183,  in  consequence  of  the  reserved  power  of  the  State  to  alter 
charters.  Uniformity  is  so  desirable  that  the  attempt  should  be 
made  to  apply  this  Act  to  all. 

(28).  This  section  is  so  worded  that  Acts  applying  to  service 
of  process  on  foreign  insurance  companies,  such  as  the  Act  of 
April  4,  1873,  P.  L.  27,  foreign  mutual  benefit  societies  and  other 
kindred  special  laws  shall  be  superseded,  and  the  same  pro- 
cedure applied  to  all  foreign  corporations.  This  is  advisable 
unless  there  is  a  reason  for  special  procedure  with  regard  to  a 
particular  class  of  corporations,  and  this  is  not  the  case  as  to  the 
matters  covered  by  this  Act. 

(29).  The  repealing  clause  is  also  made  special.  There  have 
been  omitted,  however,  the  various  acts  validating  conveyances 
of  real  estate  made  by  foreign  corporations  which  were  forbidden 
to  hold  real  estate.  While  the  subject  matter  of  these  Acts  is 
covered  by  the  present  Act,  yet  as  they  are  muniments  of  title, 
it  will  be  less  disturbing  to  have  them  remain  on  the  statute 
books. 

(30).  The  subject  of  the  domestication  of  foreign  corporations 
as  covered  by  the  Act  of  June  9,  1881,  P.  L.  89,  has  not  been  cov- 
ered in  this  Act,  because  it  is  so  intimately  connected  with  what 
should  be  required  of  domestic  corporations  that  it  seems  inad- 
visable to  recast  the  law  at  all  until  the  subject  of  domestic 
corporations  is  covered.  The  object  should  be  to  make  the  for- 
eign corporation  comply  with  the  same  provisions  as  a  domestic 
corporation. 

The  policy  of  requiring  foreign  corporations  to  give  bail  on 
appeal  and  security  for  costs  has  not  been  altered,  as  the  pro- 
tection of  our  citizens  requires  it.  The  same  consideration 
applies  to  foreign  attachment,  in  addition  to  the  tendency  to 
discourage  thereby  the  practice  of  going  abroad  to  incorporate. 

Some  States  require  an  investigation  of  the  financial  standing 
of  foreign  corporations  by  the  officer  receiving  the  registration 
and  the  refusal  of  registry  to  those  which  are  irresponsible 
and  suggestions  were  made  to  your  Committee  that  it  be  adopt- 
ed by  Pennsylvania.  This  is  impracticable  in  a  State  so  laige 
as  ours.  It  might  lead  to  abuses,  and  seems  premature  until 
we  so  supervise  o'.ir  own  corporations.  For  purposes  of  taxation 
reports  of  considerable  fi illness  as  to  their  assets,  etc.,  are  now 
made. 


AN  ACT  VALIDATING  UNDER  CERTAIN  CONDITIONS  CONTRACTS  MADE 
BY  FOREIGN  CORPORATIONS  WHICH  SHALL  HAVE  DONE  OR  SHALL 
DO  ANY  BUSINESS  WITHIN  THIS  COMMONWEALTH  WITHOUT  FIRST 
HAVING  COMPLIED  WITH  THE  LAWS  RELATING  TO  FOREIGN  COR- 
PORATIONS. 

SECT.  1.  Be  it  enacted,  etc.,  that  whenever  any  foreign  corpora- 
tion shall  have  done  or  shall  do  any  business  within  this  Com- 
monwealth, without  first  having  complied  with  the  laws  of  this 
Commonwealth  relating  to  foreign  corporations,  all  contracts 
entered  into  in  the  course  of  such  doing1  of  business  shall  be 
binding  upon  the  parties  thereto,  and  such  corporation  may  en- 
force the  same  in  the  Courts  of  this  Commonwealth  or  any  other 
Court  having  jurisdiction:  Provided,  that  prior  to  commencing 
a  suit  upon  such  contract,  the  said  corporation  shall  have 
complied  with  the  laws  of  this  Commonwealth  relating  to  foreign 
corporations :  and,  Provided  further,  that  prior  to  commencing 
such  suit  accounts  for  bonus  on  capital  stock  and  all  State  taxes 
for  each  year  that  it  shall  have  done  business  in  this  Common- 
wealth shall  have  been  settled  against  such  corporation  in  the 
manner  required  by  law,  and  paid  by  it,  together  with  such 
interest  and  penalties  thereon  as  shall  be  shown  by  such 
accounts. 


NOTE. 

This  Act  makes  permanent  the  policy  of  the  State  indi- 
cated by  the  Act  of  May  23,  1907,  P.  L.  205.  which  was  retro- 
active only;  and  also  the  Act  of  May  11,  1901,  P.  L.  172.  It  ap- 
plies to  a  failure  to  register  with  the  Auditor  General  as  well 
as  the  Secretary  of  the  Commonwealth,  the  principle  applicable 
being  the  same.  The  considerations  in  its  favor  are  given  in 
connection  with  a  similar  section  in  the  general  foreign  corpora- 
tion law  recommended  by  your  Committee  (Section  4).  The 
passage  of  this  Act,  in  addition  to  the  general  Act,  is  necessary 
in  order  to  provide  for  cases  arising  under  the  laws  now  in 
existence. 


AN  ACT  AUTHORIZING  FOREIGN  CORPORATIONS,  THAT  IS  TO  SAY,  COR- 
PORATIONS, JOINT  STOCK  COMPANIES.  PARTNERSHIPS  LIMITED, 
PARTNERSHIP  ASSOCIATIONS  AND  ALL  ASSOCIATIONS  HAVING  ANY 
OF  THE  POWERS  OR  PRIVILEGES  OF  CORPORATIONS  NOT  POSSESSED 
BY  INDIVIDUALS  OR  PARTNERSHIPS,  ORGANIZED  UNDER  ANY  LAWS 
OTHER  THAN  THOSE  OF  THIS  COMMONWEALTH.  FOR  CERTAIN 


37 

PURPOSES,  TO  OWN  REAL,  ESTATE  IN  THIS  COMMONWEALTH  NECES- 
SARY FOR  THEIR  CORPORATE  PURPOSES  UNDER  CERTAIN  CONDITIONS, 
AND  VALIDATING  SUCH  OWNERSHIP  NOW  OR  HERETOFORE  EXISTING. 

SECT.  1.  Be  it  enacted,  etc.,  that  it  shall  be  lawful  for  any 
foreign  corporation  organized  for  any  one  of  the  purposes  set 
forth  in  Section  2  of  this  Act,  upon  complying  with  all  the  laws 
of  this  Commonwealth,  to  take,  have  and  hold  real  estate  in  this 
Commonwealth  to  an  amount  necessary  and  proper  for  corporate 
purposes,  and  to  erect  and  maintain  buildings  thereon,  and  to 
mortgage,  lease  or  convey  the  same  or  any  part  thereof  and 
otherwise  deal  with  the  same  as  fully  as  any  corporation  organiz- 
ed under  the  general  laws  of  this  Commonwealth  for  the  same 
purpose,  but  not  to  any  greater  amount  or  of  any  greater  income 
or  value. 

SECT.  2.  The  purposes  referred  to  in  Section*  1  of  this  Act 
are  as  follows:  carrying  on  the  business  of  insurance  (1),  for 
the  manufacture  of  any  form  of  iron,  steel  or  glass  (2),  or  for 
the  conversion,  dyeing  and  cleansing  of  cotton  and  other  fabrics 
(3),  for  the  manufacture  of  any  form  of  lumber  or  wood  or  of 
pyroligneous  acids,  acetate  of  lime  and  charcoal  by  the  process 
of  destructive  distillation,  or  the  preparation  of  cattle  hair  for 
for  use  (4),  or  for  the  establishment,  maintenance  and  continu- 
ance of  a  ferry,  or  for  the  maintenance  and  continuance  of  a 
bridge  between  this  State  and  any  other  State,  upon  or  over  any 
river  flowing  between  said  States  (5),  or  for  the  transportation 
of  passengers  and  freight  by  steamboats  or  other  vessels,  upon 
or  over  any  river  or  waters,  between  this  State  and  any  other 
State  (6),  or  for  the  manufacture  of  cotton  or  velvet,  or  other 
fabrics,  or  for  the  manufacture  of  carbon  dioxide  and  magnesia 
and  the  products  thereof  and  compositions,  articles  and  ap- 
paratus from  and  in  connection  therewith,  or  for  the  manu- 
facture of  extracts  out  of  wood,  bark,  leaves  and  roots,  or  any 
other  extract  for  tanning,  cleansing,  dyeing,  or  other  purposes 
(7),  or  for  the  manufacture  or  printing  of  wall-paper,  litho- 
graphs or  prints,  and  mining  and  manufacture  of  any  clay  into 
brick,  tile  aud  various  other  articles  and  products  produced  from 
clay,  and  from  clay  and  other  substances  mixed  therewith  (8), 
or  for  the  quarrying  of  slate,  granite,  stone  or  rocks  of  any 
kind,  or  for  dressing,  polishing  or  manufacturing  the  same,  or 
any  of  them,  or  for  any  mineral  spring*  company  incorporated 
for  the  purpose  of  bottling  and  selling  natural  mineral  spring 
water  (9),  or  for  the  publication  and  sale  of  books,  tracts,  news- 
papers, periodicals  and  such  other  business  as  is  commonly  con- 
nected with  publishing  and  book  selling,  the  net  profits  of 


38 

which  are  by  its  charter  or  governing  body  required  to  be  ap- 
plied to  religious  and  charitable  uses  (10),  or  for  any  company 
incorporated  for  the  purpose  of  manufacturing,  supplying  or 
sale  of  ice  (11),  or  for  the  manufacture  of  cement  rock  or  for 
the  manufacture  and  sale  of  chemicals,  or  the  manufacture  and 
sale  of  foodstuffs  and  eatables,  cement  and  cement  products, 
and  the  quarrying  of  cement  rock  (12),  or  for  the  manufacture 
of  any  form  of  paper,  wood-pulp,  chemical  fibre  (13). 

SECT.  3.  The  said  corporations  shall  be  taxable  in  like  man- 
ner as  other  foreign  corporations  and  shall  make  like  returns 
to  the  Auditor  General,  and  the  said  real  estate  shall  be  taxable 
as  other  real  estate. 

SECT.  4.  The  title  to  any  real  estate  in  this  Commonwealth 
now  or  heretofore  or  hereafter  held  by,  or  in  trust  for,  any 
such  foreign  corporation  is,  upon  complying  with  all  the  laws 
of  this  Commonwealth  relating  to  foreign  corporations  hereby 
confirmed  to  the  same  effect  as  if  the  said  real  estate  had  been 
purchased,  held  or  owned  under  the  provisions  of  this  Act. 

SECT.  5.  The  term  "foreign  corporation"  as  used  in  this  Act 
means  every  corporation,  joint  stock  company,  partnership  lim- 
ited, partnership  association,  and  every  association  having  any 
of  the  powers  or  privileges  of  corporations  not  possessed  by 
individuals  or  partnerships,  organized  under  any  laws  other 
than  those  of  this  Commonwealth. 

SECT.  6.  The  following  Acts  be  and  the  same  are  hereby  re- 
pealed, but  no  rights  heretofore  acquired  thereunder  shall  be 
affected  by  such  repeal. 

(1).  An  Act  entitled  "An  Act  To  enable  foreign  insurance 
corporations  and  joint  stock  companies  to  hold  real  estate  in 
this  Commonwealth."  Approved  the  1st  day  of  June,  A.  D.  1881. 
(P.  L.  38.) 

(2).  An  Act  entitled  "An  Act  Authorizing  companies,  incor- 
porated under  the  laws  of  any  other  State  of  the  United  States 
for  the  manufacture  of  any  form  of  iron,  steel  or  glass,  to  erect 
and  maintain  building  and  manufacturing  establishments,  and 
to  take,  have  and  hold  real  estate  necessary  and  proper  for  manu- 
facturing purposes."  Approved  the  9th  day  of  June,  A.  D.  1881. 
(P.  L.  89.) 

(3).  An  Act  entitled  "A  Supplement  To  an  Act,  entitled  'An 
Act  authorizing  companies,  incorporated  under  the  laws  of  any 
other  State  of  the  United  States,  for  the  manufacture  of  any 
form  of  iron,  steel  or  glass,  to  erect  and  maintain  buildings 
and  manufacturing  establishments,  and  to  take,  have  and  hold 


39 

real  estate  necessary  and  proper  for  manufacturing-  purposes,' 
approved  the  ninth  day  of  June,  one  thousand  eight  hundred  and 
eighty-one,  authorizing  companies,  incorporated  under  the  laws 
of  any  other  State  of  the  United  States,  for  the  conversion, 
dyeing  and  cleansing  of  cotton,  and  other  fabrics,  to  erect  and 
maintain  buildings  for  such  manufacturing  purposes,  and  for 
offices  and  salesrooms,  or  either,  and  to  take,  have  and  hold  real 
estate  necessary  and  proper  for  such  purposes."  Approved  the 
25th  day  of  June,  A.  D.  1885.  (P.  L.  179.) 

(4).  An  Act  entitled  "A  Supplement  To  an  Act,  entitled  'A 
supplement  to  an  Act  auuiorizing  companies,  incorporated  under 
the  laws  of  any  otlier  State  of  the  United  States,  for  the  manu- 
facture of  any  form  of  iron,  steel  or  glass,  to  erect  and  maintain 
buildings  and  manufacturing  establishments,  and  to  take,  have 
and  hold  real  estate  necessary  and  proper  for  manufacturing 
purposes,'  approved  the  ninth  day  of  June,  one  thousand  eight 
hundred  and  eighty-one,  authorizing  companies,  incorporated 
under  the  laws  of  any  other  State  of  the  United  States,  for  the 
conversion,  dyeing  and  cleansing  of  cotton,  and  other  fabrics, 
to  erect  and  maintain  buildings  for  such  manufacturing  pur- 
poses, and  for  offices  and  salesrooms,  or  either,  and  to  take,  have 
and  hold  real  estate  necessary  and  proper  for  such  purposes,' 
approved  the  twenty-fifth  day  of  June,  Anno  Domini  one  thou- 
sand eight  hundred  and  eighty-five,  conferring  similar  powers 
upon  companies,  incorporated  under  the  laws  of  any  other  State 
of  the  United  States  for  the  manufacture  of  lumber  and  wood 
products,  and  pyroligneous  acids,  acetate  of  lime  and  charcoal, 
by  the  process  of  destructive  distillation,  or  the  preparation  of 
cattle  hair  for  use."  Approved  the  28th  day  of  April,  A.  D.  1887. 
(P.  L.  77.) 

(5).  An  Act  entitled  "An  Act  authorizing  companies  incor- 
porated under  the  laws  of  any  other  State  of  the  United  States 
for  the  establishment,  maintenance  and  continuance  of  a  ferry 
or  for  the  maintenance  and  continuance  of  a  bridge,  between 
this  State  and  any  other  State,  upon  or  over  any  river  flowing 
between  said  States,  to  erect  and  maintain  piers  and  certain 
other  buildings  and  structures,  to  hold  real  estate  in  this  State 
and  to  mortgage,  lease  or  convey  the  same."  Approved  the  6th 
day  of  June,  A.  D.  1887.  (P.  L.  352.) 

(6).  An  Act  entitled  "An  Act  authorizing  companies  incor- 
porated under  the  laws  of  any  other  State  of  the  United  States, 
for  the  transportation  of  passengers  and  freight  by  steamboats 
or  other  vessels,  on  rivers  or  other  waters  between  this  State 
and  any  other  State,  to  hold  real  estate  in  this  State,  and  to 


40 

lease,  mortgage  and  convey  the  same."     Approved  the  17th  clay 
of  April,   A.  D.   1889.     (P.  L.  35.) 

(7).  An  Act  entitled  "A  Supplement  to  an  Act,  entitled  'A 
supplement  to  an  Act  authorizing  companies  incorporated  under 
the  laws  of  any  other  State  of  the  United  States  for  the  manu- 
facture of  any  form  of  iron,  steel  or  glass,  to  erect  and  maintain 
building's  and  manufacturing  establishments,  and  to  take,  have 
and  hold  real  estate  necessary  and  proper  for  manufacturing 
purposes,  approved  the  ninth  day  of  June,  one  thousand  eight 
hundred  and  eighty-one,  authorizing  companies  incorporated  un- 
der the  laws  of  any  other  State  of  the  United  States,  for  the 
conversion,  dyeing  and  cleansing  of  cotton  and  other  fabrics, 
to  erect  and  maintain  buildings  for  such  manufacturing  pur- 
poses, and  for  offices  and  salesrooms  or  either,  and  to  take,  have 
and  hold  real  estate  necessary  and  proper  for  such  purposes, 
approved  the  twenty-fifth  day  of  June,  Anno  Domini  one  thou- 
sand eight  hundred  and  eighty-five,  conferring  similar  powers 
upon  companies  incorporated  under  the  laws  of  any  other  State 
of  the  United  States  for  the  manufacture  of  lumber  and  wood 
products  and  pyroligneous  acids,  acetate  of  lime  and  charcoal, 
by  the  process  of  destructive  distillation  or  the  preparation  of 
cattle  hair  for  use,'  approved  the  twenty-eighth  day  of  April, 
one  thousand  eight  hundred  and  eighty-seven,  conferring  similar 
power  upon  companies  incorporated  under  the  laws  of  any  other 
State  of  the  United  States,  for  the  manufacture  of  carbon  dioxide 
and  magnesia  and  the  products  thereof,  and  compositions,  ar- 
ticles and  apparatus  from  and  in  connection  therewith, 
and  for  the  manufacture  of  cotton,  velvet,  and  other  fab- 
rics, and  for  the  manufacture  of  extracts  out  of  wood,  bark, 
leaves  and  roots,  or  any  other  extracts  for  tanning,  cleansing, 
dyeing  or  other  purposes."  Approved  the  30th  day  of  April,  A. 
D.  1891.  (P.  L.  39.) 

(8).  An  Act  entitled,  "A  Supplement  To  a  supplement  to  an 
Act,  entitled  'A  supplement  to  an  Act  authorizing  companies 
incorporated  under  the  laws  of  any  other  State  of  the  United 
States  for  the  manufacture  of  any  form  of  iron,  steel  or  glass  to 
erect  and  maintain  buildings  and  manufacturing  establishments, 
and  to  take,  have  and  hold  real  estate  necessary  and  proper  for 
manufacture  purposes,'  approved  the  ninth  day  of  June,  one 
thousand  eight  hundred  and  eighty-one,  authorizing  companies 
incorporated  under  the  laws  of  any  other  State  of  the  United 
States  for  the  conversion,  dyeing  and  cleansing  of  cotton  and 
other  fabrics  to  erect  and  maintain  buildings  for  such  manu- 
facturing purposes,  and  for  offices  and  salesrooms,  or  either,  and 


41 

to  take,  have  and  hold  real  estate  necessary  and  proper  for  such 
purposes,  approved  the  twenty-fifth  day  of  June,  Anno  Domini 
one  thousand  eight  hundred  and  eighty-five,  conferring  similar 
powers  upon  companies  incorporated  under  the  laws  of  any  other 
State  of  the  United  States  for  the  manufacture  of  lumber  and 
wood  products  and  pyroligneous  acids,  acetate  of  lime  and 
charcoal  by  the  process  of  destructive  distillation,  or  the  prepara- 
tion of  cattle  hair  for  use,  approved  the  twenty-eighth  day  of 
April,  one  thousand  eight  hundred  and  eighty-seven,  conferring 
similar  power  upon  companies  incorporated  under  the  laws  of 
any  other  State  of  the  United  States  for  the  manufacture  of 
carbon  dioxide  and  magnesia  and  the  products  thereof,  and  com- 
positions, articles  and  apparatus  from  and  in  connection  there- 
with, and  for  the  manufacture  of  cotton  velvet  and  other  fabrics, 
and  for  the  manufacture  of  extracts  out  of  wood,  bark,  leaves 
and  roots,  or  any  other  extracts  for  tanning,  cleansing,  dyeing  or 
other  purposes,'  approved  the  thirtieth  day  of  April,  Anno  Domini 
one  thousand  eight  hundred  and  ninety-one,  conferring  similar 
powers  upon  companies  incorporated  under  the  laws  of  any  other 
State  of  the  United  States  for  the  manufacture  or  printing  of 
wall  paper,  lithographs  or  prints,  and  for  mining  and  manufac- 
ture of  clay  into  brick  tile  and  various  other  articles  and 
products  produced  from  clay,  and  from  clay  and  other  substances 
mixed  therewith."  Approved  the  8th  day  of  June,  A.  D.  1893. 
(P.  L.  389.) 

(9).  An  Act  entitled  "An  Act  to  amend  an  Act,  entitled  'An 
Act  authorizing  companies  incorporated  under  the  laws  of  any 
other  State  of  the  United  States  for  the  manufacture  of  any 
form  of  iron,  steel  or  glass  to  erect  and  maintain  buildings 
and  manufacturing  establishments,  and  to  take,  have  and  hold 
real  estate  necessary  and  proper  for  manufacturing  purposes,' 
approved  the  ninth  day  of  June,  Anno  Domini  one  thousand 
eight  hundred  and  eighty-one,  extending  the  same  to  companies 
formed  for  the  purpose  of  quarrying  slate,  granite,  stone  or 
rocks  or  for  dressing,  polishing,  working  or  manufacturing  the 
same,  or  any  of  them,  and  to  mineral  springs  companies  incor- 
porated for  the  purpose  of  bottling  and  selling  natural  mineral 
springs  water."  Approved  the  16th  day  of  June,  A.  D.  1893. 
(P.  L.  466.) 

(10).  An  Act  entitled  "An  Act  to  enable  foreign  corporations 
engaged  in  this  State  in  the  publication  and  sale  of  books, 
tracts,  newspapers,  et  cetera,  the  net  profits  of  which  are  by 
its  charter  or  governing  body  required  to  be  applied  to  religious 
and  charitable  uses,  to  hold  real  estate  in  this  Commonwealth." 
Approved  the  24th  day  of  June,  A.  D.  1895.  (P.  L.  238.) 

4 


42 

(11).  An  Act  entitled  "An  Act  to  amend  an  act,  entitled  'An 
Act  to  amend  an  Act  entitled  "An  Act  authorizing-  companies 
incorporated  under  the  laws  of  any  other  State  of  the  United 
States  for  the  manufacture  of  any  form  of  iron,  steel  or  glass, 
to  erect  and  maintain  buildings  and  manufacturing  establish- 
ments, and  to  take,  have  and  hold  real  estate  necessary  and 
proper  for  manufacturing  purposes,"  approved  the  ninth  day  of 
June,  Anno  Domini  one  thousand  eight  hundred  and  eighty-one, 
extending  the  same  to  companies  formed  for  the  purpose  of 
quarrying  slate,  granite,  stone,  or  rocks,  or  for  dressing,  pol- 
ishing, working,  or  manufacturing  the  same,  or  any  of  them, 
and  to  mineral  springs  companies  incorporated  for  the  purpose 
of  bottling  and  selling  natural  mineral  springs  water,'  approved 
the  sixteenth  day  of  June,  Anno  Domini  one  thousand  eight 
hundred  and  ninety-three."  Approved  the  19th  day  of  April, 
A.  D.  1901.  (P.  L.  86.) 

(12).  An  Act  entitled  "An  Act  to  amend  an  Act,  entitled  'An 
Act  to  amend  an  Act,  entitled  "An  Act  to  amend  an  Act,  entitled 
'An  Act  authorizing  companies  incorporated  under  the  laws  of 
any  other  State  of  the  United  States  for  the  manufacture  of 
any  form  or  iron,  steel,  or  glass  to  erect  and  maintain  buildings 
and  manufacturing  establishments,  and  to  take,  have,  and  hold 
real  estate  necessary  and  proper  for  manufacturing  purposes,' 
approved  the  ninth  day  of  June,  Anno  Domini  one  thousand 
eight  hundred  and  eighty-one,  extending  the  same  to  companies 
formed  for  the  purpose  of  quarrying  slate,  granite,  stone,  or 
rocks,  or  for  dressing,  polishing,  working,  or  manufacturing  the 
same,  or  any.  of  them,  and  to  mineral  springs  companies  incor- 
porated for  the  purpose  of  bottling  and  selling  natural  min- 
eral springs  water,"  approved  the  sixteenth  day  of  June,  Anno 
Domini  one  thousand  eight  hundred  and  ninety-three,'  approved 
the  nineteenth  day  of  April,  Anno  Domini  one  thousand  nine 
hundred  and  one;  extending  the  same  to  companies  formed 
for  the  -  purpose  of  manufacturing  and  selling  chemicals,  food- 
stuffs, cement  and  cement  products,  and  the  quarrying  of 
cement  rock."  Approved  the  28th  day  of  May,  A.  D.  1907.  (P. 
L.  266.) 

(13).  An  Act  entitled  "An  Act  to  amend  an  Act,  entitled  'An 
Act  to  amend  an  Act,  entitled  "An  Act  to  amend  an  Act,  en- 
titled 'An  Act  authorizing  companies  incorporated  under  the 
laws  of  any  other  State  of  the  United  States  for  the  manu- 
facture of  any  form  of  iron,  steel,  or  glass,  to  erect  and  main- 
tain buildings  and  manufacturing  establishments,  and  to  take, 
have,  and  hold  real  estate  necessary  and  proper  for  manufactur- 


43 

ing  purposes,'  approved  the  ninth  day  of  June,  Anno  Domini 
one  thousand  eight  hundred  and  eighty-one,  extending  the 
same  to  companies  formed  for  the  purpose  of  quarrying  slate, 
granite,  stone,  or  rocks,  or  for  dressing,  polishing,  working, 
or  manufacturing  the  same,  or  any  of  them,  and  to  mineral 
springs  companies  incorporated  for  the  purpose  of  bottling 
and  selling  natural  mineral  springs  water,  approved  the  six- 
teenth day  of  June,  Anno  Domini  one  thousand  eight  hundred 
and  ninety-three,"  extending  the  same  to  companies  incorpo- 
rated for  the  purpose  of  manufacturing,  supplying  and  sale  of 
ice,  approved  the  nineteenth  day  of  April,  Anno  Domini  one 
thousand  nine  hundred  and  one,'  by  extending  the  same  to  com- 
panies incorporated  for  the  manufacture  of  paper,  wood-pulp, 
or  chemical  fibre."  Approved  the  27th  day  of  April,  A.  D. 
1909.  (P.  L.  173.) 


44 


REVENUE   LAWS. 


The  conclusions  of  your  Committee  on  this  subject,  as 
with  reference  to  the  corporation  laws,  are  not  at  present 
of  a  character  sufficient  to  make  any  extensive  alteration 
in  the  present  system.  They  are  merely  supplementary, 
extending  it  along  the  same  principal  lines  as  before  in 
order  to  correct  abuses,  provide  more  revenue  and  equalize 
burdens.  Striking  changes,  which  may  yet  be  necessary  in 
the  way  of  administration,  require  more  mature  delibera- 
tion than  there  has  been  time  to  give,  and  more  information 
and  data  than  are  at  present  available. 

Careful  thought  has  been  given,  however,  to  many  do- 
tails  in  connection  with 

(A)  The  objects  upon  which  State  revenue  is  expended ; 

(B)  The  increase  of  State  revenue, 

(C)  The  change  of  the  burden  of  taxation;  and 

(D)  The  more  effectual  collection  of  the  revenue  in- 
tended to  be  provided  by  existing  laws. 


45 


(A)    EXPENDITURES. 


APPROPRIATIONS     TO     CHARITABLE     INSTITU- 
TIONS. 

Large  amounts  of  money  have  been  appropriated,  as  is 
well  known,  for  charitable  institutions  not  controlled  by 
the  State.  Auditors,  sent  by  the  State,  see  that  the  money 
is  expended  for  the  purposes  for  which  it  is  appropriated, 
but  there  is  no  supervision  of  policy  or  management  other- 
wise. Nor  could  there  be — either  the  Trustees  or  the  State 
must  manage. 

Pennsylvania  has  been  a  pioneer  is  this  regard,  and  even 
now  leads  all  States.  Beginning  in  1850,  with  $65,767.85 
given  to  four  institutions,  in  1863  there  was  an  appropri- 
ation of  $146,800  to  sixteen  institutions.  The  amount 
has  increased  gradually  to  $421,008.50  to  eleven  institutions 
in  1873,  to  $1,228,276.20  to  thirty-five  institutions  in  1887 
(this,  of  course,  covering  two  years),  to  $3,024,025  to  one 
hundred  and  forty-two  institutions  in  1901  (for  two  years), 
and  to  $5,446,900  to  two  hundred  and  forty  institutions 
in  1909  (for  two  years).  Since  1850  the  total  appropriation 
to  homes  and  hospitals  has  been  $26,402,778.99.  The  fol- 
lowing table  has  been  prepared  by  the  State  Board  of 
Charities : 


46 


Summary  of  Appropriations  to   Charitable  Institutions  for 
Fifty -eight  Years. 


First 
class. 

Amount 
first  class. 

Second 
class. 

Amount 

second  class. 

Total 
No. 

Total 
amount. 

1850 

3 

$69,166  54 

4 

$65,767  85 

7 

$134  934  39 

1851  
1852  
1853  

3 
3 
3 

70,109  00 
80,417  00 
44,600  00 

3 

4 
4 

33,000  00 
48,000  00 
62,000  00 

6 

7 
7 

103,109  00 
128,417  00 
106,600  00 

1854 

3 

41,500  00 

6 

"67,000  00 

3 

108,500  00 

1855 

4 

58,712  00 

5 

56,000  00 

9 

114,712  00 

1856  
1857  

4 
4 

68,975  00 
63,142  00 

5 
5 

86,000  00 
126,000  00 

9 
9 

154,975  00 
189,142  00 

1858 

4 

57,045  00 

7 

132,500  00 

11 

189  545  00 

1859  

4 

85,894  00 

8 

111,000  00 

12 

196,894  00 

1860 

4 

138,961  00 

6 

115,750  00 

10 

254  711  00 

1861  

4 

132,211  00 

6 

104,800  00 

10 

237,011  00 

1862  

4 

91,800  00 

7 

114,280  00 

11 

206,080  00 

1863        

4 

74,100  00 

16 

146,800  00 

20 

220,900  00 

1864 

4 

108,530  00 

22 

171,147  07 

26 

279,677  07 

1865 

4 

123,089  50 

26 

227,059  00 

30 

350,148  50 

1866 

4 

143,200  00 

7 

188,369  70 

11 

331,569  70 

1867    

4 

130,832  00 

10 

183,000  00 

14 

313,832  00 

1868  
1869 

4 
5 

136,300  00 
311,887  00 

9 
12 

217,000  00 
243,500  00 

13 
17 

403,300  00 
555,387  00 

1870    

5 

222,355  26 

10 

173,000  00 

15 

395,355  26 

1871  

5 

420,614  62 

17 

239,295  00 

22 

659,909  62 

1872  

5 

179,800  00 

10 

365,686  24 

15 

545,486  24 

1873 

6 

324,344  04 

11 

421,008  50 

17 

745,352  54 

1874 

8 

695,150  00 

13 

222,016  78 

21 

917  166  78 

1875-77  
1877-79 

8 
9 

825,875  00 
1,793,029  76 

13 
'  14 

550,800  00 
590,658  19 

21 
23 

1,376,675  00 
2,388,687  95 

1879-81  
1881-83  
1883-85  
1885-87  
1887-89  
1889-91  

8 
10 
11 
10 
10 
9 

916,434  96 
1,183,164  89 
1,299,150  00 
2,372,085  92 
2,077,052  27 
1,511,076  99 

8 
15 

22 
27 
35 
52 

342,860  00 
850,570  49 
757,158  00 
"  1,005,562  00 
1,228,276  20 
1,644,095  55 

16 
25 
33 
37 
45 
61 

1,259,294  96 
2,033,735  38 
2,056,308  00 
3,377,647  92 
3,305,328  47 
3,155,172  54 

47 

Summary  of  Appropriations  to   Charitable  Institutions  for 
Fifty-eight  Years — Continued. 


First 
class. 

Amount 
first  class. 

Second 
class. 

Amount 
second  class. 

Total 
No. 

Total 
amount. 

1891-93     

14 

2,184,207  92 

68 

1,722,686  52 

82 

8,906,894  44 

1893-95  

15 

2,194,086  37 

95 

2,496,515  64 

110 

4,690,602  01 

1895-97    

16 

2,356,439  68 

112 

2,371,143  50 

128 

4,727,583  18 

1897-99  

15 

2,606,386  66 

118 

2,434,687  43 

133 

5,041,074  09 

1899-01 

15 

2,860,693  53 

129 

2,299,030  00 

144 

5,159,723  53 

1901-03 

19 

3,277,790  00 

142 

3,024,025  00 

161 

6,301,815  00 

1903-05 

20 

4,671,722  75 

176 

4,657,100  00 

196 

9,328,822  75 

1905-07 

34 

6,858,179  18 

177 

4,142,550  00 

211 

11,000,729  18 

1907-09 

31 

6,219,839  64 

224 

5,502,600  00 

256 

11  722  439  64 

1909-11  

31 

6,323,837  65 

239 

5,446.900  00 

270 

11,770,737  65 

Total 

$55,458,788  13 

$44,987,198  66 

$100,445,986  79 

The  above  statement  does   not  include  the  special   appropriations  to   the 
indigent  insane.     This  is  shown  on  the  next  page. 

First  Class— Includes  State  and  semi-State  institutions. 
Second  Class — Includes  private  institutions. 


Summary  of  Appropriations  for  the  Care   and    Treatment 
of  the  Indigent  Insane. 


Date. 

1885) 

Maintenance. 
$1,050,000  00 

Date. 

1899  1 

Maintenance. 
$1  700  000  00 

1886  J  •- 
1887) 

900,000  00 

1900  J  •" 
1901  ) 

1  800  000  00 

1888  J  " 
1889) 

800  000  00 

1902  j 
1903) 

2  000  000  00 

1890  }•- 
1891.  ) 

900,000  00 

1904  j  "• 
1905) 

2  100  000  00 

1892  /  — 
1893  ) 

1  015  000  00 

1906  j 
1907) 

2  500  000  00 

1894  j  "  ' 
1895) 

1,000,000  00 

1908  J  ~~ 
1909) 

3  000  000  00 

1896  J 

1910  J               

1897) 

1  450  000  00 

Total  

$20,215  000  00 

1898  J  "• 

48 

The  total  appropriation  of  Massachusetts  in  1908  for 
charitable  institutions  and  charitable  work  was  $2,300,000. 
Other  States  making  similar  appropriations  are  Delaware, 
Illinois,  Kentucky,  Maine,  Maryland,  Massachusetts,  New 
Mexico,  New  Jersey,  New  York,  North  Dakota,  Oregon, 
Washington  and  Wisconsin. 

New  York  appropriates  no  money  to  private  charities. 
In  1909  it  appropriated  to  State  institutions  $3,225,000, 
and  to  what  are  classified  in  Pennsylvania  as  semi-State 
institutions  (blind  and  deaf  and  dumb  institutions) 
$775,000.  In  the  same  class  with  New  York  are  Arkansas, 
California,  Connecticut,  Idaho,  Indiana,  Iowa,  Michigan, 
Minnesota,  Missouri,  Montana,  Nebraska,  Nevada,  New 
Hampshire,  Ohio,  Oklahoma,  Tennessee,  Texas,  Utah,  Ver- 
mont and  Wyoming. 

A  brief  outline  of  the  general  character  of  these  in- 
stitutions, which  are  in  whole  or  in  part  supported  by  the 
State,  and  the  sources  from  which  they  receive  support 
may  throw  some  light  upon  this  inquiry. 

As  to  the  insane,  there  are  six  State  hospitals,  located 
at  Harrisburg,  Danville,  Norristown,  Warren,  Dixmont 
and  Wernersville. 

These  institutions  contain  8,749  indigent  patients.  Ex- 
cept Dixmont,  they  are  the  property  of  the  State,  and 
receive  patients  from  the  districts  in  which  they  are  lo- 
cated, except  Wernersville,  the  Hospital  for  the  Chronic 
Insane,  which  receives  them  from  every  part  of  the  State. 
The  cost  of  maintenance  is  divided.  The  county  and 
poor  districts  from  wrhich  an  indigent  patient  is  sent,  pay 
to  the  institution,  for  each  patient,  $1.75  per  week.  The 
rest  of  the  cost  of  maintenance  and  buildings  is  paid  by 
the  State.  The  entire  cost  of  maintaining  the  insane  in 
Pennsylvania  is,  approximately,  $4,000,000  per  year. 

The  other  institutions  of  the  State  containing  the  indi- 
gent insane  are  what  is  known  as  County  Care  Institutions, 
and  are  in  the  following  counties  and  cities : 


49 

Adams  County  Insane  Hospital,  Gettysburg. 

Allegheny  County  Hospital,  Woodville. 

Pittsburgh  North  Side  City  Home  and  Hospital,  Ho- 
boken. 

Pittsburgh  City  Home  and  Hospital,  Marshalsea. 

Blair  County  Hospital  for*  the  Insane,  Hollidaysburg. 

Chester  County  Hospital  for  the  Insane,  Embreeville. 

Cumberland  County  Hospital  for  the  Insane,  Carlisle. 

Elk  County  Asylum,  St.  Marys. 

Erie  County  Home,  Erie. 

Franklin  County  Home,  Chambersburg. 

Jefferson  County  Asylum,  Brookville. 

Hospital  for  the  Insane,  Central  Poor  District,  Retreat. 

Lancaster  County  Hospital  for  the  Insane,  Lancaster. 

Hospital  for  the  Insane,  Hillside  Home,  Clark's  Summit. 

Mercer  County  Hospital  for  the  Insane,  Mercer. 

Philadelphia  Hospital,  Insane  Department,  Philadelphia. 

Potter  County  Home,  Coudersport. 

Somerset  County  Hospital  for  Insane,  Somerset. 

Westmoreland  County  Home,  Insane  Department. 
Greensburg. 

Blakeley  Home,  Lackawanna  County,  Olyphant. 

These  institutions  were  built  by  and  are  owned  by  the 
respective  counties  and  cities  in  which  they  are  located. 
They  are  maintained  by  the  counties,  the  State  contribu- 
ting to  the  county,  for  each  patient,  the  sum  of  $2.00  per 
week.  The  number  in  these  institutions  is  6,288,  making 
the  entire  indigent  population  over  15,000. 

All  the  State  institutions  are  crowded,  and  Blockley,  in 
the  City  of  Philadelphia,  is  so  over-crowded  that  it  is 
filled  to  almost  double  its  intended  capacity. 

Two  new  State  hospitals  for  the  insane  are  in  course 
of  erection ;  one  for  the  criminal  insane,  at  Farview,  Wayne 
County,  just  fairly  started,  and  one  at  or  near  Allentown, 
called  the  Homoeopathic  Hospital,  which  is  approaching 
completion.  By  the  time  they  are  ready  to  receive  patients, 
there  will  be  enough  surplus  in  the  other  State  hospitals 


50 

to  fill  every  ward,  and  unless  the  Legislature,  at  the 
coming  session  makes  provision  for  the  erection  of  a  new 
hospital  or  added  wards  to  those  in  existence,  there  will 
not  be,  in  a  short  time,  sufficient  hospital  accommodations 
to  care  for  the  normal  increase,  which  is  about  600  a 
year.  It  is  thus  apparent  that  every  session  of  the  Legis- 
lature must  provide  for  the  care  of  at  least  1,200  patients 
additional,  either  by  building  a  new  hospital  or  by  adding 
wards  to  those  already  built. 

The  only  possible  alternative  to  this  is  the  building  of 
hospitals  by  the  counties,  under  the  County  Care  Act. 

From  present  appearances,  it  does  not  look  probable  that 
many  more  counties  will  avail  themselves  of  this  Act.  Two 
districts,  Schuylkill  county  and  the  Middle  Coal  Field 
Poor  District,  composed  of  parts  of  Carbon  and  Luzerne 
counties,  have  recently  started  proceedings  looking  to  the 
erection  of  hospitals,  and  have  submitted  plans. 

As  to  the  weak-minded,  there  are  three  institutions 
devoted  to  their  care,  to  wit:  Elwyn,  Polk  and  Spring 
City.  The  first  named  is  not  a  State  institution.  It  re- 
ceives by  appropriation  a  certain  amount  per  capita  for 
750  patients.  Polk  has  1,543  patients  and  is  a  State  in- 
stitution. Spring  City  is  a  dual  institution,  for  the  weak- 
minded  and  epileptic.  This  institution  is  only  partly  fin- 
ished, and  contains  270  weak-minded  and  87  epileptics. 

Hospitals  for  the  deaf,  dumb  and  blind,  as  well  as  the 
oral  schools  for  the  deaf  mutes,  are  not  State  institu- 
tions, nor  under  State  control,  though  they  are  almost 
wholly  maintained  by  the  State  by  a  per  capita  appropri- 
ation. 

The  only  place  for  epileptics  maintained  by  the  State 
is  Spring  City,  and  two  private  institutions,  one  in  the 
eastern  part  of  the  State,  near  West  Chester,  and  the 
other  in  the  western  part  of  the  State,  and  both  receive 
State  aid. 

As  to  hospitals  for  the  care  of  the  sick  and  injured, 
these  consist  of  institutions  wholly  supported  by  the  State, 


51 

r 

viz. :  at  Mercer,  Blossburg,  Hazelton,  Phillipsburg,  Scran- 
ton,  Ashland  and  Connellsville. 

The  inmates  number  over  12,000,  and  the  cost  of  their 
maintenance  during  the  past  year  was  $217,636.06. 

The  private  hospitals  receiving  State  aid  number  142. 
Their  total  cost  for  maintenance  last  year  was  approxi- 
mately $4,938,577.11.  The  number  of  indoor  patients 
70,394,  and  the  aggregate  number  of  free  hospital  days 
1,394,982,  the  free  dispensary  service  amounting  to  689,023. 
The  aid  given  to  these  institutions  by  the  State  for  main- 
tenance amounted  to  $3,768,500;  for  building,  $651,500, 
approximately.  A  table  giving  this  information  in  greater 
detail  will  be  found  elsewhere  (see  pages  69,  79). 

There  are  also  homes  and  kindred  institutions.  They 
are  all  private.  Those  that  receive  State  aid  are  97  in 
number. 

The  pauper  class  is  cared  for  by  the  poor  district — 
and  always  has  been  in  this  State. 

The  insane  were  formerly  cared  for  in  the  poor  dis- 
tricts with  the  other  poor.  The  burden  was  then  borne 
entirely  by  the  county,  city  or  poor  district.  After  a 
while  the  State  began  to  shoulder  part  of  the  burden  by 
building  and  equipping  the  present  State  hospitals  for 
the  insane,  heretofore  referred  to.  They  care  for  all  in- 
digent patients  sent  to  them,  charging  the  poor  district 
$1.75  per  week  for  each  patient.  Probably  nearly  10,000 
are  cared  -for  in  this  way.  The  other  5,000  or  6,000  are 
cared  for  in  certain  cities  and  counties  which  have 
erected  hospitals  for  that  purpose,  the  State  contributing 
$2.00  a  week  for  each  patient's  maintenance.  There  are 
a  few  in  the  poor  houses — probably  between  200  and  300 — 
maintained  entirely  by  the  poor  authorities.  Counting 
buildings  and  maintenance,  probably  more  than  three- 
fourths  of  the  cost  of  maintaining  is  borne  by  the  State. 

All  of  the  weak-minded,  who  are  in  institutions,  are 
supported  by  the  State,  as  are  epileptics,  save  a  few  in 
two  small  institutions,  which  receive  State  aid. 


52 

The  cost  of  maintaining  the  criminals,  like  that  of  the 
poor,  was  formerly  borne  entirely  by  the  county;  but  the 
State  took  upon  itself  a  part  of  the  burden  by  erecting 
what  is  known  as  the  Eastern  and  Western  Penitentiaries, 
to  which  certain  classes  of  criminals  may  be  sent,  the 
counties  from  which  they  are  sent  paying  the  cost  of  main- 
tenance, the  State  being  at  the  cost  of  the  buildings  and 
their  maintenance,  and  of  the  officers  and  attendants.  The 
State  also  pays  the  salaries  of  the  Judges. 

The  indigent  inmates  of  the  blind,  deaf  and  dumb  in- 
stitutions, and  schools  for  oral  teaching  of  mutes,  are 
maintained  substantially  by  the  State  So  are  the  in- 
mates of  the  House  of  Refuge  and  Morganza — incorrig- 
ible boys  and  girls. 

Hospitals  for  the  sick  and  injured,  and  homes  for  the 
dependent  and  kindred  institutions,  except  seven  hospitals 
heretofore  referred  to,  are  supported  in  part  by  the  State. 

It  will  thus  be  seen  that  while  formerly  none,  or  but  very 
few  of  the  dependent,  defective,  or  criminal  classes  were 
supported  by  the  State,  she  now  supports  wholly  or  in 
part  all  except  the  poor  in  almshouses  and  certain  hos- 
pitals and  homes  supported  by  private  charity.  The  ap- 
propriation for  all  charities,  including  those  above  named 
for  the  years  1909  and  1910,  was  $14,770,737  (see  page  55). 

In  the  public  press  and  before  medical  societies  there 
has  been  much  talk  of  a  general  but  very  abusive  char- 
acter about  the  mismanagement  of  many  of  the  privately 
managed  institutions  receiving  State  aid,  particularly  that 
they  were  managed  in  the  interest  of  the  private  prac- 
tice of  the  principal  physicians  and  surgeons  connected 
with  them,  both  by  way  of  self-advertisement  and  the 
treatment  of  private  patients.  In  spite  of  the  very  full 
opportunity  given  to  all  persons  to  present  their  com- 
plaints specifically  to  your  Committee  either  in  person 
or  by  letter,  no  actual  cases  of  abuse  were  revealed.  The 
charges  remain  only  general  as  before,  and  your  Com- 
mittee believes  it  is  a  possibility  to  be  guarded  against 
rather  than  a  fact  to  be  deplored  and  condemned. 


53 

Complaint  was  made  that  the  existence  of  hospitals 
prevented  any  surgical  practice  by  those  not  attached 
to  any  hospital  because  unattached  surgeons  were  not  per- 
mitted to  perform  operations  in  the  hospitals.  It  was 
urged  that  it  should  be  made  a  condition  of  State  aid 
that  they  permit  outside  surgeons  to  come  in.  In  view 
of  the  delicate  nature  of  a  surgical  operation  and  the 
highly  trained  staff  which  is  necessary  during  all  stages 
of  the  case,  it  would  not  be  possible  to  maintain  the  abso- 
lutely necessary  discipline  if  an  outsider  attempted  to 
fit  himself  to  the  system.  With  the  best  will  in  the  world 
on  both  sides  he  would  be  so  unfamiliar  with  the  methods 
in  use  that  there  could  not  but  be  confusion.  In  a  limited 
number  of  proper  cases,  however,  your  Committee  is  in- 
formed that  the  hospitals  permit  outside  surgeons  to  come 
in,  and  a  liberal  rule  in  this  regard  should  prevail. 

It  is  a  very  generally  held  opinion — although  in  this  in- 
stance also  no  specifications  were  made — that  the  num- 
ber of  institutions  is  too  large,  and  that  their  number 
and  location  should  be  controlled  in  some  way  by  the 
Board  of  Public  Charities  or  other  similar  body.  The 
objection  to  this  is  that  it  would  operate  as  an  unneces- 
sary restriction  upon  private  charity  in  the  founding  of 
new  institutions,  and  the  remedy  for  any  supposed  abuse 
in  the  way  of  starting  unnecessary  institutions  with  the 
expectation  and  demand  that  they  shall  be  kept  up  by 
State  aid,  is  in  the  self-restraint  of  the  Legislature  in 
withholding  appropriations  from  superfluous  institutions, 
or,  as  is  herein  recommended,  appropriating  only  for  actual 
public  work  done. 

Of  the  unwise  appropriations  of  the  past,  however, 
specific  instances  were  given  as  follows :  That  appropria- 
tions were  made  to  hospitals  before  they  were  incor- 
porated, or  before  a  site  was  provided,  without  any  pro- 
vision by  the  hospital  for  maintenance,  or  before  the 
hospital  was  open  for  patients,  or  before  any  consider- 
able sum  had  been  secured  as  an  endowment  from  private 


54 

sources.  Cases  were  mentioned  of  appropriations  to  some 
institutions  which  were  controlled  by  stockholders,  though 
the  declaring  of  a  dividend  was  forbidden. 

Many  complaints  have  been  received  for  a  number  of 
years  on  the  policy  of  our  State  in  this  regard,  not  only 
from  institutions  that  do  not  receive  it,  but  from  the  pub- 
lic at  large. 

The  objection  is  that  the  State  money  should  only  go 
in  relief  of  the  sick  or  disabled  poor,  and  that,  as  there 
is  no  rule  by  which  the  money  is  apportioned  among  the 
institutions,  it  may  or  may  not  be  so  used.  A  request 
is  made  by  the  institution.  On  this  a  recommendation 
is  made  by  the  Board  of  Public  Charities,  which,  while 
giving  the  matter  careful  attention,  has  no  fixed  rule.  On 
this  the  Legislature  acts,  changing  in  many  instances  the 
amount  recommended  by  the  Board  of  Public  Charities, 
so  that  the  recommendations  of  the  latter  have  no  practical 
utility.  Here  again  there  is  no  rule.  At  the  end  of  the 
session  the  bounty  of  the  Legislature  having  greatly  ex- 
ceeded the  amount  at  its  disposal,  the  Governor  is  called 
upon  to  cut  all  the  appropriations  to  fit  the  Treasury. 
The  result  of  these  three  operations,  all  proceeding  with- 
out rule,  without  the  opportunity  for  hearing  in  many 
cases,  and  without  the  balancing  of  conflicting  claims, 
results  in  the  disproportion  evidenced  by  the  figures  al- 
ready given.  The  relation  between  requests  of  the 
hospitals,  the  recommendations  of  the  Board  of  Public 
Charities,  the  appropriations  by  the  Legislature,  and 
the  final  amounts  approved  by  the  Governor  is  shown  by 
the  following  table : 


55 


>» 

af 
IS 
H- 


05  O  CO 

g  CO  O  GO  T£ 

-    ^  CD"  o"  o  i>* 

SO  ^H  10  CO  Oi 

33  T  CO^  rH^  l>^  CO 

~£  §  co"  o"  CM"  co" 

fl  05  CD  CM  Oi  LO 

-r3  CD"  r-T  rn"  CM" 


CD 


o  o  o 

o  o  o 

rH     GO  O  O 

CO     O  O  O 

t-^    T-H^  rH  l& 

Oi    O  t—  xo 

t^     rh  IO  ^ 


O2  TH 

I  .2  5 

g  I  g 

.2   •§  ^ 


rH        fl 

o3 


CD        .rH  O. 

-r3  CJ  ET 

G3        S 


a 

o     o 

w  w 


CM 

CO 

Tin" 

rH 
•€£• 

rH 
O 
10* 
CM 
CD 


CM 
CM 

•OS- 


-ee- 


'S      3 


0 

FH 


a>    « 

a  § 

1.1 
i  « 

CD      CD 


.a  .a 


rH"          °      ° 


co       £ 


CD  O 

cj  o 

a  a 

g  rt 

CD  CD 

"3  "S 

I'l 

§  § 


O    O 

o  o 

CO    O 


O    O 

o  o 
co"  CM" 

CD      CD 

n^  rri 

^    pi 


02  02 

-M  -M 

fl  J=l 

O  O 


FH  EH 


56 

There  is  no  doubt  in  the  vast  majority  of  instances  that 
much  public  good  has  been  done  by  the  appropriations  to 
privately  managed  charities.  But  there  is  no  guarantee, 
and  no  way  of  guaranteeing  that  the  money  expended  will 
go  wholly  to  the  benefit  of  needy  persons  who  should  legiti- 
mately be  the  object  of  State  relief.  Particularly  is  this  so 
where  money  is  appropriated  for  purposes  of  permanent 
construction  and  not  for  maintenance. 

Since  1901  for  building  and  betterment  appropriations 
have  been  made  amounting  to  $115,000  to  the  Free  Hospital 
for  Poor  Consumptives  at  White  Haven.  This  institution 
now  refuses  State  aid  for  maintenance,  and  in  consequence 
claims  the  right  to,  and  does,  refuse  to  receive  free  pati- 
ents. Such  a  situation  should  be  rendered  impossible. 

It  is  asserted  that  many  institutions  come  into  existence 
depending  on  State  aid  for  the  maintenance  of  that  ex- 
istence, and  that  this  results  in  an  unnecessary  multipli- 
cation of  institutions  where  one  would  serve,  and  the  con- 
sequent idleness  of  part  of  their  equipment.  At 
times  3,000  hospital  beds  are  vacant.  Your  Committee 
recommend  that  such  appropriations  be  made  only  for  main- 
tenance, and  that  the  sums  should  be  apportioned  to  the 
free  public  aid  given  by  the  institution.  In  those  rare 
cases  where  an  appropriation  for  construction  would 
be  proper  (as  to  supply  a  community  needing  and  having 
no  hospital  and  no  other  means  of  securing  one) 
the  grant  of  the  State  should  be  a  lien  on  the 
ground  and  buildings  so  that  if  the  institution  cease  to  be 
privately  maintained  as  theretofore,  it  might  revert  to  the 
State,  and  be  continued  by  it.  The  first  precedent  may  be 
found  in  the  grant  to  the  Orthopedic  Hospital  of  Philadel- 
phia in  1871,  and  other  precedents  in  many  of  the  appro- 
priation Acts  of  1909,  if  not  in  other  years.  A  draft  of  an 
Act  to  that  end  is  submitted  as  follows : 


57 


AN     ACT     MAKING     APPROPRIATIONS     TO     INSTITUTIONS     NOT     WHOLLY 
MANAGED    BY    THE    COMMONWEALTH     OF    PENNSYLVANIA.    LIENS 

ON  THE  PREMISES  OF  SUCH  INSTITUTIONS  FOR  THE  USE  OF  THE 
COMMONWEALTH,  AND  PROVIDING  FOR  THE  COLLECTION  THEREOF. 

SECT.  1.  Be  it  enacted,  etc.,  That  any  and  all  amounts  here- 
after appropriated  by  the  Legislature  of  this  Commonwealth 
for  the  erection,  enlargement  or  alteration  of  any  building1  or 
buildings,  or  for  any  other  permanent  improvement  in  connec- 
tion with  any  institution  not  wholly  managed  by  the  Common- 
wealth of  Pennsylvania,  be,  and  the  same  are  hereby  made  a 
non-interest  bearing  lien  on  the  premises  of  the  institution 
for  which  the  appropriation  is  made. 

SECT.  2.  Within  sixty  days  from  the  date  of  such  appropri- 
ation the  Auditor  General  is  hereby  authorized  and  required  to 
transmit  to  the  Prothonotary  of  the  county  in  which  such  in- 
stitution is  located,  to  be  by  him  entered  of  record,  a  certi- 
ficate to  the  effect  that  the  appropriation  for  which  a  lien  is 
created  by  the  first  section  of  this  Act,  has  been  made  to  such  in" 
stitution.  The  amount  of  such  appropriation  shall  be  a  lien 
from  the  date  said  certifictate  is  so  entered  of  record,  and 
whenever  the  property  of  such  institution  shall  be  sold  at  a 
judicial  sale  the  amount  of  such  lien  shall  first  be  allowed  and 
paid  out  of  the  proceeds  of  such  sale  before  any  judgment,  mort- 
gage or  other  claim  which  shall  be  entered  of  record  or  become  a 
lien  after  the  entry  of  record  of  said  certificate. 

SECT.  3.  In  all  cases  where  any  such  institution  shall  cease 
to  be  used  or  fail  to  carry  out  the  purpose  for  which  it  was 
organized,  it  shall  be  lawful  for  writs  of  scire  facias  in  favor 
of  the  Commonwealth  to  issue  on  said  liens  and  be  prosecuted 
to  judgment  and  execution  in  the  same  manner  as  such  writs 
are  ordinarily  returnable. 


In  general,  however,  no  appropriation  should  be  made  to 
any  institution  until  it  owns  its  site  and  its  buildings  are 
erected  and  equipped  ready  to  begin  business.  Such  an 
institution  can  properly  be  made  an  instrument  of  the 
Commonwealth  for  the  help  of  the  poor  and  a  benefit  to  the 
State.  This  method  will  operate  as  a  check  upon  unneces- 
sary institutions  more  than  any  supervision  by  the  Board 


58 

of  Public  Charities  in  advance  as  a  prerequisite  to  the 
granting  of  a  charter. 

There  has  been  prepared  by  the  Board  of  Public  Chari- 
ties for  your  Committee  a  table  which  shows  as  to  most  of 
the  hospitals  of  the  State  (only  those  which  did  not  make 
report  being  omitted)  of  free  hospital  days ;  that  is  to  say, 
the  total  number  of  days  that  one  free  patient  was  treated 
by  the  hospital,  and  also  the  cost  of  each  day  of  such  treat- 
ment, the  total  cost  of  the  free  days,  the  State  appropri- 
ation and  the  excess  or  deficiency  of  appropriation  pro- 
portioned to  the  cost  of  free  treatment  and  other  valuable 
information. 


59 


J-> 

.?  I 


•papuad 

vn               •** 

i       s 

xa   ion   uoi^Btid 

•* 

-oiddB  jo  ^unoutv 

0 

gggig         ^         SS?§ 

5    8 

•uonBiad 

||||      g      §111 

^    § 

-oiddB  jo  ss'aoxa 

o>      to      t^     c4"             **              co"             c<T 

co 

m  papnadxa  ^unonrv 

8888888888 

8    8 

llll§ilii§ 

§    § 

Je- 

8§S!S^SSSS8 

S    8 

(MrH(MCi-*eOlQt»C<IOO 

1C        tC 

•SJIBP  aaij  isoo  IB^OJ, 

If  .«.-••*•«•::••- 

rH        00 

•tnaip  jad  ^SOQ 

(Moqoioiooosgeo-* 

COlHCO»rtt~eOrHSi-rH 

O       iO 

s     •* 

•S£BP  iB^idsoq  aaitf 

OOlHO5OiO5OiC<IC<JCO 

"^22^"*°^             "*"             eo"eo^ 

S    §3 

oo      10 

U5 

2             i 
1 

! 

§ 

'O 

a                  I 

S                       § 

•s  -      d  -a 

«      2               4J      'C 

1    1    a    I    W 

^  8  1  tf  2 

S                    S     .    §    5    5 

^         J                                       gj         "3         &          O,        "p, 

a  1  I  «  S 

oa               ^    »2    "S,   rt    -H 

|    W    ,          -S         o    |    2 
'-35^-3    '5   W|S5 

2  1  1  1  I  1  3  5  5  1 

ilSfsllSfr/a 

I    ?     a    »    S    S    1     §    I    " 
aa*,33So>% 

aWOiootn^M 

1  1  i  1  1  1  1  1  1  1 

^^O^^^pqMPQn 

Berwick  Hospital 
Bradford  Hospital  . 

GO 


•papaad 

!     £ 

«O        1C 

xa   ion    aojjBjjd 

i    .* 

'-ojclds  jo    janoatv 

i     i 

i 

&  s  s 

^    5: 

g    S    8 

g 

•UOUBIJd 

<M         <?l         OO 

s  g 

O        CC       OD 

S 

*8 

-oaddB  jo  ssaoxa 
ai  papuadxa  ^nnotuv 

5S.     M 

0 

10         05*        0 

IB 

0 

fl 

"5 

8888 

8    8 

888 

888 

0 

0 

1  i  i  1 

1  i 

ill 

III 

| 

'uoi)BtJdojdd«  a^B)s 

<M      t-      in      os 
••^ 

10      os 

(M         00        »0 
j 

1 

^    S    S    8 

8  i  s  I 

S    5    S 

;O        C*J        O        >O 
dl       %4      O       H 

Ills 

CN        C-l        «5 

i  i  s 

^ 

'Si«p  39JJ  5SOD  JB^OiI, 

tfO         O         tO         GO 

•*      •«*      o- 

55    J»  »   J3 

1-          I-          77 

£ 

•X         ~f         0         I- 

1-     -1-     « 

t-         0         ?M         CO 

•W         tO         Ol 

i 

**    r*    *    '* 

<M      »a      « 

CO         05         ^H         CO 

1-          Of)           -t- 

o 

•taajp  aad  jsoo 

^- 

2ss 

1111 

|      |      g 

I  S  §  S 

;2     ^     ^ 

rH           5          CO 

1 

•sXup    IB^ldSOq    33.IJ 

l^         •*         CO         -W 

CO         OS         C- 

s  s  s?,  s 

-»<          CO          Cl 

1 

j 

^ 

t 

as 
1 

'§ 

i      a 

r< 

2    2 
S    ^ 

OQ 

•C 

^       "3        C3 

£ 

<i> 

S 

f 

2           o 

C 

o 

m        •-         — 

g       G       G 

*.  1  1 

§             1 

-to 

^ 

55 

SC3      — 
,      0      <a 

W     &     !;    -5 

«    S    I    -5 

!B  gS 

1'  1  J 

<L>          ^         O         *C 

i  s  1  1 

2    •§    S    S 

CQ      03      SQ      O 

Chambersburg  Hospital 
Charity  Hospital,  Norri- 

nhfstniit  Kill  Hnsniful 

Chester  Hospital  
Chester  County  Hospita 
Children's  Homeopathic 
Children's  Hospital,  Phi 

City  Hospital,  Washing 
Coatesville  Hospital  — 
Columbia  Hospital,  Col 

61 


• papnad 

xa    ion    aojiBiid 
jo 


-OJddB    JO    IS93X3 

at  papu.xlxd  ^nnouiy 


•43 

§ 

O 


a 
o 


5SOO  18}OJ, 


-raatp  aad  isoj 


•SA'Bp 


S    8    S 
i    S    i 


888 


S    3- 


88888 


co      in      oo 


888 


01         0         i-H 


co      t- 

eq      IH 


C-l         r-1 


rH         01         CO         rH         i-H         (M  Cd         v-i         CO         rH 


7 

& 

i 

t/ 

C 

!c 
c 

4 

| 

2 

a. 

| 

* 

| 

PH 

2 

(* 

i 

- 

OH 

^_ 

^5 

,_ 

- 

_" 

I 

'5 

a 

i  1 
j  1 

'2 

c 

'  I 

i 

1 

c 

, 

w 

3    » 

,         0 

"* 

S 

c 

1 

g 

1 

1 

1 


1  1  1 


62 


s 

i 


I 


I 


s               i 

i 

| 

•papuad 

§ 

i 

-Xa     3  Oil     UOI^BIld 

-                            I 

i 

-oiddB  jo  ^unorav 

0 

: 

! 

i 

8         g         g    g    5    S    S 

S«0       0 
rH        *> 

8 

•noHBiad 

g         i§          S    S    §    £    S 

t-                      05                      01        CO        CO        05         00 

S  1  g 

1 

-ojddB  jo  ss'aoxa 
ui  papuadxa  ^unotov 

•<*                      C5                                   IN         -^        CO        O 

rH                    r-l 

82 

j 

8         8888888 

888 

8 

IO                    *~<Mr-ie<JinO<M 

in      £-      10 

in" 

8(M(NQrHe»5OOt-l 
oinOsoiO"«t<ccoi 

S    S    2 

8 

6  1  8  .S  S  §  i  S  a 

S  ft  g 

1 

osmOr-<c4inocoo5 

<M              in 

IS 

SggSfSSSSS; 

58    g    § 

8 

•UI9IP  jad  }soo 

llftllllsi 

1  9  1  1 

;  i 

•s£Bp  iB^tdsoq  aaij 

S        S        "*                                *        §5        3        * 

co      m  •    o 

Q 

j 

i  sl 

O       3 

S    -g 

es      -S 

«    S 

i 

1  1 

da                       jj 

W    M 

32                 ,3 

"3    "3 

Bf    §                5     »    d 
•s    •§    •§                a    •§    5 

•2     .1 

§  3   *            1   S    S 

1     1 

.S    J3    _r                 S^h 

|  *  «         =  *  s 

1       B 

[ 

R  1  f        «     -  S   S   I 

-•  9  w  3  i  3  1  '1    - 

I  «  1  f  i  f  I  I  1 

!  1  1  1  1  1  s  1  1 

1  1  11  1  1  1  1 

arrisburg  Hospital  _. 
omeopathic  Medical  t 
omeopathic  Medical  a 

rvmpotpnr!  TTosnftal 

1    : 

•  S 

;| 
1 

o   o   o   o   o   o   W   W   ^d 

w  a  a  & 

w 

I      ! 

uo 

i      c-j         i        i      o                 i      IN 
f     3       j     •  j     8                ,      eo 

CM           1       O          1 

CO           J       r-           J 

•papnad 

Si        i  §        i  i 

SIS', 

-X8     ^OU     nOUBIJ(I 

} 

f  2 

-ojddB  jo  ^rinomy 

&        i  ~ 

8  1 

Oi 

i 

!  §   ii 

CO                  t- 
(M                      C<1 

'S 

-OlddB    JO    SS8DX9 

ui  papusdxa  ^anomy 

I 

CO                               1>        CO 

"**            "* 

$=) 

"S 

8    8 

8888888 

8888 

o 

§• 

§^       O       ^       ^ 

0 

a    ^    8    5 

1 

'UOlJBtJdOJddB  3^B^S 

&    ^ 

M       »        0       « 

0 

-to 

£ 

^                c 

s  as  &  %  s  5  3  s 

S    S    8    S 

•S 

in               c 
oo              »- 

5  i  s  §  i  i  i  i 

1  1  §  5 

1^ 

•S£Bp  88IJ  ^SOO  IB^OJ, 

g"              ^ 

-        <M        1>        00        <N        10        CO        05 

<N       0       0>       S» 

1 

SI 

^ 

eo     co     e 
oo     co     c 

I    S    g    S    S    g    S    S 

g    fc    5    S 

^ 

•raaip  aad  ^SOQ 

§ 

CO                      ^ 

i     o>     So     to     So     5!     S     P? 

1  1  1  i 

1 

•s^sp  iB^idsoq  881^ 

S 

S 

w     to     w     >o 

i| 

1      1    ! 

j        j 

i 

i            i        i 

&; 

j 

c>\ 

s 

•i 

i 

s 

i 

1 

2 

"3 

a- 

J 

^ 

1    J 

1 

s 

S1                « 

i 

0      J3 
Wl      §      « 

s.  «  J 
_,      F  5  3 

"3                 -      "3 

*§           3     a 

-S 

a  'g  -1 

'        03                  .           ft      £ 

I  *  J  5  8  i 

3    "3     9-    i 

S 

Jefferson  Medical  Colic 
Jewish  Hospital,  Phil 

>   &  *  •"  a  5 
1  S  '1  S  -3  w  3  ^ 

uimif 

8  1  I  I  If  1 

°  5  §  «  ts  1   & 

^     §     „    •§     §     g     «     S 
d     a     S     a     £    M 

•       3        5S        «       S        03        «        « 

,     £     M     M     M     H!     rf     S 

Maternity  Hospital,  P 
Meadville  City  Hospit 
Medico-Chirurgical  Ho: 
Mercy  Hospital,  Phila 

64 


i 

s    1    I 

s 

I        O        C4 

j    S    ^ 

Op        rH 

S 

rt 

8        51 

-ojdds  jo  •junooiy 

j 

S?-       i       I 

ITi 



S      e? 

"  '  «T     * 

g 

-non  mad 

CO         O 

c^i      C5 

1  i       i 

6 

T 

-oaddB    jo    ssjaxo 

I-H           00 

•"»<                      Cl 

O 

at  papaodxa  ^anouty 

j 

a 



8    8 

888          8 

8 

888 

a 

1    § 

§    1    1          1 

8 

i 

•aO.UBUdOJddBaWS 

&    s" 

in      i^      o               ic 

iM 

10          C5          1^ 

O 

£ 

S    S3    S 

O         S         <N         CO         CN         r- 

s  s 

s  s  sg 

J 

S  8  S 

S       O       ?5       2       co       S 

•*      ^      ao      10      o      frj 

t^      IP 

CO         * 

g         <M         OL 

^ 

•S£BP  «>«uj  }«oo  IBJOJ, 

§  s  s 

M    «-    JS    S    -    - 

<M         »• 

10         CO         tt. 

V. 

t 



o»      i»      ee 

rl         00        Ui 

S     a 

cc       o       c; 

Ci 

rH         r- 

r-t         O         r-i 

0 

•raajp  aad  ijsoo 

66- 

g 

Q 

•-      <5 

r-         CO         - 

Q 

s       & 

S    S5    ,t    !:    ?,    S 

w      1 

»A        OO        1C 

"U 

•SA'BP   iBjidsoq   aaj,j 

fel 

I 

1 

| 

pv. 

i 

1 

fl 

XI                                            fefl 

5 

s 

bD                             *r 

§               «& 

1 

J| 

O 

^ 

5                    ^  • 

i 

*. 

CB       'P                   " 

S  £  1  M  S 

Q           r- 

W 

i 

^ 

<y      — 

S    S    -^    B    * 

M    2 

- 

1 

*fl      «      '£ 

111 

8    «    !    S    g 

'  w  «  s  i  -B 
g  I  .  j  K  1 

'i    §    5    «     g    -5 

i  General 
•a!  Hosn 

C3 
™                       >^ 
—                      h 

o            1 

sis 
.    .  g 

£    H     ft    **    <j    •— 
;B            S     '5.            fi 

s  s 

i-        —  • 
V       as      ^_ 

1  1  £ 

B    S    1 

a     S     ._     H     S     W 

O           «           K                        5?         4! 

1  s  1  I  S  1 

Penney!* 
•est«m  < 

o     M    •£ 
^'    W     c 

*88          K 

»-.»-.     2 
v     2    5 

«        V        « 

a     «     *»     ^     •     c 
o     o     a     ^ 

C       3       0       0       £       fc 
0        0        0        0        CB        ! 

1  1 

V"       CJ 

s  Q  I 

Sal 

O     O     PH 

65 


\     \              i        a 

8 

•papnad 
-xa    ^on    uoi^Bud 

!          i    § 

1 

-ojddu  jo  ^unouiy 

!            i 

• 

CO       *<*<       O                  CO       W 
O         CO         Ci                       CO         rH 

C<|         M<         CD                      <M         O 
in         CO         5                      £         rH 

8          8    £    S    5    § 

-oidds   jo  ssaaxa 

-^    «6"    r-T           co     •** 

•**"              ci     01      i-T     TJI      o 

ui  papuadxa  ^unouiv 

B 

888         888 

8888888 

uorjBudojdde  a^s^s 

Sr 

S    B    rn    S               S 

M      •<»<      55      I-H      e<j      Oi      a- 

^         -Hi        O        O        tr        rH        t>- 

1    1    1    1    i    1    1 

•S£BP  aaaj  isoo  IB^OJ, 

CO         00        JO        CO        10         CO        g 

CO        CO        O)        O>        O        rH         O 

s  a  8  e  -s  g  s 

§    3    §S    9    9    8    S 

"inatp  jad  ISOQ 

Oi         J^-         rH         (M         Ol         O         W 
!>•         i—*         !>•         00         O>         G<J         C 

S  1  i  1  1  1  i 

•s^sp   re^idsoq  aaj£ 

"    S    S    S    "    ? 

a  s  »  s  *•  ^  s 

1 

I 

i 

Z                    a 

"S 

51       1 

S3 

-  s       5 
»31       "5 

H  -JJ 

g"         08         «W          « 

111       1  | 

i-       0       S       0      ^ 

?  1  8  1 

s  s  w    -       8s 
S?    -  5  3  -a   a  I 

0          hH           W          Q 

1  1  3  s 

M.  3  I  |  I  1  1 
3  1  i  w   I  I  J 

ft                                   -i 

;    |    |    ||    |    IS 

i  *  i  i  1  3  •- 

;  .s  ^  a  w    o  ^  w 

"  1  1  1  1  1  :| 

S     «     &%"&%% 
^     S     a      a     o      a      9 

1  I  1  8  g  «  S  s 
i  1  1  1  1  1  1  i 

9     9     a     a     o    a    s 

as      a      v      «      13      J3     x 

;     2     3     £     .-S     S      o      o 

f 

66 


•papnad 
-xa   ion   uorjBiJd 
jo  lunomy 


|    S 

i  d 


\      I 


fc    8 


-OlddB    JO 

O(  papaadxa  lunoiny 


•uxajp  .tad 


8  8  9  8  8  8  i 

"***  CO  CO  CO  ••*«  O  l£5 

?H  o  IQ  t^»  oo  SB  2 

[«  V  !9  9  18  IS.  H 


CD   Ob   00   t^   O 


88888888888888 


<M       t-       »0       t^        O 


8    §    &    8 


fe    S^    **" 


Seo'SooST^Sot^o 
aQaQ-*'<ot-?ao-*<f>qDiQ 

•OrH<MrHtOr-l5JiH 


8    8 


53    S    8 


feS8S|S3S'SS5?28i5S§ 

2558^»O»irHi5ooMeNinoo      oo>o 


to      eo      «o 


,'      ! 


o     g1 
,    « 


S     3 

"1 1  * 

j;i 

«  w  s  . 


S   §   £ 


o     o 
W    W 


If 


s  i  -s 

«     *    -fl 

«         (H         O 


*      XJ 

^    Pn 


W     § 
«    W 

If 

O       3 

1-3        H? 


67 


•papuad 

-xa   iou   no^Bi-id 
-oiddB  jo  innorav 


•UOflBUd 

jo  ssaoxa 

ui  papuadxa 


•s£«p  aaij 


•raarp  iad 


•slwp 


!      I 


i       ! 
I 


388 


888888888888888 


g  8  1  8  8  Z  S  M  »  I  * 


S    S3 


& 


68 


i 

! 

; 

i 

c 

•papuad 

i 

! 

g 

-xa   ion   nonmid 

1 

• 

1 

-oiddB  jo  ^unooiv 

j 

! 

i 

i 

i 

i 

a  s 

:    S    a 

5    £3    £    § 

0       g       ^       « 

OS        1C 

s 

'UOl4BIJd 

S   s 

-*      c* 
i     as     E 

i  S  2  1 

CO        C5        00        * 

5  1  I 

-oiddB  jo  ssaoxa 
ui  papnadxa  ^nnornv 

s. 

J        t>-        & 

5    S    S    §5 

s  ^  s  ? 

00        <N 

i 

8    8 

I    8    g 

5888 

8888 

'    8    8 

g 

g 

*noiQ.BiJdojddB  aiB4g 

^.   ^ 

)        10        CC 

f  J  »   t, 

13    8    S    § 

>     eg     co 

Si 

10 

S    ° 

rH          5 

:    3    $ 

*&       or 
OS       F 

1    &    g    § 

1    1    1    I 

$  s 

J    8    8 

os      in 

i 

•SjlBp  aajj  ^soo  IB^OX 

£        *- 

CM         O 

fc    S     5! 

S    S3    S5    9 

CM 

oc 

8    s 

%         $ 

>  5  s§  s 

S    §3    8    g 

J         CO        t~ 

oo      ^* 

•uraip  jad  ^soo 

§    1 

;   |   | 

•  a  s  5 

W         00         W 

1    g    S    1 

i  i  s 

1 

•s^sp  iB^jdsoq  aaij 

>          qj         0         U5 

83    3    S    ? 

J          TH          CO 

!• 

i 

C3 
ft 

• 

i 

*3 

£1 

C 

£ 

i 

5 

'O 
.S        * 

1 

fci 

3 

Sf    P4 

1  - 

u 

2 

|          | 

I 

1  '^ 

i 

A 
o 

^         1 

§ 

i  w 

S 

_** 

'43       s 

en  Emergency  Hospital... 

inp-tnn  T-Tnsnitnl 

Philadelphia  General  Hon 

Sidft  TTnsnitnl  Sprnnt.rm 

3rn  Pennsylvania  Hospita 
Philadelphia  Hospital  for 
s-Barre  City  Hospital  

Hospital,  Philadelphia... 
imsport  Hospital  
en's  Homeopathic  Associa 

pn'«  TTosnitnl  Philarlplnhi 

en's  Medical  College  Hosp 
en's  Southern  Homeopath 

Total... 

3     I 

*  1 

*?        4*         S 

!co       aj       "fig 
CJ       «       IS 

a    S     |     | 

a   a 

o     o 

£    £ 

£    £    £    £ 

£  £ 

69 


|i 

8888888888 

8 

^A 
O     r-Q 

-mot 

§l3isss§s^ 

99-          * 

10 

I| 

-S    ^ 

88                    88 

! 

®  K 

§<£ 

! 

5Q   ^ 

v                                              8 

| 

'y^d  '  s^u9inaAO  jduij 

«                          g     rn- 
9 

^  "i 

i 

-^~  ^ 

\ 

] 

f*  g 

\ 

i 

^ 

88888         888 

8 

O 

"s3nipn^9 

g*  s*»       *>** 

iO 

Kj      T—  | 

•<?»     ^ 

8888888888 

8 

<5i     r 

^ll^ss00^^^ 

S 

(X)     -f2      "» 

ss    ss  -S 
o    <o  •»=* 

!      \  ' 

*  <s»    -^  CT^ 

IIS 

•      1 

O_         ?**           "*N 

a 

O^   H^     ^ 

9 

^     -  fS 

1 

•^a      §S  '^ 

S    i  s 

^5      2^      O 

<4H 

O    ^    ^ 

o       !     o 

j  J  "  •  a 

'i    | 

.1  w  ^ 

1  ^       Ills 

"5 

^>           *^      ^ 

^    M                    iS    S 

"I 

o    o  ^ 

Qi 

1  1  i  i  i  1  ?  1  1  ; 

l!iH!l!!. 

a  1  1  I  1  1  I  1  I  : 

.Sbflfl§fewg>«i 
fSSSsaa«3*>'3 

^^^^<!<l««« 

c 

ft 

3    "" 

1  1 

o     C 

3       ,ic 
«        C 
3       5 
^        « 

S   £ 

70 


8 

8 

8 

8 

8    8    8    S 

888 

888 

T3 

| 

1 

1 

| 

1    1    1    i 

III! 

111 

J 

•mo* 

g 

a 

% 

r- 

2    *    S    S 

5    S    rt    R 

4         rH                      i—  ( 

sag 

1 

• 

j 

| 

1            1 

1       1 

« 

8 
§ 

8 
§ 

i 
i 

| 

8     i    8 
§         § 

8 

o" 

•0)9  •s^aaaiaAOJduTi 

» 

IO 

i 

3          *~ 

* 

g 

! 

i 

g 

i 

5 

j 

i 

1 

8 

S 

8 

8         8    § 

1      §  i 

S         8 

8    8 

^ 

'83n|p[jng 

S 

ss 

8 

s      s  g 

S3 

Oft       00 

3 

i 

i 

*s? 

! 

S^ 

i 

1 

S 

8 

8 

8 

s 

8    8    8    S 

888 

888 

CO 

| 

1 

8 

§ 

§    §    §    i 

§§| 

ill 

j 

"aOUKUJ^UIB  J^ 

I 

S 

§    s    3    S 

&    ~    g 

rH 

1 

! 
! 

I 

j 

i 

1 

! 

i    i 
1    : 

S 

^ 

1 

| 

s 

j 

! 

I 

a 

! 

^ 

i 
j 

So 

i 

i 

8 

•3 

^1 

_! 

„ 

~           a 

1 

i 

1 
1 

i 

o 

a 

2 

03 

1 

a 

1     1 
«  «  S 

^^        "2        5^ 

ij 

e,    3    2 

jj 

I 

Statement  Sh 

Bradford  Hospital  . 

Buhl,  Christian  H.f 

Butler  County  Gene 

"3 

be 

s 

Q 

Carbondale  Hospita 
Chambersburg  Hosi 
Charity  Hospital,  ] 
Chester  Hospital  „. 

Chester  County  Hoi 
Chestnut  Hill  Hosp 
Children's  Homeopa 

City  Hospital,  Was 
Clearfleld  Hospital 
Coatesville  Hospital 

71 


s  s  s  s  s  s  s 

8    8    8    8    8    8    8 

TJ 

1  §  §  1  1  1  i 

§    1    1    1    §    §    1 

a 

•mo& 

i  B  g  e  s  s  s 

g  g  I  8  g  *  | 

•42 

a 

o 

9 

1 

o 

i    s  s     !  ! 

i    i    i    i    i 
i     :         ii 

s 

II.      ! 

^ 

•MS  'siuacaaAOJdnii 

3    % 

!      ! 

1 

\ 

f++> 

' 

1 

i 

8    8    8      j    8          8 

8888     |    8 

H 

1    1    1      i    1          1 

1    §    1    §         1 

o 

Etq"      I-           !       CC                  ip 

W        IO        O        >O            !        to' 

^ 

•sSaipimg 

*       ~                                        ^ 

I 

t 

| 

J 

8    8    S    S    S    S    8 

8888888 

«c 

1    §    1    1    1    §    I 

1    §    1    §    1    §    1 

1 

****** 

10      o     t»     t*     co      oo     co 

•^        1C        O        ^**        CO        CS        ? 

2    S    B    9    8    -    § 

5 

S 

j                 j 

! 

t* 

1 

'i, 

i 

o 

1 

M 

0 

^•4 

^5 

"^ 

- 

I 

r^i 

£                       0 

c 

-2 

ft         2 

O 

EH 

S3i 

5    -g    "3     -    ' 
S     a    "C     §    "« 

3   J 
3  1              11 
It              «  1 

'S 

C5 

rse 

§    1    |    |    j 

«  S               1  | 

—     «    „                 |    R 

*2 

"3    "3     fr    <<;          —• 

j«     8    *2    *3    5     *    ,-,* 

1 

•^    £    s                 9*8 
8    f   f    I    1    &   I 

«  *  *   &  fe  S   % 

m      a      &     2      n             W 

3 

S     IS      2             c§     "S      a 

!  I  I  E-  1  «  1 

S  1  1  !  1  1  J 

o     o     o     o     o     s     «3 
0     O     O     O     (5     ft     W 

72 


S    B 

8 

888888888 

8    8 

TJ 

§o 

§o*      o      o      e> 

O 

S 

3    8    o    o 

8    8 

1 

•HWL 

€«• 

CO 

£~Oir-  ICOlOCOQBc^CO 
(M         CO         iH         i-t                      O 

§    g 

rt 

0 

O 

1 

o 

888 

8 

§ 

III 

| 

<aT 

•o;a  -wmBAoiauii 

d   *-"    rt" 

S 

<s> 

So 

1 

j                                       | 

£ 

t 

•$ 

1 

S 

888888          88 

8    8 

1 

•S3utpnng 

J 

g    |    s    1    1    J         |    | 

O        1C 

^ 

1 

2 

! 

"•*<> 

'1 

j 

§ 

te! 

8    8 

8 

888888888 

8    8 

&5 

§<x 

§8    §5    8    8    8 

§g 

~& 

c 

O        CO        ^        O        O 

O 

^ 

•9DnBua;niBw 

s  g 

K 

oococooocoososint- 

g    8 

« 

t2 

£ 

«0 

8 

i     i              i 

j 

•i 

ti 

So 

0       bfl 

^o       O 

^ 

'S    '3, 

0        | 

3 

d 

2  * 

So 

£ 

5> 

o 
a 

03 

i 

1  I         1  1  1 

1    S    g        III 

c 

I 

"3 

g   1   1        'g    •§    1 

C 

g 

1 

_-  -    1         *    "   ^ 

I 

QQ 

1  s 

.t 

E 

1  J  1  3  1  1  « 

C3         Q*        P*                  *rr        'TJ        <T3       »^H        i-^ 
*<-^<w        R      «4       9       O        £P(03 

O 

j 

S    "^ 

Statement 

Good  Samaritai 

fJrppnvillp  TTnen 

': 

| 

5      C 

,1 

i|wl,iaasi 

0                    »    n     .2     .2     M      2 

r  1  1  1  !  i  i  1  1  ! 

Illlllliil 

'5    ? 

to        :*": 

S  1 
§  a 

1! 

t-s        l-j 

73 


; 

B    §    8    8    8    8 

88888888 

.) 
i 

J 

J 

a    8    §    8    §    - 

«    "    S    S    |    |    S    S 

5 

5 

?    1 

J 

k 

3 

888           j 

q 

S 

in      o      o 

'3W  •  squama  AOI<IUI]; 

a 

»  S  » 

i 

o 

! 

^ 

S 

8888 

888888         8 

h. 

~-> 

•sSmpimg 

ft   19*  *•    8 

s  s  -  -  §  |       s^ 

3" 

£ 

c 

!       ^ 

0      1 

in 

Si  ' 

1       5y 

§ 

a   ; 

888888 

88888888 

§§  1  1  1  i 

iillills 

o 

~™ 

3      ^      58      oj      oo 

€«• 

s  *  B  S  |  3  *  « 

! 

S-o 

<X> 

~ 

M 

& 

ft 

""^S 

f 

.2 
£                                      ' 

ts 

S 

s        :       <s   « 

& 

-    Ill 

i       3  i.  •!  § 

1  -s   »  §  f  A 

o 

Ho 

• 

ft    "3    5    3     o 
S   5    ^    W    y 

^    1    1    1    1 

3    "    1    I    § 

3  1  i  |  "  s  S  1 

1  1  3  f  If  i  i  i 

S 

oo    M    a    5    ~    s    '"s.   's.   'S. 

£> 

a     1     a     ta,    ® 

Sd^"0-^!!! 

<£> 

Hill 

8    I   S:  |   1   9   W  .  S   1 

IB                    fl         G         °3 

% 

a      a>     '55      *      ° 

1  i  I  i  I 

^     M     M     W     A 

i  f  S  I  t  ?  §  i  * 

333asssaa 

74 


1 


i 


I 


8    8    S    8 

8    8    8    S 

8    8 

S    S    8    8 

i  1  s  8 

O       O       rl       O 

III! 

>    §    | 

1111 

[B10J, 

g   8    S    IS 

I    »    *    « 

;IO       Q 
^c»        *O 

sags 

!      !      1      1 

:    :    i 
s 

i      ! 

!    :         ! 

1  !  s 

1        O 

|  d 

S 

i-T 

!     |    8     1 

o 

i    :         i 

:             i 

j 

;     :    :    i 

!    i    i    i 

| 

8888 

8    8 

8    8    i 

5    S    8 

1    §    1    1 

§    1 

1    §    I 

111 

sampling 

^    S    3    « 

8    S 

S    S    c 

"    a    " 

1 

i     t 

8    8    S    8 

8888 

8    8    § 

§888 

§    1    §    1 

§    §    §    § 

§  1  ! 

1    1    1    1 

•aouBnajniBK 

g  §  9  s 

rH        ITS        Q        O 
gH         ^         S        « 

£    S3    3 

,1    §    2    S 

j       j    j 

I      i 

!  1 

j 

i 

1    ! 

1    j 

:        i 

j 

I        j 

!         i 

4      \ 

_! 

f>     _; 

2 

ill 

J  1! 

"S     a     «s 

| 
1 

i 

- 

Miners'  Hospital  of  North* 
Monongahela  Memorial  Ho 
Mount  Pleasant  Memorial 
Mount  Sinai  Hospital  

Nanticoke  Hospital  Associ  i 
Nason  Hospital  Associatio 
North  Pennsylvania  Gener  i 

1 

o 
H 

I    1 
ill 

&  1   1 
|K* 

oM 

o      i-i      a 
0     0     PH 

Packer  Hospital,  Sayre  
Panther  Creek  Valley  Hosj 
Passavant  Hospital,  Pitts 

75 


888 

888888 

88888 

1? 

III 

1    §    1    1    1    1 

1    §    §    1    § 

§ 
.9 

•  -moi 

|    1    H 

3    §    S    S    |    S 

1    83    I    S    - 

"3 

0 

j; 

8    8 

8          88 

oil! 

i    !     i 

5 

|    | 

i       §  § 

i             i 

«»  i 

E  s 

o       s  a 

a 

^ 

i 

~                 ; 

! 

5 

!                          | 

-S 

i                          i 

i 

8    8 

8          8    8    i 

888 

4 

•eSuipting 

58    53 

10            jS     w     Q 

r- 

g          8 

H 

i 

888 

8    8    8    8    8    i 

588888 

OD 

g        g        0 

8    o    8    S    S    ^ 

»        »ft        O        0        8        0 

J 

•eoaBaa^ai«w 

S  1  § 

S    g    §    S    |    5 

!    S    |    8    S    *- 

s 

" 

€19- 

5 

o 

so 

j 

1 

i        i    :    ' 

§ 

! 

! 

*•+? 

i 

"ft 

! 

», 

Q 

I 

J 

es 

5 

s 

"o 

!i 

5    •§     2    ,M     a 

i  I 

'I 

1 

Gr> 

1?      0 

1  w 
6  '! 

•?   I  2 
»   5    i 

I  I  1  I  | 

a    o    o   1    | 

S"     «      ~      — 

•2    "" 

•a         a"   ^* 
3    *    5    g-   -z    1 

Statement  > 

Philndelphia  Lyii 
Philadelphia  Ortl 
Phoenixville  Hos; 

*  I   I  1  1  •  • 

•§  1  fi  S  1  f 

S    I     Sf     &     «    • 

till!' 

g    =3     S    3    S    . 

§       X3       rti       i2       ^ 

ill*  1J 

"  ?  w  1  -  - 

a      C      ®      ti       d      O 

lilt?". 

s  s   S   |    1  5 

0        0        0        S       *        « 
IH      PH      PH      ^      P-i      W 

76 


888888 
888888 


88888888 
8  8  S  °°~  £  8  S  ^ 


8 

| 

s 

,,„_, 

S 

i 

S         i 
j         ! 

c 

9 

8 

8885 

c 

i 

> 

s 

8 

•sSmpijng 

it- 

I 

u- 

s  s 

2 

! 

3 
I 

S 
1 

8    §8    8    i 

8 

I 

,    8 

? 

1 

?  g 
I  i 

s 

a 

8 

g   8   S 

?H    i-H    iH 


I 

I 
j 

j 
j 

E 

j 

_c 

€ 

i 

• 

li 

s 

IE 

\ 

!E 

i 

2 

^c 

^     c 

t 

C 

H 

\ 

J 

S 

'C 

C 

P 

"a 

4- 

« 

^ 

— 

1 

7 

1 

1 

1 

1 

JF 

* 

5 

-1- 

'P* 

S 

1 

P- 

^ 

1 

1 

1 

*    p. 

E 

i 

o 

'c 
4- 

C 

tx 

b 

C 

1 

1 

7 

1 

°     S 
c 

1 

IE 

ii 

E 

>     T; 
^ 

_L 

1         "« 

+ 

"I 

>    1 

•T- 
Q 

o 

« 
1 

a 

s 

1 

i 

s 

^    I 

\ 

\ 

I 
I 

1 

•  f 

I 
\ 

c 

c_ 
K 

1 

•I 

1 

•= 

[ 

« 

s 

cc 

'    F 

j 

c 

n 

1 

1 

*8 

'    ! 

§ 
.    1 

y; 

c 

t 
I 

-! 

c 

1 

I 
j 

i  5 

!       'S 

•  1 
1 

QC 

"     1 
,     ." 

1 
:  1 

o: 

* 

§ 
» 

'  1 

pu 

o: 

<    "3 
§ 

0 

O 
"S 

O2 

77 


88888888888888 


•— 

8 

S 

888 

8 

8 

S 

8 

8    8 

j 

i 

8 
1 

S 

i 

s 

8 

•BSuipnna 

! 

1C 

LT 

O        CO 

S 

s 

I 

S 

| 
j 

8    S 

g 

1 

g 

1  - 

8 

8    8    S 

g 

g 

.  s 

I 

i 

I 

g 

8 

8    ? 

:- 

s 

12 

-*        O        Oi 

CD           r-H           l> 

£ 

8 

I— 

s 

5 

S 

£ 

£ 

1 

a 

'1 

*    £ 

0 

t 

? 

« 

[ 

a 

s 

« 

| 

r 

1 

a 

t 

"a. 

| 

~ 

'! 

f 

i 

C 

1 

:1 

1  ! 

C 

| 

2 

c 

i 

*     5 
P 

I 

;  s 

f 

i 

* 
* 

1 

.- 

3 

t= 

_ 

J 

** 
^ 

| 

a 

T 
t 

i  1 

» 

-    J 

* 

fi 

;  .5 

.- 

1 

i  s 

7 

i    5 
i     e 

"r 
._ 

,     "i 

,    : 

"  ~ 

~ 

4V 

i  ! 

1 

! 

i  « 

P- 
1 

; 

I 

r 

!   1 

1 

X 

:j 
1 

^ 

2           U 

\  1 

a      _a 
3      X 

5.       C 
3          0 
>        C 

s      >- 

V 

; 

n 

j        a 
f 

1       ^ 

}        o 
>        C 

)       »- 

.- 
c 

g 

fi 

:     a 

!i 

}      t- 

I 

j      ^a 

\ 

i         ii 

5        C 

;    - 

.        "^ 

,      c 
2     ^ 

K 
j     ^ 

5.    S 

i  -> 

•    i 

•>       C 

S  1 

I 

••    .* 

— 

c 
i 

i 

«  > 

«• 
: 

i 

.  1 

II 

| 

N 

,  ^- 

i  a 
i  1 

j  C 

i  H 

i  ! 

"i 
1 

i 

>  £ 
| 

j 

i 

I   S 

J 

t 
,  s 

1 

niversitv  of  Pit 

'J 

2      0 

c/ 

J    J 

:     v 

:     v 

2    a 

2       C/ 

2       f- 

1      r 

^  E- 

E 

;      C 

)    P 

78 


88888 

§588888 

888 

1 

§  1  1  1  i 

1    1    1    1    §    § 

ill 

1 

•1*400, 

§         S         tH         l-l         •« 

S  &  *  *  1  g 

§  s  § 

a 

0 

o 

1. 

i      i      i 
! 

S           j         8 

i    8    8 

* 

•o*»  -wTOAOiami 

! 

28                        M" 

1    1 
M    S 

<» 

-K-> 

•«s» 

38               8 

888888 

888 

u 

II         i 

§  §  i  i  §  § 

§    §    § 

CQ      -^                          tfl 

•^t*       IO        (M        CO        ^        ^ 

IT}         1C         O 

«S. 

•sSaipijng 

*       r-t                               rH 

Jo                       ^      S 

rH         t~         <N 

1 
1 

i 

88888 

So    8    8    8    8    8 

888 

•** 

••oireudjumji 

E-*<       t-       O       O 
^         r*         -,         «, 

?'sos" 

t§      ec      S 

fa 

•    • 

I                                        \ 

\ 

i 

! 

j     i 

! 

i 

i         1 

j 

1 

i 

I  1 

d 

Si. 

j 

.2      a     -2 

1 

! 

a 

5    |    § 

O 

W 

'e 

So 

3     I 

Q,          O          S 

§     • 

^ 

03        •*• 

i  | 

S   I   s   § 

53      ^3 

? 

1        ^  1 

Mill 

i  1 

"^ 

03                                    "3         •- 

w  §  i  i  § 

<5     2 

1 

f  1  1  !  1 

I   |  1  «  ft 

.s   s  1  3  §  3 

*  ^   o    W   _    a    ~ 

^         OS         «S       5         K        S 

g  3    S    e,  g    g 

I     o 

1  1 

~ 

S   »    «    &   •= 

•a   e   & 

1— 

5 

g     a     **     §     « 

W       2        S3       £       "Z 

M     £     °      fc 

s  i  !  a  1 

1  1  1  !  i  i 

S    S    S    1    S     B 

S         *-         4.         4-          *         JS 

-S     o     o 
a    W     W 

o     «•     w 

W    g    g 

00     S     S 

S     S     &    S?    S 

IB        B    -    •        •       B 
<$)        <C        QJ        9       S       S 

a   §   § 

s 


79 

888 

8 

s    1 

§g 

53 

^       1 

8 

P 

o        g 

, 

§*    &3    £§ 

S 

•0           « 

«*-         -1 

m 

g     I 

®         « 

o      3 

i         i 

rrt 

O 

1 

1      1 

§m 

•890  WWA<W«*1 

rt             ^ 

1       "§  b 

o        °  5 

"       ffl  S 

8         8 

£ 

I    |g 

1         1 

3 

•o            s 
a         • 

•ggnipiuifi 

li- 

S 

*           OP 

I    H 

B       .9  Ja 

i 

"^          JC  *" 

888 

I 

s  |: 

.^^w, 

§    «    8 

^ 

1  iL 

4  **    S 

5    £«  s 

"        §  S1  *» 

co        o  2    I 
fe    ^    53  ft    « 

:    !    i 

•a  ^'   -c&ii 

:    : 

i 

§  »J    §•  *»    S 

i 

i 

43  ^   &  c    S 

i 

1 

q  o    £*  co    o 

i 

i 
j 

jlJll 

j 

3 

W   a    *   1    "t 

Women's  Medteal  College  Hospital  
Women's  Soathera  Homeopathic  Hospi 
York  Hospital  

| 

The  total  amount  appropriated  to 
fiscal  year,  May  31,  1011,  is,  approxim 
NOTE.—  Th«  period  of  time  covered 
figures  from  the  time  each  institution 
NOTE.—  Hospitals  not  shown  herei 

80 


•s| 

"S    *8 


r«r 


!S 


'6061  'TS  ^B] 
-nooo  spaq  jo 


'luaA.  3m 

-jnp    paidnoDO    spaq 
jo   aaqtnnu 


jo 


jo 


•8   -S 

§  «  s 


•aaij 
^na3ipu{   jo 


jo 


jo 


joj    spaq    jo 


jo 


s  SB.  fc  s  a  s 

1         «5         CO         ITS         10         rH         rH 


«O        r-         r- 


S888.SS8888 


p 

s    •  1 
1   |   I 

X      -^      <j 


t 


If 

QO     S 


81 


•*        CO 

rM 

CO 

a  a 

1    S    C 

j  s 

3    fS 

'6061  *T8  ^«H  P3'd 

-nooo  spaq  jo  jaquin^ 

•XB9^   Sni 

•*         CQ 

00 

£ 

00 

Si 

S    5 

!    S    §5 

5    S8 

@    S 

-inp    patdnooo    spaq 

jo   laqranu  aSBjaAy 

•S  U3I  Bd 

oo     g 

t- 

rH 

s 

*~    *. 

;    5!    2 

>    g 

in 

*Bd    ,0    ,9qmnN 

'99JJ    A"l^JBd 

CO        0 

! 

S 

* 

s 

8    " 

•    8    § 

i    ^i 

g 

luaSjpni  jo   aaquin^ 

j 

•99jj  pa^9a;  nuwrt 

CO         i-H 

S 

1 

g 

g 

00        « 
r^        T 

!  1  i 

[    | 

S           § 

^uaSipui   jo   i9quinN 

•s^nai^Bd 

1 

r-i 

1 
j 

j 

i 

| 

•  1  1 

>    i 

j 

i>      of 

A"jBsnodsip  jo  jaqran^ 

1 

j 

• 

i 
i 

s  -* 

o§      °° 

CO 

s 

^ 

S    $ 

t-      o 

S        r-t 

rH         CO 

*9)tI9f^9u 

cS      co 

IO 

Tf 

53    £ 

w     a 

)        Oi 

^U9S.Pai   jo   aaqmntf 

iH        iH 

•nvoM 

IO        O 

GO         i>- 

S 

3 

S 

3 

3    & 

8     § 

'    1 

S    K 

joj    spaq    jo    jaquin^ 

S    8 

CO 

6 

8 

S 

5!    S 

8    £ 

8 

0       g 

§  § 

8 

§ 

i 

i 

£  1 

8    5 

§ 

§    § 

•a^B^sa  iBai  jo  an[BA 

I  s 

o 

§ 

(M 

ffi 

tj-          G 

J§    g 

68 

i 
i 

i 
! 

i 

J 

2 

3 

a 

£? 

§ 

'O 

L 

.Q 

o 
£ 

tji 

9 

03 

,  Bradford  
Hospital,  Braddocl 

8 

S 
s 

1 

eral  Hospital,  Butl 

al  Hospital,  Canon 

3 

o 

"3 

8 
W 

0 

a 
5 

spital,  Chambersbt 
Norristown 

pital,  Philadelphia 
Dhestfir 

I 

0 

1 

*" 

w 

athic  Hospital,  j^h 
1,  Philudelphia.-. 

4J          3 

'a    fe 

g 

0 

o 

b 

S 

S 

s  « 

-1  , 

.  w 

hj 

1  a 

a   a 

0       S 

W    O 

| 

"a 

5* 

s  1 

a       C 

<   3    'S 
M     c 

'  1 

o 

o     o 

j.          O 

o     o 

5 

o 
p 

a 

nonsbu 

rbonda 

ambersl 
aritv  H 

*.    t 

>        3         *- 

w       c 

Q 
S 

CQ           OT 

S    g 
2    2 

M 

3 

P5 

S3 

O 

S3 

Q 

J3      X 
O     C 

a  6 

o   o 

82 


'6061  '18  £BW  paid 
-nwo  spaq  jo 


-jap    pardnooo    spaq 
jo  laqumu 


£  B  d    jo    aa  q  ui  n 


jo 


•aaij 


jo 


£iBsuads{p  jo 


S    3 


!    | 

i         i    ! 


I  a 


^ua3jpu{   jo 


S     J2 


joj    spaq    jo   zaqmnjs 


53    2 


888 


JB8J  jo 


8    8 

s"  a 


88888 

8\£$  QfT  IQ  O* 

r- i        00        CO        O 


J      ! 


1  S 


s 

"§  & 


H  bo     c;      5 

•>:      ca      §     W     Q 
on      ••-!       rr 


G 

s     ° 

O       *£ 


o     £     n 

i  S  I 

S    O    5 


s  i 

•3    I 

~      PH 


I  S  I 


rs     -^ 


08       i— 


S    fc 

o      o 
O     O 


111 

w   .-  a 


*J          OS 


1 1  ? 

!a« 

o     ,    « 


88 


•6061  '18  *«] 
noao  spaq  jo 


•jBd£  3ui 

-inp    patdnooo_  spaq 
jo   jaquinu 


•siuailBd 
£  B  d    jo    ja  q  ran  & 


«= 


*U83ipui   jo 


•aaij 


jo 


jo 


111 


jo 


s  g  a 


joj    spaq    jo   jaqnmjs: 


IB8J  jo 


2 

2 

8 

B 

g 

s 

8 

8 

8 

8 

8 

3 

s 

1 

i 

1 

§ 

i 

| 

i 

1 

1 

t*A 

i 

p 

! 

r- 

1-1 

: 

•~ 

1 

1 

1 
1 

"S 

1 

| 

i 

i 

i 

; 

c 

J. 

•c 

i 
c 

I 

1 

3        ^ 

:       a 
7     ^ 

\        * 

i 

-  i 

i 

1 

i 

:       « 

:      ^ 

! 

o 

j  I 

;  1 

|  | 

£     Jt     £ 

1  s  1 

03      £      A 


I   §   1 

*?      r-ri      T5 


W      'C 

a     § 


fc    S 


•=  g 

I 


PH 
c 

w 
I  S  s 

5     ™     £ 


s 
* 


1       «     « 
I 


84 


'6061  'IS  A"BM  paid 

S    g 

-    S    S    S 

5    &    8    S    S    §3 

& 

-nooo  spaq  jo  jaquin^j 

-jnp    paidnoao    spaq 

S    g 

"  «  f  * 

§    |    |    -    S    S 

3 

jo   aaqcunu  aSBjaAy 

•s^uai^Bd 

§  5 

«    g    |    g 

s  s  a  i  i  s 

S 

S.K  d    jo    jaqran^ 

T-l 

TH                                  rH 

•aojj  ^naBd 

S    S 

«  3  2  w 

s  g  |       || 

S 

iu*3ipui  jo   jaquin*! 

•aaij  pa^Baaj  s^aai^Bd 

i  § 

05  1  i  a 

co       ^       •**       -^       w      O: 
•^        rH        1C        CO        O5        r-l 

g 

^uaSipUi   jo   JaquinK 

^ 

00         i-H                      rH 

•s^uai^'Bd 

t~ 

s 

o      |      £ 

S  1  S  1  a    i 

1 

AjBSUodsip  jo  oaqcanx 

CO 

-  a 

•**      co 

,»wii^B:.a,«.ll 

§§ 

of 

1  I  1  S  |  1 

S 

•s^uaqBd 

8    S 

i 

S    §8    $    §3    S    S 

§ 

aoj    spaq    jo    jtaqranx 

§8    8 

888 

8    8    8    8    8    IS 

8 

•a^B^sa  iBaj  jo  aniBA 

g        lO 

SS3 

i-T 

8 

i 

i 

1    to 

I 

bi    g 

i 

a    £ 

i 

5    £ 

S3       +J 

S  S 

2 

03 

s  3  3" 

a 
f 

-O          83 

£* 

"3 

ill 

(H               O              O 

S  w  a 
W  .-a  a 

S  3  s 

^    "2    "S     ^ 

«    5    •§     o 

1 

S 

PH 

Dciation,  Eri 
Harrisburg 

.   2   |   -g 

1  1  S  « 

till 

w    §   S  w 

2    2    5     « 

•I  i  ^  s  !  , 

1  5  1  s-  :.  i 

J9    8    ••  S.  3 

s  5j    «    &  -a   « 

g 

a 

o 

^ 

|H 

1   «2 

• 

Hamot  Hospital  Ass 
Harrisburg  Hospital 

Harrisburg  Polyclini 
Homeopathic  Medica 
Homeopathic  Medica 
Homestead  Hospital 

Howard  Hospital,  P 
Jefferson  Medical  Col 
Jewish  Hospital  Ass< 
Jewish  Maternity  Ho 
Johnstown  City  Hos 

T?nnA  Summit  Wnfimt 

Kensington  Hospital 

85 


••d 
o> 
3 


O 

O 


o 

^ 


6 

-s 


^ 
^ 
e 


o 


•606T  '18  Ml 
-nooo  spaq  jo 


•jsaX  Sni 

-anp    paidnooo    spaq 
jo   jaqranu 


jo 


jo 


jo 


2g3S3S8S|          SSftS 


s  s 


S  § 


!       ! 


jo 


jo 


joj    spaq    jo 


I     1 


3    g 


o      Oi 

JV        rH 


^ 
£ 


S 
o 

OQ 


JO 


888^^8888888 

o*     10      o*     cooicio^Ooot^-t* 


j  i 


J3      ,_;     ^ 

^    -2     a 


73       ft 


ft  * 

O  H  '  '  S 

M  «  "3  ^ 

^H  4?  ~  "3 


S    "     S 

•3       pJ       G       «{        3 


S    s 


•§  ^D 

5  3  S  S 

-  fi  K  ^ 

.a    _?  ^r  ^7 

bfl        03  C3  03 


W    o 


O  W 

„    W  -3 

o     ^  7; 

W    .2  o 

I  i  ! 

8       ^  .  rt 


o    ^ 


&  s    a 


M         Hi 


ft  ft  ft 
o  o 
^  M 


E 


I  1 


86 

0       0 

CO 

• 

o 

a 

0) 

Oft                   ^f 

t>      a 

'6061  '18  ^«W  Paid 

co      m 

H 

P 

" 

frj 

|H                     Ov 

*" 

C4 

3 

-nooo  spaq  jo  aaquin£ 

5 



3 

•IB8A1   SUI 

o      « 

g 

8 

ec 

00 

o 

eo      oj      «v 

CJ          T-H          » 

S    8 

cS 

H 

-anp    paidnaoo    spaq 

c5 

—  < 
H 

jo  jaquinn  aSBjaAy 

*«u»B«d 

10      ^ 

"        CO 

g 

1 

g 

8 

s 

oo      -^      c 
gq      in      e? 
co              es 

•«*«         10 

s 

i 

£  B  d    jo    a  a  q  m  n  u 

i 

•99JJ    A-WIBd 

*  s 

S 

S 

s 

o^ 

="     %    §5 

^ 
s 

3ua3ipai  jo   aaqtanji 

i 

_ 
3 

•aaij  pajBaxj  s^uaj^Bd 

~T¥ 

g 

H 

5 

1 

g 

§     S     1 

1^.       ^o 

S 

t) 

* 

•4 

*ra*"mi   f°   I9qranKT 

3 

0 

I 
•d 

3 

a 

•s;uarvBd 
A'aBsaadsip  jo  asquint 

s  § 

s 

! 

1 

1 

s  ! 

.  a 

rH 

s 

j 

•< 

•s^nai^Bd 

§  g 

i 

1 

i 

1 

1 

s  §  i 

s 

i 

^naSipm   jo   i;>quin& 

1-1 

"* 

3 

s 

•WWII 

S    3 

s 

Si 

s 

s 

s 

s  g  s 

•    8    S3 

§ 

i, 

joj    spaq    jb    jaqran^ 

i 

I 

15 

S    8 

8 

s 

8 

8 

s 

s  s  g 

8    S 
§    I 

! 

D 

•a^B^sa  iBai  jo  an[BA 

B  § 

" 

IS 

1-1 

o 

g 

S    g    | 

i* 

I 

j 

5 

S 

i    i 
:    j 

S 
I 

g 

1 

1 

1 

1 

j 

i 

! 

1    1 

1 

j 

0 

i 

- 

1 

03 
O 

1 

? 

i 

§ 

j 

? 

i 

_d 

S3 

*3 

03 

03 

S 

j 

a 

1 

D 

I 

02 

"3 

W 

g 

I 

a 

03 

S 

> 

i 

C3 

1 

!S 

6 

o 

53 

$ 

i. 

>> 

• 

5 
S 
^     2* 

"S 

I 

1 

A 

"S 

3 

'S 

£ 

g 

1  1 

:  o 

!    'O 

'     d1     S 

1 

S 

5 

-- 

y 

| 

C3 

o 

1 

fc 

o 
W 

w 

a" 
1 

0 

•    ce 

*  3 

5   1   | 

-!i 

**    W 

1 

5 
g 

S  «- 

'S.   -2 

1 

J 

a" 

03 

"3 

* 

—        O        C 

o   W    S 

.     .    fc 

?« 
.    33 

2    t 

'a 
'5. 

3 

§    p, 
W     o 
•5    W 
.9     £ 

03       0 

Hospital  1 

I 

0 

w 

<S 

a 

o> 
O 
a 

in 
1 

\ 

O 

3 

S  s  j 

B         >,         4 

II  i 

'    |   § 
1    1 

'a 

D 

*»    'g 

a 

P 

g 

I 

^ 

ill 

'    1    1 

1 

I  1 

03 

| 

S 

| 

c 

a     S     £ 
O     P-i     P- 

tn       c3 
JP      «S 

fu    & 

a 

87 


"6061  '18  A-BJ 
-nooo  spaq  jo 


{§    8    i;    S    3 


•JB8A-   3U] 

-anp    pajdnaDO    spaq 
jo  jaqomu 


jo 


53    S3    S    §    5    6 


81^      &      cq      cq 
10     S     §5     co 


•aaij 

s 

JO 


8    2    S    I    I    S 


•aaij 


jo 


A'.iBstiadsjp  jo 


g     |     g        | 

2  a" 


CO        S 

T*  CH 

S  S 


1  I  S  1 


t-l  10 


S    5    ft    55    £ 

CO         10         <0         l-i         rH 


jo 


$    S    S    8 


cS    8    8    15    S    15 


Jtoj    spaq    jo 


jo  aniBA 


8888288888888 


3855SS8832S3 

<W        (N        c3        -*  r-(        CO 


i  i 


j 

I    *    JV 

Kill 


!       i 


StuC 
t- 


•-.     '       3    a    /-s    •" 
2    2    S    §    5    5 

.  "i  5 


,?i 


*  5 

"*  B 

!  » 

H 


i    : 


5     2 


a    s 

1  s 

I  1 
S  S 


O 
.£5      *-> 

CQ      ,0 

i  s 
1  I 

w  w 


s  s  e 


i     i 


»  s  s 


«  CS  03  05 

S3  2  3  2  — .     . 

t>  a,  a  a  p,  wi  ba 

H  73  "3  a?  «  S  g 

q  -a  -a  -o  -o  jo  x: 

S  C3  03  OS  01  oo  aj 


K 


S  s 


8^ 

5 

OT     co     2 

M 

'6061  'IS  ^BP\[  paid 

CO        CO 

N    S    ^          S    **" 

CO       »*       g 

rd 

-naoo  spaq  jo  oaquin^ 

3 

U8a£  Sni 
-jnp    paidnooo    spaq 

S          S 

T"l        <>3 
r-t 

IB       s  s 

8rH         CO 
CO        S 

H-3 

jo   laqurau   aSBJaAy 

£ 

•8*uaWB<i 

8  *  * 

U5       fe 

I  I  S  I  S 

1  §  s 

1 

£  8  d    jo    i  a  q  ra  n  & 

^ 

!     rt                     ^ 

^ 

•aaij  £[:}JBd 

3    g    S 

€ 

11              g    « 

8    g    § 

- 

^uaSipui  jo   aaqranN 

j      j 

•s 

•aaij  pa^Baa;  s^uai^Bd 

is53 

S  § 

rH         O          •*         «O         J>         O 
10         rH         00        rH        1^         S 

O         CO         T-H 

£ 

vaaum  jo   iaquinN 

r-T                             r-T 

« 

•s^ai^d 

s       s 

i  1 

|       |       |       g       S       | 

1  1  g 

>§ 

£iBSU8dsiip  jo  zaquin^ 

eo 

«0       CO 

S                     «    w 

S   rt 

c£l 

•s^uar^Bd 

1  S  i 

S?    S 

S  i  S  1  S  S 

|    8    S 

.nastpm   ,o   aaqtnnN 

M 

«        r-T       rH        <N 

*" 

•nt»BM 

S    $    S 

*  § 

g    |    |    g    g    Si 

CO        2         CO 

% 

joj    spaq    jb    aaqran^ 

S 

888 

8 

888         88 

888 

Q 

§8    8 

&3 

o     o 

"S 

a^B^sa  iBaa  jo  aniBA 

no        °°        5 

1 

So1    cT           ir^    oT 
IO         "*                     CO        CO 

la! 

1 

1 

B 

1 

1 

• 

^ 

5 

• 

3 

<^> 

PI 

^H 

3 

13 

"o* 

B 

3 

<» 

n 

* 

1 

a           S 

| 

Ke 

i 

1        1        4 

S                                   X! 

«     1 

1 

1 

& 

0  J 
fen  >   « 

lit 

Philadelphia 
Philadelphia 

1  g  S  i  f  S 

0      |      |      |      |      | 

-5  s  H  ^  ^  s 

."S                 O         «      ^ 

1,  Beading.. 
Pbiladelphi 
South  Beth 

«   >,  w 

ft    "2    M     cs     °*    "3 

S3 

••si 

•3    '3    "3 

"3    "3 

W    'ft    S    S4    w    'ft 

%      ~       £ 

i 

'i    1    1 

iij 

'1    | 
W    W 

1  1  1  s  s  | 

ft                    O         oj          03          aj 

5    -s    »    £   §   3 

.g   g   fl   1  1  g- 

III 

&*       *Q>         *QJ 

^^ 

.«   a   g 

O         ^ 

•^        *""        O        O        O        o 

)        &        ^ 

'O       *      S 

g     <! 

0     PH     I-B     hs     i-j     ^ 

%    3    £ 

K     K     M 

«     co 

CO       CO       W2       CO       CO       CO 

CO       CO       CO 

"606T  'IS  ^BW  paid 
-nooo  spaq  jo  asquint 


•JB3A   SUI 

-inp    paidnoDO    spaq 
jo   laqranu 


£  B  d    jo 


•aaij 
*   s 
luaSrpai   jo 


•aaij  paiBa-r;  s;nar}Bd 
jo 


1>         Oi         03 


jo 


i    S    Z    8    g 


t*       CO       OO 
<M         S        50 


?naSipm   jo' 


joj    spaq    j 


!    8    S? 


jo 


i  i  I 

I  i 

3   1 

g 

| 

1 

| 

1 

,  S 

1  ®  s 

,  | 

8 

2 

i 

" 

8^ 

! 

i 

i 

! 

I 

• 

i 

a> 

S 

3 

o, 

-^     c 

-      a 

I! 

"o 
^ 

S 

B 

c 

3     5    .c 

r  i  « 

i      o      Z 

! 

J  i 

b 
1 

c 
cc 

1 

C 

i 

h 

e 

-2    W 


35      =s     -H     -=? 


3 
1  3 

s  i 


i     | 
§     S 


Taylo 
Titus 


90 


'6061  '18  *«H  paid 
-nooo  gpaq  jo 


•jBa£  3u\ 

-anp    pajdnooo    spaq 
jo   aaqmnu 


£  8  d    jo    a  a  q  ui  n  x 


jo 


jo   aaqiuux 


"  I 


*  S 


8    S 

S        05 


g        5 


JtiBsaadstp  jo 


!     ~       ! 


jo 


ipeoioopO{~'«!<QQt-aiiQ 

i^Ssls^ll^sl 


JO}    tpaq    jo    «qiunx 


•e;«;S3  {Baa  jo 


SSS3S3SS§S| 


88  S  88888 

IH"      53"  «»  ^     *-T      O 

rH        O  t"  Ci        CO        00 

•••    VH  a 


fe    5H    8    8 

I    i    8    I    1    I 
S    8    S    g    g    8 


J 


g  1 5 


ngton 
iatlon 


o   5 

^ ! 

i « 

s  I 


C8       ^ 


£    W 


"1  3  I  * 

3  S  5  «- 

ft       O       «       * 

I  w  1  % 

cltS 
S    JS     il 


a     S1 
«     o 


W     «    a 


c 

1  g  i    g  1 

£  G? 

<•£      cu      2>      <u      <u 

^  ^  ^  £  £ 


9    •§    „• 
o     «     • 

5g! 

°  s  S 

t    a    S 

A     W      i 

i  a  s 


91 


•6061  '18  *«W  P»Fd 
-noao  spaq  jo  jaquinx 


-inp    paidnooo    spaq 
jo  jaqra'nu  93BJ3AV 


jo 


t-H 


S 


jo 


^U93ipni  jo 


joj    spaq    jo 


IB9J    JO 


58    53 


8    § 


e  i  i 


I  I 


a  B  i  i  8 


S3    S    8    £ 


S    8    S    8    S 

a"  s  s  a"  8 


J  1 

•c  id 

I  i 

I  I 


a  3  a  S 

I  1  S  I 

«  S  I  I  -2 

S  "3  2  2  H 

I  s  1 . 1  • 

I  §  I  I  1 

W  H  S  S  -5, 

a  OQ  w  co  O 

"a  "a  "a  a  H 

1  I  I  I  I 


§ 


92 

The  results  shown  by  this  table  vary  considerably.  In 
the  great  majority  of  cases  the  cost  exceeded  the  ap- 
propriation, the  total  cost  of  free  days  being  $2,718,374.45 
and  the  appropriations  (to  these  hospitals)  being 
$1,527,875.  Only  21  hospitals  received  from  the  State 
more  money  than  they  expended  in  free  treatment.  As 
to  some  of  these  the  excess  was  considerable  in  proportion 
to  the  amount  of  money  appropriated.  On  the  other  hand, 
the  excess  of  money  spent  in  free  treatment  over  appro- 
priations varies  greatly  with  the  hospital.  The  Howard 
Hospital  of  Philadelphia,  spent  $83,388  in  free  treatment, 
and  received  only  $5,000  from  the  State.  The  University 
of  Pennsylvania  Hospital  spent  $134,278.92,  and  received 
only  $62,500.  But  as  to  thirteen  hospitals  the  difference 
was  less  than  $1,000.  The  table  also  shows  an  extremely 
varying  unit  of  cost,  running  from  $3.39  at  the  American 
Oncologic  Hospital,  Philadelphia,  $3.70  at  the  DuBois  Hos- 
pital, and  $3.42  at  The  Packer  Hospital  at  Sayre,  to  63 
cents  at  the  Children's  Hospital,  Philadelphia,  95  cents  at 
St.  Francis  Hospital,  Pittsburgh,  and  the  like.  This  is  the 
result  of  the  higher  cost  of  treating  special  diseases  like 
cancer,  and  the  greater  cost  of  supplies  in  small  hospitals 
in  remote  districts,  as  well  as  difference  in  equipment. 

In  estimating  the  cost  of  free  hospital  days  an  element 
must  fairly  be  reckoned  upon  which  does  not  appear  in 
the  reports  to  the  Board  of  Public  Charities.  This  is  the 
expense  of  free  dispensary  work  which  in  some  hospitals 
is  very  much  larger  than  the  cost  of  treating  patients 
in  wards,  which  alone  is  taken  in  arriving  at  the  cost  of 
"free  hospital  days."  For  instance,  it  appears  from  the 
table  (page  63),  that  the  appropriation  to  the  Medico- 
Chirurgical  Hospital  of  Philadelphia,  for  the  year  ending 
May  31,  1909,  was  $30,239.10  in  excess  of  the  free  hospital 
days.  But  this  does  not  give  a  true  idea  of  the  charitable 
work  of  the  hospital,  as  the  partially  free  in-patients,  ac- 
cident, dispensary,  electrical  and  X-ray  patients  are  not 
included  in  this  total.  The  total  amount  expended  for 


93 

charitable  patients  for  the  twelve  months  ending  May  31, 
1909,  is  $68,354.98.  The  Mount  Sinai  Hospital  in  Phila- 
delphia, for  example,  for  the  year  ending  May  31,  1909, 
paid  for  free  hospital  days  $24,823.26  and  received  a  State 
appropriation  of  $10,000.  It  has  only  34  beds,  but  its 
dispensary  work  extended  to  51,474  patients.  Methods  of 
reckoning  the  cost  of  this  work  could  be  best  determined 
by  conference  between  the  institutions  involved  and  the 
Board  of  Public  Charities,  or  the  Department  of  State 
Charitable  Institutions  herein  recommended  (see  page  99). 

But  even  as  to  free  hospital  days,  so-called,  the  method 
of  arriving  at  the  cost  varies  with  the  bookkeeping 
methods  of  the  institution.  Owing  to  the  inter-relation  of 
expenses  it  is  impossible  to  get  an  exact  figure.  Some 
institutions  divide  the  total  cost  of  maintenance  by  the 
number  of  hospital  days,  both  pay  and  free,  and  get  at 
the  cost  of  free  hospital  days  by  multiplying  the  quotient 
by  the  number  of  free  days.  It  is  obvious  that  as  the  cost 
of  pay  patients  is  much  greater  than  that  of  free  patients 
the  result  considerably  overstates  the  cost  of  free  hos- 
pital days.  Other  institutions,  notably  the  Jefferson 
Medical  College  Hospital,  state  separately  the  total  cost  of 
maintaining  free  hospital  days  by  employing  an  arbitrary 
percentage  method  based,  of  course,  upon  general  ex- 
perience, but  containing  nevertheless  an  unascertainable 
element  of  error.  This  method  recognizes  that  pay  pati- 
ents cost  more  than  free  patients.  The  remedy  is  in  a 
uniform  method  of  accounting,  which  can  best  be  devised 
by  the  Board  of  Public  Charities  or  proposed  Department 
of  State  Charitable  Institutions  in  conference  with  the 
institutions  interested.  The  combined  experience  of  all 
may  give  a  percentage  which  will  determine  with  fair  ac- 
curacy the  cost  of  free  patients. 

The  State  aid,  therefore,  to  each  private  charitable 
institution  should  be  in  the  form  of  a  fixed  sum  for  each 
day  a  free  patient  is  treated  therein,  the  sum  to  be  specially 
determined  for  each  institution  according  to  its  experi- 


94 

ence  of  cost  in  the  past.  The  wide  variation  in  the  unit 
of  cost  above  noted  would  prevent  the  use  of  an  average 
unit,  which  would  produce  an  even  greater  inequality 
than  now  exists.  This  sum  also  can  best  be  fixed  for  each 
one  by  the  State  Department  which  shall  have  the  super- 
vision of  charities  in  consultation  with  the  institution  (a 
similar  work  to  that  of  which  the  result  is  given  in  the 
table  already  mentioned),  and  your  Committee  recom- 
mends that  an  application  be  required  to  be  made  to  such 
Department  for  this  purpose,  and  proper  consideration  and 
treatment  thereof  can  then  be  had.  As  it  is  not  possible  to 
determine  in  advance  how  many  free  patients  will  be 
treated  during  the  next  two  appropriation  years,  the  sum 
should  be  calculated  on  the  basis  of  the  amount  expended 
for  the  last  two  years.  It  will  then  operate  as  a  reim- 
bursement to  the  institution  for  money  expended  and 
this  is  in  line  with  the  present  policy  of  all  such  appropria- 
tions, the  law  requiring  that  the  money  be  spent  and 
vouchers  furnished  before  the  State  relief  is  given.  The 
method  is  already  provided  by  the  Auditors  of  the  State 
for  checking  the  application  of  the  money,  and  this  work 
can  be  continued  by  the  Department  proposed.  In  order 
not  to  unduly  increase  appropriations  to  charity,  only 
part  of  such  cost  should  be  assumed  by  the  State,  and  your 
Committee  recommends  that  State  aid  be  confined  to  two- 
thirds  of  the  sum  so  expended.  Two-thirds  of  the  cost 
of  free  hospital  days  in  the  hospitals  reported  to  the 
Board  of  Public  Charities  is  $1,812,249.62,  and  this  ex- 
ceeds the  amount  appropriated  to  those  hospitals  by  only 
$284,374.62.  It  is  the  expectation  of  your  Committee  that 
the  additional  revenue  necessary  to  make  up  this  sum  (to 
which  must  be  added  the  additional  sum  which  will  go  to 
the  few  hospitals  not  reporting)  will  be  at  hand. 

As  above  shown  the  State  bears  part  of  the  cost  of 
maintaining  the  poor  insane  in  local  insane  hospitals,  as 
well  as  in  State  institutions.  No  State  aid  is  extended  to 
the  sick  poor  in  the  institutions  maintained  by  local  public 
authorities. 


96 

Your  Committee  recommends  that  State  aid  should  also 
be  extended  to  these  in  the  same  way,  that  is,  in  proportion 
to  free  hospital  days.  Data  are  not  available  for  de- 
termining the  cost  of  this  or  the  extent  to  which  it  would 
oe  possible  with  the  existing  revenue,  but  the  principle  is 
worthy  of  the  earnest  consideration  of  the  Legislature. 


STATE  INSTITUTIONS. 

It  was  the  opinion  of  some  expressed  to  your  Committee 
that  State  charity  could  be  better  distributed  through  the 
means  of  State  institutions  than  through  aiding  private 
charities.  The  practice  of  the  States  noted  elsewhere  in 
this  report  (page  48)  shows  that  the  Pennsylvania  system 
in  the  extent  to  which  it  has  gone,  is  the  exception  rather 
than  the  rule.  Your  Committee  is  of  the  opinion  that  there 
should  be  no  radical  change  of  our  policy  in  this  regard, 
and  that  the  present  system  is  the  most  efficient  in  the 
country. 

Notwithstanding  the  failure  of  other  States  to  follow  to 
any  extent  along  the  lines  of  Pennsylvania,  her  system  is, 
nevertheless,  winning  favor  and  has  the  approval  of  stu- 
dents of  the  subject.  We  may  expect  to  see  the  system 
spread  rather  than  to  have  it  universally  disapproved.  The 
extent  of  the  relief  afforded  may  be  seen  from  the  table 
above  (pages  46;  59).  This  immense  amount  of  relief  is  of 
unquestioned  advantage  to  the  State.  It  is  largely  in  aid  of 
those  to  whom  help  in  sickness  is  otherwise  impossible.  To 
withdraw  it  suddenly  would  be  inhuman,  and  the  State  and 
county  institutions  are  not  equipped  to  either  render  the 
assistance  or  to  bear  the  burden.  If  any  change  is  to  be 
made  it  should  be  by  way  of  a  very  gradual  reduction  of 
the  relief,  say  by  reducing  the  proportion  of  the  cost  of  free 
hospital  days  to  which  the  State  should  contribute.  Sud- 
den readjustments  of  the  ways  in  which  the  State  money 


96 

is  expended  are  even  more  harmful  than  the  sudden  read- 
justment of  the  burden  of  raising  it. 

Yet  there  is  no  question  that  State  institutions  are  neces- 
sary and  that  the  first  call  upon  the  State  Treasury  for 
this  purpose  should  be  by  those  institutions  which  the  State 
has  undertaken,  and  which  are  dragging  on  unfinished  and 
of  no  use.  There  are  now  four  such  in  a  partially  finished 
state.  The  money  which  has  been  put  into  them  has  been 
idle,  so  far  as  actual  help  to  anyone  is  concerned,  from  the 
date  of  the  Acts  creating  them.  These  are  the  Eastern 
Pennsylvania  State  Institution  for  the  Feeble  Minded  and 
Epileptic,  State  Hospital  for  the  Criminal  Insane,  State 
Hospital  for  Injured  Persons  of  the  Trevorton,  Shamokin 
and  Mount  Carmel  Coal  Fields,  and  the  Homeopathic  State 
Hospital  for  the  Insane  near  Allentown.  Of  these  the  first 
(which  is  located  at  Spring  City)  has  nearly  400  inmates, 
all  male,  and  there  is  no  provision  for  females,  for  which 
there  is  great  need.  This  is  only  a  small  part  of  the  accom- 
modations intended  to  be  afforded.  The  Rittersville  Hos- 
pital is  nearing  completion.  It  was  authorized  in  1901, 
and  construction  was  commenced  in  1904.  The  Com- 
mission has  been  insistent  in  their  requests  for  money 
to  complete,  but  it  was  diverted  to  other  uses.  In 
at  least  one  case  the  appropriations  for  the  construc- 
tion of  the  Allentown  Hospital  asked  for  by  the  Commis- 
sion for  erecting  it  to  enable  it  to  complete  it,  and  approved 
by  the  Legislature  have  from  the  beginning  been  reduced 
by  the  Governor  because,  as  stated  in  his  veto  reductions, 
there  was  not  sufficient  State  revenue  and  this  reduction 
was  made  though  he  had  advocated  in  his  message  to  the 
Legislature  the  completion  of  the  institution,  and  recog- 
nized the  pressing  need  for  the  proper  care  of  the  insane, 
whilst  at  the  same  time  there  were  approved  large  ap- 
propriations to  institutions  not  under  State  control. 

The  Trevorton  Hospital  was  given  $60,000  by  the  Legis- 
lature of  1907,  but  only  $30,000  was  approved  by  the 
Governor.  The  Legislature  of  1909  gave  $75,000  for  con- 
struction and  $50,000  for  maintenance  and  the  Governor 


97 

approved  this  for  only  $25,000  each.  The  work  has  there- 
fore stopped  for  lack  of  funds.  The  Farview  Hospital  was 
given  $250,000  by  the  Legislature  of  1909,  and  the  Gov- 
ernor approved  of  only  $100,000. 

Your  Committee  earnestly  urge  upon  the  Legislature 
that  sufficient  moneys  be  appropriated  at  this  session  of 
the  Legislature  to  at  once  complete  these  buildings  and 
that  this  demand  in  its  entirety  be  a  preferred  claim  upon 
such  part  of  the  State  revenue  as  should  be  devoted  to 
charity.  The  appropriations  at  each  session  should  be 
enough  to  carry  on  the  work  of  each  institution  vigorously 
and  continuously  to  the  next  session.  Waste  by  deteriora- 
tion and  idle  capital,  to  say  nothing  of  the  need  of  aid  to 
the  suffering,  should  not  be  permitted. 

Secondary  to  these  State  institutions  mentioned  are 
local  insane  hospitals  which  receive  State  aid  under  the 
County  Care  Act,  above  mentioned.  These  deserve  en- 
couragement and  it  would  be  well  to  increase  State  aid 
to  them  and  thus  encourage  further  building,  either  by 
way  of  helping  in  erection  or  increasing  the  per  capita 
cost  of  maintenance.  The  actual  cost  of  maintenance  is 
less  than  in  State  hospitals  and  the  percentage  of  cures 
is  greater  as  the  patients  have  more  out-door  life  and 
are  more  convenient  to  the  visits  of  friends. 

The  weak-minded  also  need  more  State  institutions 
than  the  three  already  mentioned.  The  institution  at 
Spring  City  is  intended  for  both  weak-minded  and  epi- 
leptic. The  Board  of  Public  Charities  has  recommended, 
and  your  Committee  endorses  the  recommendation,  that 
this  institution,  which  is  nearing  completion,  be  diverted 
solely  to  the  care  of  the  weak-minded  and  that  provision 
be  made  elsewhere  for  the  epileptic.  Weak-minded  per- 
sons who  are  scattered  at  large  in  great  numbers  (esti- 
mated at  18,000  in  Pennsylvania)  throughout  the  country 
are  a  menace  to  society  and  by  themselves  and  their  off- 
spring recruit  the  largest  part  of  the  criminal  and  de- 
pendent classes. 

7 


98 

The  same  conditions  apply  to  the  epileptic  and  an  insti- 
tution caring  for  700  or  800  is  now  needed.  In  the  insane 
hospitals,  now  overcrowded,  are  from  2,500  to  3,000  feeble- 
minded and  epileptic  people. 

Tuberculous  insane  patients  should  be  kept  in  a 
separate  institution,  and  if  the  recommendation  of  the 
State  Commissioner  of  Health  be  followed  a  hospital  can 
be  erected  at  Cresson  upon  ground  already  belonging 
to  the  State,  in  a  particularly  favorable  locality. 

Another  need  is  the  establishment  of  psychopathic  wards 
attached  to  some  of  the  large  general  hospitals  in  the 
cities  where  cases  of  neurasthenia,  hysteria  and  other 
mental  states  not  amounting  to  insanity,  can  be  investi- 
gated and  treated  without  the  stigma  attaching  to  resi- 
dence in  an  insane  asylum. 

State  institutions  to  take  up  the  work  of  the  local 
privately-maintained  homes  and  refuges  are  also  needed. 
There  is  no  State  institution  for  abandoned  and  neglected 
children  or  for  wayward  girls. 

The  cost  of  the  principal  additional  State  institutions 
needed  is  estimated  as  follows: 

Hospital  for  the  tuberculous  insane,  to  be  located  at 
Cresson,  $240,000. 

Two  psychopathic  wards  to  be  attached,  one  to  a  hos- 
pital in  the  East  and  the  other  to  a  hospital  in  the  West, 
$80,000  each,  or  $160,000. 

Farm  Colony  for  Epileptics  (the  Spring  City  Institution 
to  be  devoted  solely  to  the  Feeble  Minded),  $600,000. 


99 


DEPARTMENT    OF   STATE    CHARITABLE 
INSTITUTIONS. 

Part  of  the  delay  in  the  completion  of  State  institutions 
may  be  traceable  to  the  practice  of  creating  a  separate 
commission  to  build  each  institution.  The  object  of  this 
has  been  to  commit  such  work  to  those  most  interested  in 
the  subject  in  the  hope  that  the  best  results  would  be 
obtained,  and  whilst  these  commissions  (of  the  present 
unfinished  institutions)  appear  to  have  labored  zealously, 
they  have  not  been  able  to  obtain  the  moneys  to  complete 
their  several  institutions.  It  appears  to  your  Committee 
that  if  all  of  this  work  had  been  committed  to  the  direction 
of  one  State  Department,  with  power  to  appoint  necessary 
architects,  inspectors  and  employees,  such  Department  rep- 
resenting the  State  directly  would  have  secured  the  moneys 
needed  and  expedition  in  construction  would  have  been 
obtained. 

Your  Committee  therefore  recommends  that  the  com- 
missions to  erect  the  hospitals  at  Trevorton,  Farview  and 
Spring  City,  be  abolished  and  their  power  transferred  to 
a  State  Department,  and  that  the  Commission  to  erect  the 
Homeopathic  Insane  Hospital  near  Allentown  be  given  the 
sum  necessary  to  complete  immediately.  The  Allentown 
Hospital  is  so  nearly  completed  that  it  can  be  finished  by 
the  present  Commission  before  the  Department  could  be 
organized.  Acts  to  accomplish  this  are  submitted  herewith 
(see  page  101). 

The  Board  of  Commissioners  of  Public  Grounds  and 
Buildings,  as  now  constituted  by  the  organization  of  the 
Governor,  Auditor  General  and  State  Treasurer,  ex-officiis, 
has  not  the  time  and  facilities  for  such  a  large  work,  in 
addition  to  the  many  duties  of  its  members  in  their  in- 
dividual offices.  The  institutions  are  placed  all  over  the 
State.  The  work  really  requires  the  attention  of  special- 
ists in  addition  to  the  architect  in  immediate  charge  of 
each  branch. 


100 

Much  the  same  considerations  apply  to  the  Board  of 
Public  Charities  as  now  constituted.  Its  members  are 
business  men  serving  gratuitously,  and  while  their  ser- 
vice has  been  devoted,  they  are  scattered  over  the  State, 
and  it  is  a  physical  impossibility  to  give  sufficient  atten- 
tion as  a  Board  to  the  work  now  in  hand.  The  work  of 
erecting  new  buildings  is  not  possible  to  them. 

The  Legislature  of  1905  passed  a  well-considered  bill 
creating  a  Department  of  State  Charitable  Institutions, 
which  was  vetoed  by  the  Governor  on  the  ground  that  it 
covered  the  same  ground  as  the  Board  of  Public  Charities, 
which,  nevertheless,  was  not  abolished. 

A  comparison  of  the  bill  with  the  duties  of  that  Board, 
and  of  the  Committee  on  Lunacy,  which  is  part  of  it,  dis- 
closes that  a  great  deal  is  omitted.  The  whole  subject  of 
lunacy,  and  the  visitation  of  correctional  and  reformatory 
institutions,  both  State  and  local,  would  have  remained 
to  the  Board.  Your  Committee  believes  that  the  best  in- 
terests of  the  State  would  be  served  by  entrusting  all  these 
matters  to  such  a  Department,  and  discontinuing  the 
Board  of  Public  Charities.  No  thought  of  inefficiency  or 
wilful  neglect  enters  into  this  recommendation.  It  is 
the  product  of  the  growth  of  our  institutions  to  a  point 
where  a  volunteer  Board  has  too  much,  to  do. 

Accordingly  the  bill  has  been  revised  to  include  all  the 
duties  entrusted  to  the  Board  of  Public  Charities  by  the 
Act  of  1869  (P.  L.  90)  and  its  supplements,  and  to  the 
Committee  on  Lunacy  by  the  Act  of  1872  (P.  L.  43),  and 
its  supplements,  and  the  repeal  of  those  Acts.  The  Com- 
mittee on  Lunacy,  however,  is  to  retain  its  membership 
of  a  lawyer  and  a  physician  with  the  addition  of  the  Com- 
missioners, and  the  aid  of  a  Secretary.  The  administrative 
work  will  doubtless  fall  upon  the  official  members,  and  at 
the  same  time  the  advice  of  the  professional  members  will 
be  available. 

The  Act  revised  as  referred  to,  is.  suftjnitted  herewith 
(see  page  105). 


101 


AN  ACT  TO  ABOLISH  THE   COMMISSION   CREATED  BY   AJi '/A'pT  H^TC 

"AN  ACT  TO  PEOVIDE  FOB  THE  SELECTION  OF"  A  SITE '  AND  THiS 
ERECTION  OF  A  STATE  HOSPITAL  FOB  THE  TREATMENT  AND  CARE 
OF  THE  CRIMINAL  INSANE,  TO  BE  CALLED  THE  STATE  HOSPITAL 

FOR  THE  CRIMINAL  INSANE,  AND  MAKING  AN  APPROPRIATION 
THEREFOR,"  APPROVED  MAY  11,  1905,  AND  TO  PROVIDE  FOR  THE 
COMPLETION  OF  THE  SAID  HOSPITAL  BY  THE  DEPARTMENT  OF 
STATE  CHARITABLE  INSTITUTIONS,  AND  MAKING  AN  APPROPRIA- 
TION THEREFOR. 

SECT.  1.  Be  it  enacted,  etc.,  That  the  Commission  created 
by  the  provisions  of  an  Act  entitled  "An  Act  to  provide  for  the 
selection  of  a  site  and  the  erection  of  a  State  Hospital  for  the 
treatment  and  care  of  the  Criminal  Insane,  to  be  called  the 
State  Hospital  for  the  Criminal  Insane,  and  making  an  ap- 
propriation therefor,"  approved  May  11,  1905,  to  select  a  site 
and  build  an  institution  for  the  treatment  and  care  of  the  crim- 
inal insane  of  the  Commonwealth  and  certain  other  insane 
patients,  be  and  the  same  is  hereby  abolished,  to  take  effect 
one  month  after  this  Act  goes  into  effect. 

SECT.  2.  The  existing  Commission  shall  within  one  month  af- 
ter this  Act  goes  into  effect,  deliver  to  the  Department  of  State 
Charitable  Institutions  all  the  records  of  its  office  and  the  tract 
or  tracts  of  land  and  buildings  in  course  of  erection  thereon, 
if  any,  selected  for  the  said  hospital.  The  said  Department 
shall  thereupon  proceed  to  select  such  other  suitable  tract  or 
tracts  of  land  as  may  be  necessary  for  the  completion  of  said 
hospital  and  grounds ;  and  said  tract  or  tracts  of  land,  so 
selected  and  the  cost  thereof,  shall  be  approved  in  writing  by 
the  Governor  before  the  purchase  money  shall  be  paid ;  and  the 
deed  or  deeds  for  the  same  shall  be  taken  in  the  name  of  the 
Commonwealth;  but  nothing  herein  contained  shall  prevent  the 
said  Department  from  receiving  a  deed  to  the  Commonwealth, 
in  fee,  for  any  land  donated  for  the  purpose  aforesaid.  Said 
Department,  subject  to  existing  contracts  of  contractors  and 
architects,  shall  proceed  with  the  completion  of  the  plan  of 
said  building  or  buildings,  and  shall  prepare  such  other  plan 
or  plans  as  may  be  necessary  for  the  completion  of  said  hospi- 
tal, and  shall  have  power  to  employ  and  fix  the  compensation 
of  an  architect  and  a  superintendent  of  construction  and  such 
other  persons  as  it  may  think  necessary  to  employ  to  secure 
the  proper  and  economical  construction  of  said  building  or 
buildings.  The  money  heretofore  appropriated  for  the  purchase 
of  suitable  lands  for  a  site  for  said  hospital  and  for  the  con- 


102 

6>f  the  said  hospital  not  heretofore  expended  and  the 
y  Ta.pi>rb'p*riated  by  this  Act  shall  be  expended  under  the 
direction  of  the  said  Department  and  shall  be  drawn  from 
the  Treasury  t*s  may  be  required  for  the  erection  and  comple- 
tion of  said  buildings  and  grounds  on  warrants  signed  by  the 
Commissioner  of  State  Charitable  Institutions. 

SECT.  3.  Said  Department  of  State  Charitable  Institutions, 
subject  to  existing  contracts  of  contractors  and  architects, 
shall  proceed  to  erect  and  complete  said  buildings  as  soon  as 
possible  compatible  with  the  economical,  substantial  and  skill- 
ful execution  of  the  work. 

SECT.  4.  Said  Department  of  State  Charitable  Institutions 
upon  the  completion  of  said  hospital  shall  surrender  its  trust  to 
"The  Trustees  of  the  State  Hospital  for  the  Criminal  Insane." 

SECT.  5.  For  the  purpose  of  completing  said  hospital  the  sum 
of  Six  hundred  thousand  dollars  is  hereby  appropriated  an- 
nually for  the  years  1911  and  1912  to  be  drawn  as  herein  before 
provided. 

SECT.  6.  All  Acts  or  parts  of  Acts  inconsistent  herewith  are 
hereby  repealed. 


AN  ACT  TO  ABOLISH  THE  COMMISSION  CHEATED  BY  AN  ACT  ENTITLED 
"AN  ACT  TO  PROVIDE  FOB  THE  SELECTION  OF  A  SITE  AND  THE 
ERECTION  OF  A  STATE  INSTITUTION  FOB  THE  FEEBLE-MlNDED 
AND  EPILEPTIC,  TO  BE  CALLED  THE  EASTERN  PENNSYLVANIA 
STATE  INSTITUTION  FOR  THE  FEEBLE-MINDED  AND  EPILEPTIC, 
AND  MAKING  /N  APPROPRIATION  THEREFOR,"  APPROVED  MAY  15, 
1903,  AND  TO  PROVIDE  FOR  THE  COMPLETION  OF  SAID  INSTITUTION 
BY  THE  DEPARTMENT  OF  STATE  CHARITABLE  INSTITUTIONS.  AND 

MAKING  .AN    APPROPRIATION    THEREFOR." 

SECT.  1.  Be  it  enacted,  etc.,  That  the  Commission  created  by 
the  provisions  of  an  Act  entitled  "An  Act  to  provide  for  the 
selection  of  a  site  and  the  erection  of  a  State  Institution  for 
the  Feeble-Minded  and  Epileptic,  to  be  called  The  Eastern 
Pennsylvania  State  Institution  for  the  Feeble-Minded  and  Epi- 
leptic, and  making  an  appropriation  therefor,"  approved  May 
15,  1903,  to  select  a  site  and  build  an  institution  for  the  care 
and  maintenance  of  epileptics  an  L  idiotic  and  feeble-minded 
persons  of  Eastern  Pennsylvania,  be  and  the  same  is  hereby 
abolished,  to  take  effiect  one  month  after  this  Act  goes  into 
effect. 

SECT.  2.  The  existing  Commission  shall  within  one  month  af- 
ter this  Act  goes  into  effect  deliver  to  the  Department  of  State 


103 

Charitable  Institutions  all  the  records  of  its  office  and  the  tract 
or  tracts  of  land  and  buildings  in  course  of  erection  thereon, 
if  any,  selected  for  the  said  institution.  The  said  Department 
shall  thereupon  proceed  to  select  other  suitable  tract  or 
tracts  of  land  as  may  oe  necessary  for  the  completion  of  said 
institution  and  grounds;  and  said  tract  or  tracts  of  land,  so 
selected,  and  the  cost  thereof,  shall  be  approved  in  writing  by 
the  Governor  before  the  purchase  money  shall  be  paid,  and 
the  deed  or  deeds  for  the  same  shall  be  taken  in  the  name  of 
the  Commonwealth ;  but  nothing  herein  contained  shall  prevent 
the  Commonwealth;  but  nothing  herein  contained  shall 
prevent  said  Department  from  receiving  a  deed  to  the  Com- 
monwealth in  fee,  for  any  land  donated  for  the  purpose 
aforesaid.  Said  Department  of  State  Charitable  Instiutions 
subject  to  existing  contracts  of  contractors  and  architects,  shall 
proceed  with  the  completion  of  the  plan  of  said  building  or 
buildings,  and  shall  prepare  such  other  plan  or  plans  as  may  be 
necessary  for  the  completion  of  said  institution,  and  shall  have 
power  to  employ  and  fix  the  compensation  of  the  superintend- 
ent of  construction  and  such  other  persons  as  it  may  think 
necessary  to  employ  to  secure  the  proper  and  economical  con- 
struction of  said  building  or  buildings.  The  money  heretofore 
appropriated  for  the  purchase  of  suitable  land  for  a  site  for 
said  institution  and  for  the  construction  of  the  said  institution 
not  heretofore  expended  and  the  money  appropriated  by  this 
Act,  shall  be  expended  under  the  direction  of  the  said  Depart- 
ment of  State  Charitable  Institutions  and  shall  be  drawn 
from  the  Treasury  as  may  be  required  for  the  erection  and 
completion  of  said  buildings  and  grounds  on  warrants  signed 
by  the  Commissioner  of  State  Charitable  Institutions. 

SECT.  3.  Said  Department  of  State  Charitable  Institutions 
shall  proceed  to  erect  said  buildings  and  complete  the  same 
as  soon  as  possible  compatible  with  the  economical,  substan- 
tial and  skillful  execution  of  the  work  with  such  funds  as  may 
be  appropriated,  from  time  to  time,  by  the  Legislature. 

SECT.  4.  Said  Department  of  State  Charitable  Institutions 
upon  the  completion  of  the  said  institution  shall  surrender  its 
trust  to  "The  Trustees  of  the  State  Institution  for  Feeble- 
Minded  of  Eastern  Pennsylvania." 

SECT.  5.  For  the  purpose  of  completing  said  institution  the 
sum  of  Seven  hundred  and  fifty  thousand  dollars  ($750,000)  is 
hereby  appropriated  annually  for  the  years  1911  and  1912,  to 
be  drawn  as  hereinbefore  provided. 

SECT.  6.  All  Acts  or  parts  of  Acts  inconsistent  herewith  are 
hereby  repealed. 


104 


AN  ACT  TO  ABOLISH  THE  OFFICE  OF  COMMISSIONERS  CREATED  BY  AN 
ACT  ENTITLED  "AN  ACT  TO  PROVIDE  FOR  THE  SELECTION  OF  A 
SITE  AND  THE  ERECTION  OF  A  STATE  HOSPITAL  FOR  INJURED 

PERSONS,  TO  BE  LOCATED  AT  OR  NEAR  SHAMOKIN,  IN  THE  COUNTY 
OF  NORTHUMBERLAND,  TO  BE  CALLED  A  STATE  HOSPITAL  FOR 
INJURED  PERSONS  OF  THE  TREVERTON,  SHAMOKIN  AND  MOUNT 
CARMEL  COAL  FIELDS,  AND  FOR  THE  MANAGEMENT  OF  THE  SAME, 
AND  MAKING  AN  APPROPRIATION  THEREFOR,"  APPROVED  JUNE  13, 
1907,  AND  TO  PROVIDE  FOR  THE  COMPLETION  OF  THE  SAID  HOS- 
PITAL BY  THE  DEPARTMENT  OF  STATE  CHARITABLE  INSTITU- 
TIONS, AND  MAKING  AN  APPROPRIATION  THEREFOR. 

SECT.  1.  Be  it  enacted,  etc.,  That  the  office  of  Commissioners 
created  by  an  Act  entitled  "An  Act  to  provide  for  the  selection 
of  a  site  and  the  erection  of  a  State  Hospital  for  injured  per- 
sons, to  be  located  at  or  near  Shamokin,  in  the  county  of 
Northumberland,  to  be  called  a  State  Hospital  for  Injured  Per- 
sons of  the  Treverton,  Shamokin  and  Mount  Carmel  Coal  Fields, 
and  for  the  management  of  the  same,  and  making  an  appro- 
priation therefor,"  approved  June  13,  1907,  to  select  a  site  and 
build  a  hospital  for  injured  persons  to  be  located  at  or  near 
Shamokin,  in  the  county  of  Northumberland,  be,  and  the  same 
is  hereby  abolished,  to  take  effect  one  month  after  this  Act 
goes  into  effect. 

SECT.  2.  The  existing  Commissioners  shall  within  one  month 
after  this  Act  goes  into  effect  deliver  to  the  Department  of 
State  Charitable  Institutions  all  the  records  of  their  office  and 
the  tract  or  tracts  of  land  and  buildings  in  the  course  of  erec- 
tion thereon,  if  any,  selected  for  the  said  hospital.  The  said 
Department  shall  thereupon  proceed  to  select  such  other  tract 
or  tracts  of  land  at  or  near  Shamokin  in  Northumberland 
county  as  may  be  necessary  for  the  completion  of  the  said  hos- 
pital and  grounds,  wrhich  shall  be  approved  by  the  Governor  in 
writing,  and  the  deeds  for  the  same  shall  be  taken  in  the  name 
of  the  Commonwealth  in  fee.  Said  Department,  subject  to  ex- 
isting contracts  of  contractors  and  architects,  shall  proceed 
with  the  completion  of  the  plan  of  said  building  or  buildings, 
and  shall  have  power  to  employ  and  fix  the  compensation  of 
the  superintendent  of  construction  of  said  buildings  and  such 
other  persons  as  they  may  think  necessary  to  employ  to  secure 
the  proper  and  economical  construction  of  said  building  or 
buildings.  The  money  heretofore  appropriated  for  the  con- 
struction of  the  said  hospital  not  heretofore  expended  and  the 
money  appropriated  by  this  Act  shall  be  expended  under  the 


105 

direction  of  the  said  Department  and  shall  be  drawn  from  the 
Treasury  as  may  be  required  for  the  erection  of  said  buildings 
on  warrants  signed  by  the  Commissioner  of  State  Charitable 
Institutions. 

SECT.  3.  Said  Department  of  State  Charitable  Institutions 
shall  proceed  to  erect  and  complete  said  buildings  as  soon  as 
possible  compatible  with  the  economical,  substantial  and  skillful 
execution  of  the  work. 

SECT.  4.  Said  Department  of  State  Charitable  Institutions 
upon  the  completion  of  said  hospital  shall  surrender  their  trust 
to  "The  Trustees  of  the  State  Hospital  of  the  Treverton,  Sha- 
raokin  and  Mount  Carmel  Coal  Fields  of  Pennsylvania." 

SECT.  5.  For  the  purpose  of  completing  said  hospital  the  sum 
of  seventy-five  thousand  dollars  ($75,000)  is  hereby  appropriated 
annually  for  the  years  1911  and  1912  to  be  drawn  as  herinbe- 
fore  provided. 

SECT.  6.  All  Acts  or  parts  of  Acts  inconsistent  herewith  are 
hereby  repealed. 


AX  ACT  CREATING  A  DEPARTMENT  OF  STATE  CHARITABLE  INSTITU- 
TIONS AND  A  COMMITTEE  ON  LUNACY,  SUBJECT  TO  THE  DE- 
PARTMENT, DKKIX1XC  THE  DUTIES  OF  EACH  WITH  RESPECT  TO 

STATE  INSTITUTIONS  AND  CHARITABLE,  REFORMATORY  AND  COR- 
RECTIONAL INSTITUTIONS,  JAILS,  PRISONS,  ALMS,  POOR  AND 
WORK  JTorsus,  AND  THE  TREATMENT  AND  DETENTION  OF  THE 
INSANE.  AND  MAKING.  AN  APPROPRIATION  THEREFOR;  REGU- 
LATING THE  TREATMENT  AND  DETENTION  OF  THE  INSANE,*  AND 

ABOLISHING  THE  BOARD  OF  PUBLIC  CHARITIES  AND  THE  PRESENT 

COMMITTEE  ON  LUNACY. 

SECTION  1.  Be  it  enacted,  etc.,  That  there  is  hereby  established 
a  separate  and  distinct  Department,  to  be  known  as  the  De- 
partment of  State  Charitable  Institutions,  the  Commissioner 
of  which  said  Department  shall  have  charge  of  the  erection  of 
all  new  State  institutions,  and  supervision  of  all  charitable 
institutions,  entirely  or  partly  supported  and  maintained  by 
State  appropriations,  as  to  their  affairs  of  all  kinds,  and  ot 
reformatory  and  correctional  institutions,  hospitals  and  houses 
in  which  the  insane  are  placed  for  treatment  or  detention, 
city  and  county  jails  or  prisons,  and  alms,  poor  and  work 
houses. 

SECTION  2.  The  chief  officer  of  the  Department  of  State  Charita- 
ble Institutions  shall  be  denominated  the  Commissioner  of  State 
Charitable  Institutions.  He  shall  be  appointed  by  the  Governor, 
by  and  with  the  advice  and  consent  of  the  Senate,  and  shall  hold 

8 


106 

his  office  for  four  years,  and  until  his  successor  shall  be  duly 
qualified,  and  he  shall  receive  an  annual  salary  of  six  thousand 
dollars  ($6,000),  payable  quarterly  by  a  warrant  drawn  by 
the  Auditor  General  upon  the  State  Treasurer.  He  shall  appoint 
one  deputy,  who  shall  perform  the  duties  attached  by  law  to  the 
office  of  Commissioner  of  State  Charitable  Institutions,  during1 
the  absence  or  inability  of  the  Commissioner,  and  such  other 
duties  as  may  be  assigned  him,  whose  salary  shall  be  twenty- 
five  hundred  dollars  ($2,500)  per  annum,  payable  in  the  same 
manner  as  that  of  the  Commissioner,  and  shall  give  to  the 
Commonwealth  a  bond  in  the  penalty  of  ten  thousand  dollars 
($10,000),  with  one  or  more  sureties  to  be  approved  by  the  Gov- 
ernor, conditioned  for  the  proper  and  faithful  performance  of 
his  duties.  The  Commissioner  shall  also  appoint  three  clerks, 
one  of  whom  shall  be  a  trained  stenographer,  at  an  annual 
salary  of  fourteen  hundred  dollars  ($1,400)  each,  who  shall  dis- 
charge such  duties  as  he  .shall  assign  them,  and  whose  salary 
shall  be  paid  monthly,  by  warrant  drawn  by  the  Auditor  Gen- 
eral upon  the  State  Treasurer.  He  shall  also  appoint  one  mes- 
senger, who  shall  receive  a  salary  of  nine  hundred  dollars 
($900.00)  per  annum,  to  be  paid  in  the  same  manner  as  the 
salaries  of  the  clerks.  The  Commissioner  of  State  Charitable 
Institutions  may  also,  from  time  to  time,  appoint  examiners,  in 
such  number  as  may  be  necessary  for  the  proper  conduct  of  the 
business  of  the  Department,  not  to. exceed  six  in  number,  who 
shall  receive,  when  actually  employed  in  making  examinations 
of  the  affairs  of  the  various  institutions  of  the  State, 
under  the  order  of  the  said  Commissioner,  not  to  exceed  eight 
dollars  ($8.00)  per  day,  and  also  actual  expenses  incurred  in 
making  such  examinations;  which  compensations  and  expenses 
shall  be  paid  by  warrant  drawn'  by  the  Auditor  General  upon 
the  State  Treasurer.  Within  fifteen  days  from  the  time  of  the 
notice  of  their  appointment,  the  Commissioner  and  his  deputy 
shall  take  and  subscribe  the  oath  of  office  prescribed  by  the  Con- 
stitution, and  file  the  same  in  the  office  of  the  Secretary  of  the 
Commonwealth;  and  the  Commissioner  shall  also  give  to  the 
Commonwealth  a  bond  in  the  penalty  of  twenty  thousand  dollars 
($20,000),  with  two  or  more  sureties  to  be  approved  by  the 
Governor,  and  conditioned  for  the  faithful  performance  of  his 
duties. 

SECTION  3.  The  Department  shall  be  provided,  by  the  proper 
authorities,  with  suitably  furnished  offices  at  the  State  Capitol. 

SECTION  4.  It  shall  be  the  duty  of  the  said  Commissioner  of 
State  Charitable  Institutions  to  visit  each  of  the  said  charitable, 


107 

reformatory  or  correctional  institutions  within  the  State,  re- 
ceiving State  aid,  and  each  of  the  city  and  county  jails  and 
prisons,  and  alms,  poor  and  work  houses,  at  least  twice  in 
every  calendar  year,  and  to  examine  into  the  condition  of  all 
buildings,  grounds  and  other  property  connected  with  such 
institutions  and  of  all  matters  relating  to  its  management, 
financial  or  otherwise ;  and  for  such  purpose  he  shall  have  free 
access  to  the  grounds  and  buildings,  all  books,  papers,  property 
and  supplies,  of  any  such  institution ;  and  all  persons  con- 
nected with  any  such  institution  shall  give  such  information 
and  afford  such  facilities  for  such  examination  and  inquiry  as 
the  Commissioner  may  require.  The  Examiners  appointed  by 
him  shall  have  the  same  powers  of  investigation  and  right  of 
access  in  all  of  the  said  institutions  under  the  control  of  the 
Department.  The  Commissioner  and  Deputy  Commissioner  of 
the  said  Department  and  the  Exminers  appointed  by  its  Com- 
missioner, are  each  hereby  authorized  to  administer  oaths  in 
examining  any  person  or  persons  relative  to  any  matters  con- 
nected with  the  inquiries  authorized  by  this  Act. 

SECTION  5.  The  said  Commissioner  of  the  Department  of 
State  Charitable  Institutions  shall  prepare  a  series  of  inquiries, 
with  necessary  accompanying  blanks,  to  the  several  institu- 
tions of  charity,  reformation  and  correction,  in  the  State,  and 
to  those  having  charge  of  the  poor  in  the  several  counties 
thereof,  and  any  sab-division  of  the  same,  with  a  view  to  illus- 
trate in  his  annual  report  the  causes  and  best  treatment  oi 
pauperism,  crime,  disease  and  insanity;  he  shall  also  return 
and  publish  in  his  said  report  all  desirable  information  concern- 
ing industrial  and  material  interests  of  the  Commonwealth 
bearing  on  this  subject. 

SECTION  6.  It  shall  be  the  duty  of  all  persons  having  charge 
or  oversight  over  the  poor  in  any  city  or  county  of  this  State, 
or  in  any  sub-division  thereof,  and  all  persons  having  charge 
or  control  of  county  jails  or  prisons  or  work  houses,  and  of  all 
other  persons  having  charge  or  control  over  any  other  charita- 
ble, reformatory  or  correctional  institutions  not  now  by  law 
required  to  make  an  annual  report  of  the  condition  of  the 
same,  to  make  report,  annually,  to  the  said  Commissioner  of 
the  Department  of  State  Charitable  Institutions  at  such  time 
and  in  such  manner  as  he  shall  prescribe,  of  such  facts  and 
statements  concerning  the  same  as  he  may  require,  and  all 
charitable,  reformatory  and  correctional  institutions  now  re- 
quired by  law  to  make  annual  reports,  shall  hereafter  make  and 
transmit  the  same  to  the  said  Commissioner  on  or  before  the 
first  day  of  December  in  each  year. 


108  r 

SECTION  7.  The  statements  required  to  be  made  by  the  inspec- 
tors, sheriffs  or  other  person  having-  charge  of  any  penitentiary 
or  jail  within  this  State,  under  the  provisions  of  the  first  sec- 
tion of  the  Act  approved  the  twenty-seventh  day  of  February, 
one  thousand  eight  hundred  and  forty-seven,  entitled  "An  Act 
requiring-  inspectors  of  prisons,  sheriffs,  prothonotaries,  and 
clerks  of  criminal  courts  and  others  to  make  annual  returns 
to  the  Secretary  of  the  Commonwealth,  and  for  other  purposes" 
shall  hereafter  be  made  to  the  Department  of  State  Charitable 
Institutions ;  and  it  shall  be  the  duty  of  the  inspectors,  sheriffs 
and  other  persons  having-  charg-e  of  any  penitentiary  or  jail 
within  this  Commonwealth  to  keep  the  records  of  the  peniten- 
tiary or  jail  in  their  charge  after  forms  to  be  prepared  for  and 
furnished  them  by  the  said  Department  of  State  Charitable  In- 
stitutions so  that  the  information  and  statistics  intended  to  be 
obtained  under  the  first  section  of  the  Act  of  the  twenty- 
seventh  day  of  February,  one  thousand  eight  hundred  and 
forty-seven,  and  such  other  information  and  statistics  as  the 
said  Department  of  State  Charitable  Institutions  may  deem 
necessary,  may  be  presented  with  accuracy  and  uniformity. 

SECTION  8.  It  shall  be  the  duty  of  the  said  inspectors,  sheriffs 
and  other  persons  to  make  return  of  the  statements  required  by 
the  seventh  section  of  this  Act  to  the  said  Department  of  State 
Charitable  Institutions  within  ten  days  after  the  first  days 
of  January,  April,  July  and  October  in  each  year  if  required 
by  said  Department,  for  each  of  which  statements  the  officer 
making  the  same  shall  receive  the  sum  of  ten  dollars,  to  be? 
paid  out  of  the  county  funds  of  the  coimty  for  which  said 
statement  shall  be  made,  and  upon  the  neglect  or  refusal  to 
make  such  statements  in  the  manner  and  at  the  times  required 
by  this  Act,  such  inspector,  sheriff  or  other  person  so  neglect- 
Ing  or  refusing,  shall  forfeit  and  pay  a  fine  of  not  more  than 
$100.00  to  be  sued  for  and  collected  by  the  Commissioner  in 
the  name  of  the  Department  of  State  Charitable  Institutions  for 
the  use  of  the  Commonwealth. 

SECTION  9.  It  shall  be  the  duty  of  the  Overseers  and  Directors 
of  the  Poor,  or  other  persons  having  charge  of  the  poor  in  the 
several  counties,  cities,  boroughs  and  townships  of  this  Com- 
monwealth, arid  of  all  directors  and  managers  of  charitable 
and  correctional  institutions,  of  the  Commonwealth  receiving 
State  aid,  to  keep  their  records  after  the  manner  and  in  the 
form  to  be  prescribed  by  the  Department  of  State  Charitable 
Institutions,  and  to  make  returns  thereof  to  said  Department 
at  such  times  as  they  may  direct;  and  in  default  thereof,  the 


109 

person  or  persons  so  offending-  shall  forfeit  and  pay  a  fine  of 
not  less  than  one  hundred  dollars,  to  be  sued  for  and  collected 
by  the  Commissioner,  in  the  name  of  the  Department  of  State 
Charitable  Institutions,  for  the  use  of  the  Commonwealth. 

SECTION  10.  That  before  any  county  prison  or  county  alms- 
house  shall  be  erected  within  this  Commonwealth,  the  plan 
of  construction  of  such  prison  or  almshouse,  drawn  sufficiently 
in  detail  for  clear  comprehension  thereof,  shall  be  submitted 
by  the  Commissioners  of  the  county  in  which  the  same  is  to  be 
built,  to  the  Department  of  State  Charitable  Institutions,  and 
shall  be  inspected  and  approved  by  said  Department,  and  so 
certified  by  the  Commissioner  of  said  Department  upon  the 
plan,  a  copy  of  which  shall  be  furnished  by  the  Commissioners 
at  the  time  of  their  submitting-  the  original  as  aforesaid,  and 
shall  be  signed  by  the  Commissioner  of  the  said  Department, 
and  shall  be  filed  and  remain  in  the  office  of  the  Secretary  of 
the  Commonwealth ;  and  that  so  much  of  the  first  section  of 
the  Act  of  April  eighth,  one  thousand  eight  hundred  and  fifty- 
one,  as  requires  the  report  of  plans  of  county  prisons  to  be  made 
to  and  approved  by  the  Secretary  of  the  Commonwealth,  be 
and  the  same  is  hereby  repealed. 

SECTION  11.  It  shall  also  be  the  duty  of  the  Commissioner  to 
make  a  biennial  report  to  the  Legislature  of  all  matters  con- 
nected with  his  Department  and  said  institutions  and  the  finan- 
cial management  thereof  as  he  may  deem  necessary,  covering 
the  two  years  ending  November  thirtieth  preceding.  He  shall 
make  like  special  reports  to  the  Legislature  when  requested  by 
either  House  or  any  Committee  thereof,  and  like  reports  to  the 
Governor  on  the  first  days  of  January  and  July  in  each  year 
with  such  suggestions  as  he  deems  proper. 

SECTION  12.  All  charitable  institutions  not  wholly  managed 
and  maintained  by  the  State  desiring  to  receive  State  aid  for 
construction,  improvement  or  maintenance  shall  before  the 
first  day  of  October  of  each  year  immediately  preceding  the 
biennial  session  of  the  Legislature  inform  the  said  Commis- 
sioner in  writing  of  the  sum  asked  to  be  appropriated  therefor 
and  the  purposes  for  which  required ;  together  with  such  min- 
utely detailed  information  under  oath  as  he  may  require  to 
determine  the  cost  of  free  hospital,  dispensary  and  all  other 
kinds  of  service  therein  and  the  amount  thereof  during  the 
two  years  then  next  preceding ;  provided  that  such  infor- 
mation already  furnished  may  be  taken  in  whole  or  in  part  as 
the  information  now  required.  Upon  the  receipt  thereof  the 
Commissioner,  after  such  investigation  and  consultation  with 


110 

the  managers  of  such  institutions  as  he  may  deem  necessary, 
shall  determine  and  advise  the  Legislature  in  his  report  of  the 
said  cost  and  the  amount  thereof  according  to  the  different 
kinds  of  service,  and  this  shall  form  the  basis  of  the  appro- 
priation to  snch  institution  for  maintenance  by  the  Legisla- 
ture for  the  two  following  years. 

SECTION  13.  The  Department  of  State  Charitable  Institutions 
shall  have  supervision  over  all  houses  or  places  in  which 
any  person  of  unsound  mind  is  detained,  whenever  the  occu- 
pant of  the  house  or  person  having  charge  of  the  lunatic  re- 
ceives any  compensation  for  the  custody,  control  or  attendance, 
other  than  as  an  attendant  or  nurse,  and  also  of  all  houses  or 
places  in  which  more  than  one  such  person  is  detained  with  or 
without  compensation  paid  for  custody  or  attendance. 

SECTION  14.  The  Commissioner  of  the  Department  of  State 
Charitable  Institutions,  a  member  of  the  bar  of  at  least  ten 
years'  standing  and  a  practicing  physician  of  at  least  ten  years' 
standing  shall  act  as  a  Committee  on  Lunacy,  which  Com- 
mittee shall  at  all  times  be  subject  to  the  authority  and  con- 
trol of  the  Department  of  State  Charitable  Institutions.  The 
two  professional  members  shall  be  appointed  by  the  Governor 
and  confirmed  by  the  Senate  after  the  passage  of  this  Act  for 
a  term  of  five  years  or  upon  any  vacancies  occurring  by  death 
or  resignation  for  the  unexpired  term  of  such  appointment, 
or  on  expiration  of  the  term  of  service,  and  the  Governor  upon 
sufficient  cause  may  in  his  discretion  remove  any  member  from 
the  office.  The  Committee  shall  choose  a  Chairman  from  their 
number  and  a  person  to  serve  as  Secretary  for  the  current 
year  and  annually  thereafter  in  November.  Two  members  shall 
constitute  a  quorum  of  the  Committee.  The  Secretary  shall 
receive  an  annual  salary  of  three  thousand  dollars,  with  nec- 
essary incidental  expenses,  to  be  accompanied  with  proper 
vouchers  payable  quarterly  by  the  State  Treasurer,  and  he  may 
be  removed  at  the  pleasure  of  the  Committee. 

SECTION  15.  The  report  of  the  said  Committee  on  Lunacy 
shall  be  published  annually  with  that  of  the  Department  of 
State  Charitable  Institutions. 

SECTION  16.  The  Department  shall  have  power,  from  time  to 
time,  with  the  consent  of  the  Chief  Justice  of  the  Supreme 
Court  and  of  the  Attorney  General,  to  ordain  rules  and  regu- 
lations on  the  following  matters,  so  far  as  the  same  are  not 
inconsistent  with  any  laws  of  this  Commonwealth  then  in  force, 
and  of  any  provisions  of  this  Act : 


Ill 

(1).  The  licensing  of  all  houses  or  places  in  which  any  per- 
son can  be  lawfully  detained  as  a  lunatic,  or  of  unsound  mind, 
upon  compensation  paid  to  or  received  by  the  owner  or  occu- 
pant of  such  house  or  place,  directly  or  indirectly,  for  the  care 
of  such  lunatic,  and  also  of  all  houses  or  places  in  which  more 
than  one  person  of  unsound  mind  is  detained,  or  resides :  Pro- 
vided, That  this  clause  shall  not  extend  to  any  jail  or  prison: 
And  provided  also,  That  the  Department,  with  consent  as  afore- 
said, may,  from  time  to  time,  exempt  any  particular  hospital 
established  by  the  State,  or  under  any  municipal  authority,  or 
any  eleemosynary  institution  from  the  obligation  to  apply  for 
or  obtain  a  license,  and  no  such  institution  now  existing  shall 
be  required  to  take  out  a  license  until  required  to  do  so  by  the 
Department,  with  the  consent  aforesaid. 

(2).  Regulations  to  insure  the  proper  treatment  of  persons 
detained  in  any  house  or  place,  whether  licensed  or  not,  that 
are  subject  to  the  provisions  of  this  Act,  and  to  guard  against 
haproper  or  unnecessary  detention  of  such  persons. 

(3).  Regulations  of  the  forms  to  be  observed  warranting  the 
commitment,  transfer  of  custody,  and  discharge  of  all  luna- 
tics, other  than  those  committed  by  order  of  a  Court  of 
Record,  and  as  to  these  with  the  consent  of  the  Presiding 
Judge  of  the  Court  under  whose  order  the  person  is  detained. 

(4).  The  visitation  of  all  houses  or  places  licensed  under 
this  Act,  or  in  which  any  persons  are  detained  as  lunatics, 
and  of  all  persons  detained  therein. 

(5).  The  withdrawal  of  such  licenses,  and  the  imposition  of 
conditions  under  which  they  shall  continue. 

(6).  Reports  and  information  to  be  furnished  by  the  man- 
ager or  managers  of  all  houses  or  places  for  the  detention  or 
treatment  of  the  insane  which  are  subject  to  the  provisions 
of  this  Act,  and  by  Boards  of  Visitors. 

(7).  Regulations  as  to  the  number  of  persons  that  may  be 
detained,  and  the  accommodations  to  be  provided,  and  food, 
clothing,  fuel  to  be  furnished,  in  any  house  or  building,  subject 
to  the  provisions  of  this  Act,  the  manner  of  such  detention,  and 
the  restraints  imposed,  the  means  of  communication  by  those 
detained,  with  relatives,  friends  and  other  persons  outside  the 
houses  and  places  of  detention. 

SECTION  17.  There  shall  be  appointed  Boards  of  Visitors  of 
all  houses  or  places,  licensed  under  this  Act,  or  in  which  any  per- 
son of  unsound  mind  is  detained  and  for  the  care  and  custody 
of  whom  compensation  of  any  kind  is  received  or  where  more 
than  one  such  person  is  detained.  One  such  Board  shall  be 


112 

appointed  in  every  county  in  which  there  is  a  house  or  place, 
subject  to  the  provisions  of  this  Act,  of  not  less  than  three  per- 
sons, and  in  each  county  where  there  are  more  than  one  such 
house  or  place,  the  number  constituting-  the  Board  of  Visitors 
of  such  county  shall  be  increased  in  the  discretion  of  the  Com- 
mittee on  Lunacy. 

SECTION  18.  The  members  of  the  Board  of  Visitors  shall  be 
appointed  by  the  Department  of  State  Charitable  Institutions 
in  each  year,  and  shall  continue  until  their  successors  arc 
appointed,  and  the  Department  may  remove  the  visitors,  and 
fill  vacancies  in  the  office. 

SECTION  19.  Women  may  be  appointed  members  of  the  Boards 
of  Visitors,  and  at  least  once  a  year  these  Boards  shall  be  filled 
so  that  members  who  have  failed  to  act  shall  be  removed. 

SECTION  20.  It  shall  not  be  lawful  for  any  person  or  persons 
or  corporations,  not  exempted  from  the  obligation  to  obtain 
a  license  under  this  Act,  to  keep  or  maintain  a  house  or  place 
for  the  reception  or  custody  of  persons  of  unsound  mind,  with- 
out having-  received  a  license  under  this  Act ;  nor  when  such 
license  has  expired  or  been  withdrawn  or  suspended,  and  the 
manager  and  occupant  of  any  such  house,  within  which  more 
than  one  person  shall  be  detained,  as  being-  a  person  of  un- 
sound mind,  for  compensation  received,  and  the  manager  and 
occupant  of  any  such  house  or  place  wherein  more  than  one 
person  is  received  and  detained,  with  or  without  compensa- 
tion, and  while  there  is  no  license  in  force  authorizing  the 
keeping  of  such  a  house  or  place,  shall  be  deemed  guilty  of  a 
misdemeanor. 

SECTION  21.  Any  person  having  charge  or  control  of  any 
house  or  place  subject  to  the  provisions  of  this  Act,  used  for 
the  detention,  care  or  custody  of  a  lunatic,  who  shall  violate 
or  omit  to  observe  any  regulation  of  the  Committee  on  Lu- 
nacy, authorized  by  this  Act,  after  a  copy  of  the  same  has  been 
left  at  the  said  house  or  place  or  delivered  to  the  person 
named  in  the  license,  or  to  the  manager  of  such  house,  shall  be 
deemed  guilty  of  a  misdemeanor;  and  all  common  law  rights 
of  action  or  indictments  are  also  reserved. 

SECTION  22.  The  Department  of  State  Charitable  Institutions 
shall,  from  time  to  time,  provide  for  an  effectual  visitation 
of  all  persons  confined  as  insane  in  all  places  over  which  they 
are  given  jurisdiction  by  this  Act,  and  an  inspection  of  sucb 
houses  or  places  of  confinement,  and  of  the  mode  of  treatment 
of  the  insane. 


113 

SECTION  23.  And  the  Department  shall  make  rules  to  insure 
to  the  patients  the  admission  of  all  proper  visitors,  being" 
members  of  their  family,  or  personal  friends,  agents  or  attor- 
neys, and  compel  obedience  to  such  regulations. 

SECTION  24.  The  detention  of  any  person  as  insane  in  any 
house  or  place,  made  subject  to  the  provisions  of  this  Act, 
without  compliance  with  the  requisitions  of  this  Act,  shall  be 
a  misdemeanor  on  the  part  of  any  person  concerned  in  such 
detention,  who  has  omitted  or  permitted  the  omission  of  any 
of  the  requirements,  and  the  party  aggrieved  shall  also  be 
entitled  to  his  action  for  damages. 

SECTION  25.  No  verdict  or  judgment  shall  be  entered  in  any 
action,  nor  shall  any  judgement  be  entered  on  any  indictment 
for  such  detention,  as  against  any  person  or  persons  who  are 
subject  to  the  regulations  and  provisions  of  this  Act,  who  shall 
have  complied  with  the  requirements  of  this  Act ;  unless  the 
Judge,  after  trial  and  verdict,  shall  certify  that  there  was 
proof,  to  his  satisfaction,  that  the  party  charged  acted  with 
gross  negligence  or  corruptly,  or  that  he  acted  without  reason- 
able or  probable  cause,  or  was  actuated  by  motives  other  than 
the  good  of  the  person  restrained. 

SECTION  26.  In  all  buildings  or  establishments  where  an  in- 
sane person  is  detained,  which  are  subject  to  the  provisions 
of  this  Act,  there  shall  be  kept  the  following  books,  which 
shall  be  at  all  times  open  to  the  inspection  of  any  member 
of  the  Committee  on  Lunacy,  or  the  Board  of  Visitors  of  the 
proper  county : 

An  admission  book. 

A  discharge  book. 

A  case  book  in  which  there  shall  be  regularly  entered  all 
the  facts,  bearing  on  each  patient  and  his  case. 

A  medical  journal  in  which  there  shall  be,  at  least  once  a 
week,  a  statement  written  of  all  matters  which  are  of  special 
importance,  bearing  on  the  treatment  and  condition  of  the 
patients. 

SECTION  27.  No  person  shall  be  received  as  a  patient  for 
treatment  or  for  detention  into  any  house  or  place,  where 
more  than  one  insane  person  is  detained,  or  into  any  house  or 
place  where  one  or  more  insane  persons  are  detained  for 
compensation,  without  a  certificate  signed  by,  at  least,  two 
physicians,  resident  in  this  Commonwealth,  who  have  been 
actually  in  the  practice  of  medicine  for  at  least  five  years, 
both  of  whom  shall  certify  that  they  have  examined  sepa- 


114 

rately  the  person  alleged  to  be  insane,  and  after  such  exami- 
nation had,  do  verily  believe  that  the  person  is  insane,  and 
that  the  disease  is  of  a  character,  which,  in  their  opinion,  re- 
quires that  the  person  should  be  placed  in  a  hospital  or  other 
establishment  where  the  insane  are  detained  for  care  and  treat- 
ment, and  that  they  are  not  related  by  blood  or  marriage  to 
the  person  alleged  to  be  insane,  nor  in  any  way  connected  aa 
a  medical  attendant,  or  otherwise,  with  the  hospital  or  other 
establishment,  in  which  it  is  proposed  to  place  such  person. 

SECTION  28.  The  certificate  above  provided  for  shall  have  been 
made  within  one  week  of  the  examination  of  the  patient,  and 
within  two  weeks  of  the  time  of  the  admission  of  the  patient, 
and  shall  be  duly  sworn  to  or  affirmed  before  anyone  author- 
ized to  administer  oaths  by  the  laws  of  this  Commonwealth, 
who  shall  certify  to  the  genuineness  of  the  signatures,  and  to 
the  standing  and  good  repute  of  the  signers.  And  any  person 
falsely  certifying  as  aforesaid  shall  be  guilty  of  a  misdemeanor, 
and  also  liable  civilly  to  the  party  aggrieved. 

SECTION  29.  No  person  alleged  to  be  insane  shall  be  received 
into  any  house  for  treatment  or  for  detention,  unless  at  the 
time  of  such  reception  the  person  or  persons,  at  whose  in- 
stance the  person  is  received,  shall,  by  a  writing  signed,  state 
that  the  person  has  been  removed,  and  is  to  be  detained  at  his 
or  her  request,  under  the  belief  that  such  detention  is  neces- 
sary and  for  the  benefit  of  the  insane  person. 

SECTION  30.  There  shall  also  be  delivered  to  the  person  or 
persons  having  the  supervision  or  charge  of  house,  a  written 
statement  of  the  following  facts  relative  to  the  person  to  be 
detained,  signed  by  the  person  or  persons  at  whose  instance 
the  insane  person  has  been  removed  and  detained,  or  if  the 
facts  be  not  known  it  shall  be  so  stated. 

(1).  The  name. 

(2).  Age. 

(3).  Kesidence  for  the  past  year,  or  for  so  much  thereof  as  is 
known. 

(4).  Occupation,   trade   or   employment. 

(5).  Parents,  if  living. 

(6).  Husband  or  wife. 

(7).  Children. 

(8).  Brothers  and  sisters,  and  the  residence  of  each  of  these 
persons. 

(9).  If  not  more  than  one  of  these  classes  is  known,  the 
names  and  residences  of  such  of  the  next  degree  of  relatives, 
as  are  known. 


115 

(10).  A  statement  of  the  time  at  which  the  insanity  has 
been  supposed  to  exist,  and  the  circumstances  that  induce  the 
belief  that  insanity  exists. 

(11).  Name  and  address  of  all  medical  attendants  of  the 
patient  during-  the  last  two  years. 

SECTION  31.  Should  the  person  in  charge  of  the  house  have 
reason  to  believe  that  any  of  these  statements  have  been  omitted 
through  ignorance,  and  that  the  answers  will  be  immediately 
furnished,  and  no  reason  existing  to  doubt  the  good  faith  of 
the  parties,  after  inquiring  of  the  person  intended  to  be  de- 
tained, it  shall  be  lawful  to  detain  the  person  alleged  to  be 
insane  for  such  further  period  as  shall  be  necessary  to  obtain 
the  said  statements  complete,  but  not  exceeding  seven  days. 

SECTION  32.  Within  twenty-four  hours  after  any  person  is 
received  into  any  house  for  detention  as  an  insane  person,  the 
person  in  charge  there  shall  enter  or  have  entered  in  a  book 
kept  for  that  purpose  all  the  facts  stated  in  the  certificate  or 
documents  required  to  be  exhibited  at  the  time  of  receiving  the 
patient,  and  shall  file  the  originals  and  preserve  them.  The 
regular  medical  attendant  of  the  house  shall,  within  twenty- 
four  hours  after  the  reception  of  any  patient,  examine  such 
patient  and  reduce  to  writing  ine  results  of  such  examination, 
and  enter  the  same  upon  a  book  to  be  kept  for  that  purpose, 
together  with  the  opinion  formed  from  such  examination,  and 
from  the  documents  received  with  the  patient. 

SECTION  33.  In  case  the  said  medical  attendant  is  of  the 
opinion  that  a  detention  is  not  necessary  for  the  benefit  of  the 
patient,  he  shall  notify  the  person  or  persons  at  whose  in- 
stance the  patient  is  detained,  and  unless  such  person  shall, 
without  a  delay  not  exceeding  seven  days,  exhibit  satisfactory 
proof  of  such  necessity,  the  patient  shall  be  discharged  from 
the  house  and  restored  to  his  family  or  friends. 

SECTION  34.  At  the  time  of  such  examination,  the  medical 
attendant  shall  himself  cause  the  patient  distinctly  to  under- 
stand, if  he  or  she  is  capable  of  doing  so,  that  if  he  or  she 
desires  to  see  or  otherwise  communicate  with  any  person  or 
persons,  means  will  be  provided  for  such  interview  or  commu- 
nication, and  said  attendant  shall  personally  see  that  proper 
means  are  taken  to  communicate  this  fact  to  the  person  or 
persons  indicated  by  the  patient,  and  any  proper  person  or  per- 
sons, not  exceeding  two,  shall  be  permitted  to  have  a  full  and  un- 
restrained interview  with  the  patient. 

SECTION  35.  The  statements  furnished  at  the  time  of  the  re- 
ception of  the  patient  (and  of  the  examination  of  the  patient 


116 

by  the  medical  attendant  of  the  house)  shall  be  forwarded  by 
mail  to  the  address  of  the  Committee  on  Lunacy,  within  seven 
days  from  the  time  of  the  reception  of  the  patient,  which  shall 
by  them  be  entered  in  a  book  which  they  shall  keep  for  this 
purpose,  and  at  least  once  in  six  months  there  shall  be  a  re- 
port made  by  the  medical  attendant  of  the  house,  on  the 
condition  of  each  patient,  tog-ether  with  such  other  matters 
relative  to  the  case,  as  the  said  Committee  may  require ;  and 
at  any  time  such  report  shall  be  made  upon  the  request  of  the 
Secretary  of  the  Committee  on  Lunacy. 

SECTION  36.  During-  the  detention  of  any  person  as  insane, 
any  medical  practitioner  designated  by  him,  or  by  any  mem- 
ber of  his  family,  or  "near  friend,"  with  the  sanction  of .  a 
Judge  of  a  Court  of  Record  of  the  county  in  which  such  in- 
sane person  resided  at  the  time  of  his  removal  and  detention, 
shall  be  permitted,  at  all  reasonable  hours,  to  visit  and  ex- 
amine the  patient;  and  such  medical  attendant  shall,  unless 
objected  to  by  the  patient,  be  permitted  by  request  of  his  ot- 
her family,  or  "near  friend,"  and  with  the  consent  of  the 
physician  in  chief  of  the  establishment,  to  attend  the  patient 
for  all  maladies  other  than  insanity,  in  the  same  manner  as 
if  the  patient  were  in  his  own  home. 

SECTION  37.  All  persons  detained  as  insane  shall  be  furnished 
with  materials  and  reasonable  opportunity,  in  the  discretion 
of  the  superintendent  or  manager,  for  communicating,  under 
seal,  with  any  person  without  the  building,  and  such  communi- 
cation shall  be  stamped  and  mailed.  They  shall  have  the  un- 
restricted privilege  of  addressing  communications,  if  they  so 
desire,  not  oftener  than  once  a  month,  to  any  member  of  the 
Committee  on  Lunacy. 

SECTION  38.  The  provisions  of  this  Act  in  respect  of  the  ad- 
mission or  discharge  of  patients,  shall  not  extend  to  insane 
criminals  in  custody.  Such  persons  shall  not  be  received  ex- 
cept when  delivered  by  a  sheriff  of  the  county  or  his  deputy, 
together  with  an  order  of  the  Court  of  the  county  in  wrhich  he 
was  arrested  or  convicted,  having  jurisdiction  of  the  offense, 
under  the  seal  of  the  Court  and  signed  by  a  law  Judge.  Nor 
shall  such  criminals  be  discharged  from  a  hospital  or  other 
place  of  detention  for  the  insane,  saving  on  a  like  order,  and 
to  the  sheriff  or  his  deputy  producing  such  an  order,  and  while 
detained  as  an  insane  person,  such  criminal  shall  be  so  kept  as 
to  insure  his  detention  until  duly  discharged.  Whenever  any 
person  detained  in  any  gaol  or  prison  is  insane,  or  in  such  a 
condition  as  to  require  treatment  in  a  hospital  for  the  insane, 


117 

it  shall  be  the  duty  of  any  law  Judge  of  the  Court,  under 
whose  order  the  person  is  detained,  upon  application,  to  direct 
an  inquiry  into  the  circumstances,  either  by  a  commission,  or- 
otherwise,  as  he  shall  deem  proper,  with  notice  to  the  Com- 
mittee 011  Lunacy;  and  if  the  Judge  shall  be  satisfied  that  the 
person  confined  requires  treatment  in  a  hospital,  he  shall 
thereupon  direct  the  removal  of  the  said  person  from  the  gaol  or- 
pin son  to  a  State  hospital,  which  order  shall  be  executed  by 
1  lie  sheriff  of  the  county  or  his  deputy,  and  the  actual  ex- 
penses of  such  removal,  and  the  expenses  of  maintaining  the 
person,  in  the  hospital,  shall  be  paid  by  the  county  liable  for 
the  maintenance  of  the  said  person  in  the  gaol  or  prison  from 
which  he  is  removed. 

SKCTION  39.  The  trustees,  managers  and  physician  of  any  hos- 
pital, in  which  a  criminal  is  confined  by  order  of  any  Court, 
or  in  which  a  lunatic  has  been  committed  after  an  acquittal 
of  crime,  shall  not  discharge,  release  or  remove  the  prisoner 
or  lunatic  without  the  order  of  a  Court  of  competent  juris- 
diction ;  and  in  case  such  lunatic,  whether  a  convict  or  ac- 
quitted, is  not  set  at  large  but  is  to  be  removed  to  any  place 
of  custody  other  than  a  hospital,  the  order  for  removal  shall 
not  be  made  without  notice  to  the  Committee  on  Lunacy,  and 
time  given  them  to  investigate  the  case,  and  be  heard  on  the 
application. 

SECTION  40.  All  persons  that  have  been  detained  as  insane 
(other  than  criminal  insane,  duly  convicted  and  sentenced  by 
a  Court)  shall,  as  soon  as  they  are  restored  to  reason  and  are 
competent  to  act  for  themselves,  in  the  opinion  of  the  medical 
attendant  of  the  house,  be  forthwith  discharged;  and  any  per- 
son so  detained  shall,  at  all  times,  be  entitled  to  a  writ  of 
habeas  corpus  for  the  determination  of  this  question,  and 
on  the  hearing  the  respondent  in  that  writ  shall  be  required  to 
pay  the  costs  and  charges  of  the  proceedings  unless  the  Judge 
shall  certify  that  there  was  sufficient  ground,  in  his  opinion,  to 
warraiit  the  detention,  and  put  the  petitioner  to  his  writ;  in 
ease  the  discharged  patient  be  in  indigent  circumstances,  such 
person  shall  be  furnished  with  necessary  raiment,  and  with 
funds  sufficient  for  sustenance  and  travel  to  his  home,  to  be 
charged  to  the  county  from  which  such  patient  was  committed. 

SECTION  41.  The  Committee  on  Lunacy  shall  be  notified  of 
all  discharges  writhin  seven  days  thereafter,  and  a  record  of 
the  same  shall  be  kept  by  the  Committee. 

SECTION  42.  The  Committee  011  Lunacy  may,  at  any  time, 
order  and  compel  the  discharge  of  any  person  detained  as  in- 


118 

sane  (other  than  a  person  committed  after  trial  and  convic- 
tion for  crime,  or  by  order  of  Court).  But  such  order  shall 
not  be  made,  unless  notice  be  given  to  the  person  having  charge 
of  the  building  in  which  the  patient  is  detained,  and  to  the  per- 
son or  persons  at  whose  instance  the  patient  is  detained,  and 
reasonable  opportunity  given  them  to  justify  a  further  deten- 
tion, and  the  Committee  shall  not  sign  an  order  of  discharge, 
unless  they  have  personally  attended  and  examined  the  case  of 
the  patient. 

SECTION  43.  Persons  voluntarily  placing  themselves  in  any  of 
the  houses  provided  for  in  this  Act,  and  who  may  be  suffering 
from  nervous  diseases  threatening  mental  disorder,  may  be  re- 
ceived for  a  period  of  one  month  or  less,  by  an  agreement, 
which  shall  also  specify  the  time,  signed  by  them  at  the  time 
of  admission,  and  they  may  renew  said  agreement  at  the  end 
of  one  month,  but  no  agreement  shall  be  deemed  to  authorize 
their  remaining,  unless  signed  in  the  presence  of  some  adult 
persons  attending  as  a  friend  of  the  person  applying  in  the 
presence  of  and  also  by  the  medical  attendant. 

SECTION  44.  So  much  of  the  Act,  entitled  "An  Act  to  provide 
for  the  admission  of  certain  classes  of  the  insane  into  hospitals 
for  the  insane,  in  this  Commonwealth  and  their  discharge 
therefrom,"  approved  the  twentieth  day  of  April,  Anno  Domini 
one  thousand  eight  hundred  and  sixty-nine,  number  fifty-four, 
of  the  pamphlet  laws  of  that  year,  as  provides,  "that  insane 
persons  may  be  placed  in  a  hospital  for  the  insane  by  their 
legal  guardians,  or  by  their  relatives  or  friends  in  case  they 
have  no  guardians,  but  never  without  the  certificate  of  two  or 
more  reputable  physicians,  after  a  personal  examination  made 
within  one  week  of  the  date  thereof,  and  this  certificate  to  be 
duly  acknowledged  and  sworn  to  or  affirmed  before  some  mag- 
istrate or  judicial  officer  wlio  shall  certify  to  the  genuineness 
of  the  signature,  and  to  the  respectability  of  the  signed,"  is 
amended,  and  the  persons  thereby  authorized  to  place  an  insane 
person  in  a  hospital,  are  required  to  observe  the  forms  and  con- 
ditions, required  by  this  Act,  in  exercising  the  powers  con- 
ferred by  the  said  Act  of  the  twentieth  day  of  April,  Anno 
Domini  one  thousand  eight  hundred  and  sixty-nine,  when  the 
insane  person  is  placed  in  any  house,  hospital  or  place,  which 
is  subject  to  the  provisions  of  this  Act. 

SECTION  45.  So  much  of  said  Act,  as  provides  by  section  second 
"that  it  shall  be  unlawful,  and  be  deemed  a  misdemeanor 
in  law  punishable  by  fine  of  not  exceeding  one  hundred 


119 

dollars,  for  any  superintendent,  officer,  physician,  or  other 
employe  of  any  insane  asylum,  to  intercept,  delay  or  interfere 
with,  in  any  manner  whatsoever,  the  transmission  of  any  letter 
or  other  written  communication,  addressed  to  an  inmate  of  any 
insane  asylum  to  his  or  her  counsel,  residing  in  the  county  in 
which  the  home  of  the  patient  is,  or  in  the  city  or  county  in 
which  the  asylum  is  located,"  is  hereby  amended  so  that  the 
same  shall  extend  to  the  superintendents,  officers,  physicians, 
servants  or  other  employees  of  all  hospitals,  houses  or  places 
for  the  treatment  or  detention  of  the  insane  which  are  subject 
to  the  provisions  of  this  Act. 

SECTION  46.  So  much  of  the  said  Act  as  provides  by  section  ten, 
"If  the  superintendent  or  officer  of  any  hospital  for  the  insane, 
shall  receive  any  person  into  the  hospital  after  full  compliance 
with  the  provisions  of  this  Act,  no  responsibility  shall  be  in- 
curred by  them  for  any  detention  in  the  hospital,"  as  applies 
to  the  superintendent  or  officers  of  any  hospital  house  or  place 
made  subject  to  the  provisions  of  this  Act,  is  repealed  and  in 
place  of  the  provisions  of  that  Act,  for  the  protection  of  such 
superintendents  or  officers,  the  provisions  of  this  Act  for  that 
purpose  are  substituted. 

SECTION  47.  The  managers  and  officers  of  any  hospital  or 
licensed  house  or  place,  shall  not  be  liable  to  the  penalties  im- 
posed by  this  Act,  and  shall  be  entitled  to  all  the  protection 
of  this  Act,  in  case  of  receiving  for  detention  a  lunatic,  or  al- 
leged lunatic,  without  complying  with  the  requisitions  of  the 
Act,  if  the  judge  trying  the  cause  shall  certify  that  the  said 
officers  and  managers  had  good  reason  to  believe  that  such 
receiving  and  detention  were  necessary  for  the  safety  of  the 
lunatic,  or  other  persons,  and,  that  the  delay  required  to  comply 
with  the  requirements  of  this  Act  would  have  been  injurious  to 
the  person  detained  or  to  other  persons,  and  that  Inhere  is  no 
reason  to  believe  that  they,  or  any  of  them,  were  actuated  by 
improper  motives.  And  within  forty-eight  hours  after  any 
person  is  thus  received,  all  the  requisitions  of  this  Act  to  au- 
thorize a  detention  shall  have  been  complied  with,  or  the  person 
discharged  from  custody,  and  the  officers  of  the  hospital,  or 
place  where  such  lunatic  has  been  thus  received,  shall  forthwith 
notify  the  Department  of  State  Charitable  Institutions  of  the 
facts  connected  with  the  reception  and  detention. 

SECTION  48.  Whenever  any  person  shall  be  found  by  inquisition 
returned,  shall  thereupon  forthwith  send  to  the  Committee  on 
to  be  insane,  the  committee  of  the  person  or  of  the  estate,  and 
also  the  clerk  of  the  court  into  which  the  inquisition  has  been 


120 

Lunacy  at  their  principal  office,  a  statement  in  writing,  signed 
by  the  committee  of  the  lunatic,  of  the  name,  age,  sex,  and  resi- 
dence of  the  lunatic,  and  the  residence  of  the  committee,  and 
upon  any  change  in  the  residence  or  place  of  detention  of  the 
lunatic,  shall  forthwith  notify  the  Committee  on  Lunacy  of 
MK'h  change.  The  Committee  on  Lunacy,  or  any  one  or  more 
of  the  members  of  the  committee,  shall  have  power  to  visit 
and  examine  the  said  lunatic,  and  authorize  such  visiting  and 
examination  by  their  secretary,  or  any  board  of  visitors,  or  one 
or  nrn-e  members  thereof,  and  by  a  physician,  and  the  said 
committee  are  authorized  to  apply  to  any  court,  having  juris- 
diction over  the  committee,  or  to  a  Judge  of  a  Court  of  Common 
Pleas,  of  the  county  in  which  the  lunatic  is  a  resident  or  de- 
tained, tc  make  such  orders  for  the  maintenance,  custody  or 
care  of  the  said  lunatic,  and  for  the  care  and  disposition  of  the 
property  of  a  lunatic,  as  the  case  may  require.  From  any  order 
final  or  otherwise,  thus  made,  an  appeal  may  be  taken  to  the 
Supreme  Court,  but  such  appeal  shall  not  be  a  supersedeas,  un- 
less so  ordered  by  the  Court  making  the  order,  or  by  a  Judge  of 
the  Supreme  Court,  on  application  and  a  hearing. 

SECTION  49.  The  Committee  on  Lunacy  are  hereby  author] xed 
and  empowered  to  transfer  any  such  indigent  insane  persons  in 
county  poor  houses  or  almshouses  or  otherwise  in  the  custody 
of  tne  directors  or  overseers  of  the  poor,  to  the  State  hospitals 
for  the  insane  for  care  and  treatment,  and  at  its  discretion  to 
transfer  any  such  indigent  insane  persons  from  the  State  hos- 
pitals or  asylums  to  the  poorhouses,  almshouses  or  prisons  of 
the  several  counties  chargeable  for  their  maintenance,  or  upon 
being  satisfied  that  any  of  the  State  hospitals  for  the  insane 
are  overcrowded,  to  transfer  patients  or  inmates  from  one  State 
hospital  for  the  insane  to  another.  The  costs  of  such  transfer 
shall  be  paid  out  of  the  general  appropriation  for  the  care  of 
the  insane,  and  upon  certificate  of  the  Committee  on  Lunacy 
that  such  transfer  has  been  made,  and  of  its  cost.  The  munici- 
palities or  persons  liable  to  the  institutions  to  which  the  com- 
mitment was  made  shall,  after  this  transfer,  be  liable  to  the 
hospital  for  the  insane  to  which  such  transfer  shall  be  made. 

SECTION  50.  The  expense  of  the  care  and  treatment  of  the  indi- 
gent insane,  in  the  State  hospitals  for  the  insane,  is  hereby 
fixed  at  the  uniform  rate  of  one  dollar  and  seventy-five  cents 
per  week  for  each  person,  including  clothing,  chargeable  to  the 
respective  counties  or  poor  districts  from  which  such  insane 
shall  come;  and  the  excess  over  said  one  dollar  and  seventy- 


121 

five  cents  shall  be  paid  by  the  State,  but  in  no  case  shall  said 
excess  exceed  two  dollars  and  fifty  cents  per  week  for  each 
indigent  insane  person. 

SECTION  51.  Poor  districts  in  this  Commonwealth,  which  have 
supplied  or  may  hereafter  supply  a  hospital  for  the  care  and 
treatment  of  the  indigent  insane  according  to  plans  and  speci- 
fications approved  by  the  Department  of  State  Charitable  Insti- 
tutions, which  said  insane  hospital  shall  be  provided  with  all 
the  modern  appliances  for  the  treatment  of  the  insane,  with  a 
medical  superintendent  of  experience  in  the  treatment  of  mental 
diseases  and  who  shall  be  in  actual  practice  for  at  least  five 
years,  in  which  the  said  insane  are  attended  by  trained  and 
skilled  nurses  and  in  every  way  receive  the  same  care  and  at- 
tention as  they  would  receive  in  any  State  hospital  for  the  in- 
sane, shall  hereafter  be  entitled  to  the  same  allowance  for  the 
care  and  treatment  for  the  indigent  insane  as  is  herein  given 
to  State  hospitals  for  the  insane. 

SECTION  52.  Any  county,  municipality,  borough,  or  township 
of  this  Commonwealth,  which  now  has,  or  may  hereafter  supply, 
erect  and  equip,  a  suitable  institution  for  the  maintenance,  care 
and  treatment  of  its  indigent  insane,  upon  plans  and  specifi- 
cations approved  in  writing  by  the  Department  of  State  Chari- 
table Institutions  shall  receive  from  the  State  Treasurer  the  sum 
of  two  (2)  dollars  per  week  for  every  indigent  insane  person  of 
such  county,  municipality,  borough  or  township,  so  maintained, 
who  has  been  legally  adjudged  to  be  insane  and  committed  to 
such  institution,  or  who  may  be  transferred  from  a  State  hos- 
pital for  the  insane  to  such  local  institution :  Provided,  That  the 
Department  of  State  Charitable  Institutions  shall  be  satisfied 
that  the  quality  and  equipment  of  such  institution  and  the  man- 
ner of  care  and  treatment  therein  furnished  is  proper  and 
suitable  to  the  class  or  classes  of  the  indigent  insane  so  main- 
tained, and  shall  so  certify  to  the  Auditor  General  before  any 
such  payment  shall  be  made. 

SECTION  53.  The  Superintendent  and  Trustees  of  each  of  the 
State  charitable,  reformatory  or  correctional  institutions, 
entirely  or  partially  supported  by  State  aid,  shall,  on  or  be- 
fore the  fifteenth  day  of  May,  August,  November  and  Febru- 
ary, if  so  directed  by  the  Commissioner,  cause  to  be  pre- 
pared estimates,  in  triplicate,  giving  in  minute  detail  all 
the  expenses  required  for  the  institution  for  the  ensuing  xnree 
months,  to  be  paid  for  out  of  moneys  appropriated  by  the  State ; 
two  of  such  triplicate  estimates  shall  be  sent  to  the  Commis- 


122 

sioner,  and  the  other  retained  on  file  in  the  office  of  the  insti- 
tution. The  Commissioner  may  cause  such  estimates  to  be  re- 
vised, either  as  to  quantity  or  quality  of  supplies,  and  the  es- 
timated cost  thereof,  and  shall  certify  that  he  has  carefully 
examined  the  same,  and  that  the  articles  contained  in  such  es- 
timate, so  approved  of  revised  by  him,  are  actually  required  for 
the  use  of  the  institution ;  and  shall,  thereupon,  present  such 
estimate  and  certificate  to  the  Auditor  General.  Whereupon  the 
Auditor  General  shall  authorize  the  Board  of  Managers  or 
Trustees  or  other  managing  officers  of  such  institutions  to  make 
drafts  on  him,  as  the  money  may  be  required  for  the  purposes 
mentioned  in  such  estimates,  and  such  drafts  shall  be  paid,  on 
the  warrant  of  the  Auditor  General,  out  of  the  funds  in  the 
State  Treasury  appropriated  for  the  support  of  such  institu- 
tions. In  every  such  estimate  there  shall  be  a  sum  named,  not 
to  exceed  5  per  centum  of  the  amount  drawn  from  the  State 
during  the  preceding  quarter,  as  a  contingent  fund,  for  which 
no  minute  detailed  statement  need  be  made.  No  expenditures 
shall  be  made  from  such  contingent  fund  except  in  case  of  actual 
emergency,  requiring  immediate  action,  and  which  cannot  be 
averted  without  loss  or  danger  to  the  institution  or  the  inmates 
thereof.  The  treasurer  of  such  institution  shall  not  pay  ac- 
counts for  goods  furnished,  and  salaries  of  officers  or  employes, 
out  of  any  moneys  appropriated  by  the  State,  without  the  cer- 
tificate of  the  Superintendent  of  such  institution,  and  the  ap- 
proval of  the  Commissioner.  Nor  shall  the  treasurer  *of  any 
such  institution  pay  accounts  for  supplies  furnished  to  officers 
or  employes,  out  of  such  moneys,  except  on  the  certificate  of  the 
superintendent  that  the  same  are  drawn  from  the  ordinary  sup- 
plies provided  for  the  general  use  of  the  institution.  No  per- 
son other  than  patients,  officers  or  employes  of  such  institutions, 
and  the  families  of  the  superintendent,  medical  officers  or 
stewards,  necessarily  residing  therein,  shall  be  allowed  rooms 
or  maintenance  in  such  institutions,  except  at  a  rate  to  be 
fixed  by  the  Auditor  General  and  the  Commissioner,  with  the 
approval  of  the  Governor. 

SECTION  54.  The  treasurer  of  each  charitable  reformatory  or 
correctional  institution  receiving  State  aid,  shall,  on  or  before 
the  fifteenth  day  of  June,  September,  December  and  March, 
make  to  the  Commissioner  a  full  and  perfect  statement  of  all 
receipts  and  expenditures  of  State  moneys  used,  specifying  the 
several  items  for  the  last  preceding  quarter,  and  such  statement 
shall  be  verified  by  the  affidavit  of  the  treasurer,  attached  thereto, 
in  the  following  form : 


123 

I treasurer    of    the    

do  solemnly  swear  that  I  have  deposited  in  the  bank  all  the 
moneys  appropriated  by  the  State,  and  received  by  me  on  ac- 
count of  such during  the  last  quarter, 

and  I  do  further  swear  that  the  foregoing  is  a  true  abstract  of 
all  such  moneys  received  and  expenses  incurred  by  me,  or 
under  my  direction,  as  such  treasurer,  during  the  quarter  ending 
on  the  day  of  ,  19 

SECTION  55.  There  shall  be  attached  to  such  treasurer's  state- 
ment of  State  moneys  so  received  and  expended,  the  affidavit 
of  the  superintendent,  steward,  or  other  officer  having  like 
powers,  to  the  effect  that  the  goods  and  other  articles  therein 
specified  were  purchased  and  received  by  him,  or  under  his  di- 
rection, at  the  institution ;  that  the  goods  were  purchased  at 
a  fair  cash  market  price,  and  paid  for;  and  that  he,  or  any 
person  in  his  behalf,  had  no  pecuniary  or  other  interest  in  the 
articles  purchased ;  that  he  received  no  pecuniary  or  other 
benefit  therefrom,  in  the  way  of  commission,  percentage,  de- 
ductions or  presents,  or  in  any  other  manner,  directly  or  in- 
directly. He  shall  state  the  name  or  names  of  the  person  or 
persons,  or  firm  or  corporation,  from  whom  said  articles  were 
purchased,  and  that  the  articles  contained  in  such  bill  were 
received  at  the  institution;  that  they  conform  in  all  respects 
to  the  invoice  of  goods  received  and  ordered  by  him,  both  in 
quantity  and  quality.  Such  statement  shall  be  accompanied  by 
a  voucher  showing  the  payment  of  the  several  items  contained 
in  the  statement,  the  amount  of  such  payments,  and  for  what 
the  payments  were  made.  Such  vouchers  shall  be  examined  by  the 
Commisioner  and,  if  found  correct,  shall  be  endorsed  and  for- 
warded by  the  Commissioner,  with  the  statement,  to  the  Auditor 
General,  who  shall  have  the  power  of  final  audit.  If  any  voucher 
is  found  objectionable,  for  any  cause  whatever,  the  Commis- 
sioner or  the  Auditor  General  shall  endorse  his  disapproval  there- 
on, with  his  reasons  therefor,  and  return  it  to  the  treasurer 
of  such  inst'tution,  who  shall  present  it  to  the  board  of 
managers  or  trustees  for  correction,  and  immediately  return  it. 
If  it  is  then  in  correct  form,  and  satisfactory  to  the  Commis- 
sioner and  the  Auditor  General,  it  shall  be  filed.  In  the  event 
that  it  is  still  unsatisfactory,  to  either  the  Commissioner  or 
the  Auditor  General,  the  amount  thereof  shall  be  disallowed. 
All  vouchers  and  statements  shall  be  filed  in  the  office  of  the 
Auditor  General. 

SECTION  50.  All  purchases  for  the  use  of  the  State  charitable, 
reformatory  or  correctional  institutions  receiving  State  aid,  and 


124 

paid  for  with  moneys  appropriated  by  the  State,  shall  be  made 
for  cash,  and  not  on  credit  or  time.  Every  voucher  shall  be  duly 
filled  up  at  the  time  it  is  taken;  and  with  every  abstract  of 
vouchers  paid  there  shall  be  proof,  on  oath,  that  the  vouchee 
was  filled  up  and  the  money  paid  at  the  time  it  was  taken.  The 
board  of  managers  or  trustees  shall  make  all  needful  rules 
and  regulations  to  enforce  the  provisions  of  this  section.  The 
Commissioner,  his  deputy,  any  manag'er  or  officer,  trustee 
or  employee,  of  any  such  institution,  shall  not  be  interested, 
directly  or  indirectly,  in  the  furnishing-  of  any  materials,  labor 
or  supplies  for  the  use  of  any  such  institution ;  nor  shall 
any  manager  or  trustee  act  as  attorney  or  counsel  for 
the  board  of  managers  or  trustees  thereof.  The  Commis~ 
sioner  may  arrange  with  the  board  of  managers  or  trustees 
of  any  such  institution  under  his  control  for  the  purchase, 
by  contract,  of  such  staple  articles  or  supplies  as  may  be 
found  feasible  to  purchase  for  the  use  of  such  institution,  or 
any  of  them.  Such  contracts  shall  be  let  only  after  advertise- 
ment has  been  made  by  the  trustees,  in  accordance  with  the  di- 
rections and  subject  to  the  approval  of  the  Commissioner.  The 
contracts  shall  be  let  to  the  lowest  bidder,  and  executed  by  the 
president  of  the  board  of  managers  or  trustees,  subject  to  the 
approval  of  the  Commissioner.  Every  bidder  shall  be  required 
to  file  with  the  Commissioner  a  certified  check,  in  the  sum  of 
five  hundred  dollars  ($500)  as  a  guaranty  of  good  faith  and 
his  willingness  to  execute  the  contract  if  it  should  be  awarded 
to  him.  In  the  event  of  the  successful  bidder  failing  to  qualify, 
in  accordance  with  the  provisions  of  this  section,  the  amount  of 
this  check  shall  be  forfeited  to  the  Commonwealth,  and  the 
contract  shall  be  awarded  to  the  next  highest  bidder.  The  suc- 
cessful bidder  shall  give  a  bond  to  the  Commonwealth,  in  a 
sum  to  be  approved  by  the  Attorney  General,  for  the  faithful 
performance  of  his  contract.  Each  of  such  institutions  may 
manufacture  such  supplies  and  materials,  to  be  used  in  the 
institution,  as  can  be  economically  and  properly  made  therein, 
with  the  approval  of  the  Commissioner.  When  requested  by 
the  Commissioner,  the  superintendents,  managers  or  trustees 
of  such  institutions,  or  any  of  them,  shall  meet  at  the  office  of 
Ihe  Commissioner,  at  Harrisburg,  for  the  purpose  of  consider- 
ing the  feasibility  of  joint  contracts. 

SECTION  57.  The  Governor,  Auditor  General,  and  Commissioner 
of  State  Charitable  Institutions,  or  a  majority  of  such  officers 
shall  approve  or  reject  all  plans  and  specifications  for  any  new 
buildings,  or  for  any  unusual  repairs  or  improvements  for  any 
State  charitable,  reformatory  or  correctional  institution,  out  of 


125 

State  moneys  appropriated  therefor,  and  no  such  building- 
shall  be  erected,  or  such  repairs  or  improvements  made,  until 
the  plans  and  specifications  therefor  have  been  so  approved. 
The  contracts  for  such  erection,  repairs  or  improvements 
may  be  let  by  the  board  of  managers  or  trustees  to 
the  lowest  responsible  bidder,  after  thirty  days  advertisement 
in  two  newspapers  of  general  circulation  in  the  county  wherein 
said  institution  is'  located;  but  such  contracts  must  be  ap- 
proved by  the  Governor,  Auditor  General,  and  the  Commis- 
sioner, or  a  majority  of  them;  and,  subject  to  such  approval, 
such  contracts  may  be  sublet.  A  certified  check,  drawn  upon 
some  legally  incorporated  bank  or  trust  company  of  this  State, 
shall,  in  all  cases,  be  required  as  an  evidence  of  good  faith, 
upon  all  proposals  for  buildings,  repairs  or  improvements,  to 
be  deposited  with  the  Commissioner,  and  in  an  amount  to  be 
determined  by  him.  All  contracts  for  the  erection,  repairs  or 
improvements  to  said  institutions  shall  contain  a  clause  that 
the  contract  shall  be  deemed  executory  only  to  the  extent  or 
the  moneys  available,  and  no  liabilities  shall  be  incurred  by 
the  State  beyond  the  moneys  available  for  the  purpose. 

SECTION  58.  The  board  of  managers  or  trustees  of  each  of  the 
State  charitable  reformatory  or  correctional  institutions  re- 
ceiving State  aid,  in  addition  to  their  other  duties  now  required 
by  law,  shall  visit  and  inspect  the  institution,  for  which  it  is 
appointed,  at  least  monthly,  and  shall  make  a  written  report, 
in  duplicate,  to  the  Governor  and  the  Commissioners,  within 
ten  days  of  each  such  visitation,  to  be  signed  by  each  member 
making  such  visitation.  Such  report  shall  state,  in  detail  the 
financial  condition  of  the  institution  visited,  and  such  other 
matters  appertaining  to  the  management  and  affairs  thereof 
as,  in  the  opinion  of  the  board,  should  be  brought  to  the  at- 
tention of  the  Governor  or  the  Commissioner  and  may  contain 
recommendations  as  to  needed  improvements  or  changes  in  the 
institution  or  its  management. 

SECTION  59.  No  money  shall  be  paid  on  any  contract  for  repairs, 
improvements  or  new  buildings  for  any  State  charitable  re- 
formatory or  correctional  institution  receiving  State  aid,  until 
the  voucher  for  the  same  shall  be  approved  by  the  board  of 
managers  or  trustees,  and  forwarded  to  the  Commissioner,  who 
shall,  if  he  approve  the  same,  endorse  his  approval  thereon,  and 
present  the  same  to  the  Auditor  General  for  his  approval.  If 
the  account  be  approved,  the  Auditor  General  shall  draw  his 
warrant  to  the  order  of  the  contractor,  who  shall  be  paid  by 
the  State  Treasurer  out  of  moneys  appropriated  for  the  repair 
and  improvements  of  such  institution. 


126 

SECTION  60.  No  warrant  shall  be  issued  by  the  Auditor  General, 
and  no  money  fhall  be  paid  by  the  State  Treasurer,  to  the  trus- 
tees or  managers  of  any  such  institution  except  upon  a  voucher 
signed  by  the  treasurer  of  said  institution,  and  duly  approved 
by  the  Commissioner  of  State  Charitable  Institutions. 

SECTION  61.  The  sum  of  seventy-five  thousand  dollars  ($75,000), 
or  so  much  thereof  as  may  be  necessary,  be,  and  the  same  is 
hereby  specifically  appropriated  for  the  purpose  of  paying  the 
salaries  and  expenses  provided  herein,  the  same  to  be  on  war- 
rant drawn  by  the  Auditor  General  on  the  State  Treasurer,  out 
of  moneys  not  otherwise  appropriated  by  law. 

SECTION  62.  That  the  Act  entitled  "An  Act  to  create  a  Board 
of  Public  Charities,"  approved  the  twenty-fourth  day  of  April, 
1869,  and  the  several  supplements  and  amendments  thereto, 
are  hereby  repealed. 

SECTION  63.  That  the  Act  entitled  "An  Act  relative  to  the 
supervision  and  control  of  hospitals  or  houses  in  which  the 
insane  are  placed  for  treatment  or  detention,"  approved  the 
eighth  day  of  May,  1883,  and  the  several  supplements  and 
amendments  thereto  are  hereby  repealed. 

SECTION  64.  All  Acts  are  parts  of  Acts  inconsistent  herewith 
or  supplied  hereby  be  and  the  same  are  hereby  repealed. 


127 


(B)   NECESSITY  OF  INCREASED  STATE 
EXPENDITURE. 


The  demand  for  better  roads  comes  from  all  classes  of 
citizens,  automobile  owners,  farmers  and  all  others  who 
use  the  highways.  It  is  elsewhere  proposed  that  the  tax  on 
automobiles  shall  be  applied  to  the  maintenance  of  im- 
proved roads.  All  the  increased  revenue  that  could  be 
legitimately  raised  could  be  expended  in  this  way  with 
benefit  to  the  State. 

The  following  table  (see  page  128)  shows  the  improved 
and  unimproved  roads  of  the  Commonwealth  outside  of 
Philadelphia.  In  spite  of  the'amounts  already  spent  it  ap- 
pears that  only  a  beginning  has  been  made. 

Since  the  organization  of  the  State  Highway  Department 
in  1903  we  have  spent  $8,168,700  for  the  construction  of 
State  highways  with  a  total  road  mileage  of  86,593.  In 
the  last  five  years  New  York  State  has  spent  $26,000,000, 
arid  the  counties  $10,000,000  on  main  highways,  though 
its  total  road  mileage  is  only  67,579  miles.  In  New  Jersey 
$6,000,000  has  been  spent  on  road  construction,  of  which 
the  State 's  share  was  $1,550,000  upon  a  mileage  of  14,842. 
Massachusetts  in  five  years  has  spent  $4,274,633  on  a  mile- 
age of  17,145  and  Maryland  a  total  of  $7,384,000  on  a 
mileage  of  16,000. 


128 
Mileage  of  Public  Roads. 


Improved. 

Unimproved. 

Total. 

1    Adams 

7.35 

1,058.61 

1,065.96 

2    Allegheny 

289  01 

1,384.29 

1,673.30 

3     Armstrong 

14.39 

1,708.75 

1,723  14 

4    Beaver 

10.03 

1,099.18 

1,109.21 

5    Bedford 

17.08 

1,707.97 

1,725.05 

6    Berks                         -      — 

131.00 

2,293.10 

2,424.10 

7    Blair                           _       —      

39.70 

696.15 

735.85 

8    Bradford                                       -       

24.07 

2,437.85 

2,461.92 

9    Bucks                                  

87.84 

1,678.50 

1,766.34 

10    Butler 

15.57 

1,815.86 

1,831.43 

11    Cambria                          - 

10.21 

1,143.74 

1,153.95 

1.59 

143  74 

150.33 

13    Carbon                                          

12.17 

500.18 

512.35 

14    Centre                                                 —  - 

9.30 

1,048.98 

1,058.  '28 

15    Chester 

170.09 

2,366.02 

2,536.11 

16    Clarion 

6.73 

1,367.22 

1,373.95 

17    Clearfield 

17.09 

1,682.80 

1,699.89 

18    Clinton 

8.44 

566.41 

574.85 

19    Columbia 

6.67 

1,264.44 

1,271.11 

20    Crawford 

16.55 

2,150.52 

2,167.07 

21    Cumberland 

13.28 

1,212.30 

1,225.58 

22    Dauphin 

14.50 

1,032.05 

1,046.55 

220.15 

310.31 

530.46 

24  x  Elk                                       

5.50 

537.39 

542.89 

25    Erie                                      -    

18.92 

1,647.52 

1,666.44 

26    Fayette                                           

15.02 

1,659.53 

1,674.55 

27    Forest                                             - 

3.79 

370.66 

374.45 

28    Franklin                                               

58.25 

1,175.41 

1,233.66 

29    Fulton        •                                        

683.41 

683.41 

30    Greene 

14.00 

1,484.77 

1,498.77 

31    Huntingdon 

19.28 

1,302.95 

1,322.23 

32    Indiana                                                

18.59 

1,911.10 

1,929.69 

33    Jefferson                                                 

9.  SI 

1,210.15 

1.219.96 

771.95 

771.95 

35    Lackawanna    . 

5.00 

744.01 

749.01 

129 


Mileage  of  Public  Roads — Continued. 


Improved. 

Unimproved. 

Total. 

36    Lancaster                               -         

216.25 

2,574.50 

2,790.75 

37    L/awrence 

9.36 

855.76 

865.12 

38    Lebanon 

108.00 

722.77 

830.77 

39    Lehigh 

25.52 

1,175.22 

1,200.74 

40    Luzerne 

47.07 

1,520.04 

1,567.11 

41    Lycoming 

15  60 

1,655.38 

1,670.98 

42    McKean  

9.60 

741.30 

750.90 

43    Mercer       —      _    _  

18.77 

1,608.10 

1,626.87 

44    Mifflin 

6.66 

499.79 

506.45 

45    Monroe                                               ._    _ 

20.53 

941.69 

962.22 

46    Montgomery 

410.17 

1,432.09 

1,842.26 

47    Montour 

1.94 

355.85 

357.79 

48    Northampton 

26  30 

1,047.16 

1,073.46 

49    Northumberland 

12.18 

1,166  14 

1,178  32 

50    Perry 

1  55 

997  35 

998.90 

51    Pike 

5  00 

546  73 

551  73 

52    Potter 

11  09 

1  124  15 

1  135  24 

53    Schuylldll 

10  42 

1  353  27 

1  363  69 

54    Snyder 

2  05 

785  80 

787  85 

55    Somerset    _               _    __ 

10.93 

2,147.01 

2,157.94 

56    Sullivan    _ 

3.16 

549.21 

552  87 

57    Susquehanna 

1,998.12 

1,993.12 

58    Tioga   __ 

19  82 

1,789  60 

1,809.42 

59    Union 

4  78 

488  97 

493.75 

60    Venango 

10  63 

1,154  92 

1  165  55 

61    Warren    

13.40 

1,061.57 

1,074.97 

62    Washington    

92.07 

2,165.35 

2,187.42 

63    Wayne  

1.51 

1,436.21 

1,437.72 

64    Westmoreland 

°4  70 

2  737  99 

2  761  99 

65    Wyoming    

1.55 

741.10 

742.65 

66    York   

18  44 

2,653  60 

2,672.04 

Total 

2  400  02 

84  193  86 

86  593  88 

130 

The  extension  of  improved  roads  on  anything  like  the 
scale  thus  suggested  must  be  made  on  sound  principles 
of  financiering  by  the  expenditure  of  capital  rather  than 
income.  Capital  can  only  be  found  by  borrowing,  as  our 
municipalities  freely  do  for  like  purposes.  The  Constitu- 
tion severely  limits  the  borrowing  power  of  the  State  by 
providing  (Article  IX,  Section  4)  : 

"No  debt  shall  be  created  by  or  on  behalf  of  the  State  except 
to  supply  casual  deficiencies  of  revenue,  repel  invasion,  suppress 
insurrection,  defend  the  State  in  war,  or  to  pay  existing  debt ; 
and  the  debt  created  to  supply  deficiencies  in  revenue  shall 
never  exceed,  in  the  aggregate  at  any  one  time,  one  million 
of  dollars." 

Our  neighboring  States  are  helping  out  the  construction 
of  State  roads  by  this  means.  New  York  authorized  a 
bond  issue  of  $50,000,000  for  highway  improvement  in 
1905  although  the  State  was  already  heavily  in  debt. 
These  bonds  are  being  issued  from  year  to  year  as  author- 
ized by  the  Legislature.  Massachusetts  has  issued 
$1,820,000  of  bonds  since  1906,  the  proceeds  going  to  road 
construction,  and  Maryland  $6,000,000. 

Your  Committee  is  of  opinion  that  our  borrowing  power 
should  be  enlarged  to  meet  the  demand  and  thus  enable 
us  to  kep  pace  with  our  sister  Commonwealths  in  this 
respect.  Your  Committee  recommends  and  submits  here- 
with a  draft  of  a  Joint  Resolution  to  accomplish  that  pur- 
pose. (See  page  130.) 


A  JOINT  EESOLUTION  PBOPOSING  AN  AMENDMENT  TO  SECTION  FOUR, 
ABTICLE  NINE  OF  THE  CONSTITUTION  OF  PENNSYLVANIA. 

Be  it  Resolved  by  the  Senate  and  House  of  Representatives 
of  the  Commonwealth  of  Pennsylvania  in  General  Assembly  met, 
that  the  following  amendment  to  Section  4,  Article  9,  of  the 
Constitution  of  Pennsylvania,  be  and  the  same  is  hereby  pro- 
posed in  accordance  with  the  eighteenth  article  thereof: 


131 

That  Section  4  of  Article  9,  which  reads  as  follows : 
"No  debt  shall  be  created  by  or  on  behalf  of  the  State,  except 
to  supply  casual  deficiencies  of  revenue,  repel  invasion,  suppress 
insurrection,  defend  the  State  in  war,  or  to  pay  existing  debt; 
and  the  debt  created  to  supply  deficiencies  in  revenue  shall  never 
exceed,  in  the  aggregate  at  any  one  time,  one  million  of  dollars." 
Be  amended  so  that  the  same  shall  read  as  follows: 
No    debt    shall    be    created    by    or    on    behalf    of    the    State 
except  to  supply  casual  deficiencies  of  revenue,  repel  invasion, 
suppress  insurrection,  defend  the   State  in  war,   construct   and 
improve  its  public  highways,  or  to  pay  existing  debt;  and  the 
debt  created  to  supply  deficiencies  in  revenue  shall  never   ex- 
ceed, in  the  aggregate  at  any  one  time,  one  million  of  dollars. 


Schools  also  demand  increased  expenditures.  The  State 
Normal  Schools  claim  that  they  should  receive  more  State 
money.  The  common  school  appropriations  should  be  in- 
creased not  only  to  give  greater  efficiency  in  the  manage- 
ment of  the  schools,  but  to  relieve  the  local  taxes.  One  of 
the  requests  of  the  Pennsylvania  State  Grange  to  your 
Committee  was  for  relief  from  the  local  taxation  on  real 
estate.  Coupled  with  this  was  the  request  that  the  State 
pay  the  minimum  wage  to  public  school  teachers  for  the 
minimum  term.  This  would  necessitate  the  expenditure 
of  $40.00  per  month  for  an  average  school  year  of  8J 
months  nearly,  for  35,111  teachers,  or  the  sum  of 
$12,537,740.  If  $50.00  per  month  were  paid  it  would  re- 
quire $14,922,175.  For  the  year  ending  June,  1909,  the 
total  paid  by  the  State  for  this  purpose  was  $905,025.55, 
and  for  the  year  ending  June,  1910,  the  total  was 
$966,756.10.  The  common  school  appropriation  for  each 
of  the  last  two  appropriation  years  was  $7,500,000.  If 
the  State  assumed  these  wages  of  school  teachers  it  would 
mean  an  increase  of  from  $5,000,000  to  $7,500,000  per 
year,  and  this  is  too  great  a  burden  for  the  State  to 
bear  even  with  the  increased  revenue,  this  specific  re- 


132 

lief  is  not  presently  possible.     But  some  substantial  ad- 
vance in  that  direction  must  shortly  be  made. 

As  elsewhere  stated,  money  is  needed  for  the  completion 
of  State  institutions  now  under  way.  This  has  been  re- 
peatedly recommended  by  the  officials  having  them  in 
charge  and  has  been  recommended  by  the  Governor.  The 
sums  needed  may  be  repeated  here : 

Homeopathic  State  Hospital  for  Insane 
at  Allentown, 

Completion  $    663,000.00 

Equipment  250,000.00 

Miners'  Hospital  at  Trevorton 150,000.00 

Feeble  Minded  Institution  at  Spring  City  1,500,000.00 
Hospital  for  Criminal  Insane  at  Farview     1,187,602.00 

New  institutions  for  tho  care  of  the  State's  insane, 
feeble  minded  or  otherwise  deficient  persons,  are  recom- 
mended elsewhere  by  the  Board  of  Public  Charities  as 
urgently  needed.  The  sum  required  is  estimated  at 
$1,000,000. 

The  State  debt  is  overbalanced  by  the  amount  in  the 
Sinking  Fund  and  has  always  been  inconsiderable.  In 
this  happy  condition  of  affairs  the  State  has  always  been 
able  to  bring  her  receipts  and  expenditures  approximately 
even  (subject  to  the  uncertainties  of  calculation  of  the 
revenues),  as  shown  by  the  following  table: 

Surplus  of  Excess  of 

Receipts  over  Expenditures 

Receipts         Expenditures    Expenditures  over  receipts 

1905  $24,269,119.72   $26,930,538.67   $2,661,418.95 

1906  25,818,924.03  25,574,200.42  $  244,723.61   

1907  27,027,132.72  24,589,725.79  2,437,406.93   

1908  25,852,548.95  29,197,654.15   3,345,105.20 

1909  29,101,183.70  30,021,773.57       920,589.87 

24.43        27,657,399.88         1,289,024.55       


With  this  showing,  the  balance  being  somewhat  against 
the  Commonwealth,  the  increased  expenditures  necessary 
can  only  be  met  by  increases  in  State  taxation. 


133 


(C)    CHANGE  OF  SUBJECTS  OF 
TAXATION. 


The  present  division  of  subjects  of  taxation  between  the 
State  and  the  localities  is  an  admirable  feature  which 
should  be  preserved.  The  changes  which  should  be  made 
are  for  the  purpose  of  an  increased  revenue,  and  to 
equalize  burdens  among  the  members  of  the  classes  as  now 
taxed.  Among  the  many  subjects  of  taxation  suggested 
your  Committee  has  given  special  consideration  to  the 
following : 

DIRECT  INHERITANCE  TAX. 

Pennsylvania  was  the  first  State  in  the  Union  to  put  in 
force  an  inheritance  tax,  and  with  the  exception  of  a  tax 
on  bank  dividends  and  on  the  recording  of  certain  local 
papers,  etc.,  (Acts  of  1825-1826,  Chapter  2),  this  was  the 
first  State  tax  of  any  kind  in  Pennsylvania ;  the  Act  first 
creating  anything  like  a  system  of  State  taxation  being 
passed  in  1831.  Our  tax  on  collateral  inheritances  was 
introduced  in  1826  and  has  remained  in  force  with  oc- 
casional amendments  to  the  present  day.  The  tax  was 
placed  at  its  present  rate,  at  5  per  cent.,  in  1846.  The 
whole  subject  was  codified  in  1887  by  "An  Act  to  provide 
for  the  better  collection  of  collateral  inheritance  taxes/' 
The  policy  thus  begun  in  Pennsylvania  in  1826  has  spread 
through  most  of  the  States  of  the  Union  and  has  extended 
to  direct  as  well  as  collateral  inheritances. 

Inheritance  tax  is  no  longer  a  mere  theory,  but  an 
established  fact,  and  it  has  come  to  stay.  A  State  properly 
taxes  a  right  of  succession  which  its  laws  confer,  and 
such  duty  should  be  paid  to  the  State  which  protects  the 


134 

rights  of  property.  Inheritances  are  now  taxed  to  a 
greater  or  less  extent  in  thirty-six  States,  and  the  tendency 
is  to  pass  Acts  taxing  lineal  as  well  as  collateral  heirs  and 
at  graduated  rates.  Twenty-one  States  of  the  Union  tax 
both  direct  and  collateral  heirs,  viz :  Arkansas,  California, 
Colorado,  Connecticut,  Idaho,  Illinois,  Louisiana,  Massa- 
chusetts, Michigan,  Minnesota,  Montana,  Nebraska,  New 
York,  North  Carolina,  Oregon,  South  Dakota,  Utah, 
Washington,  West  Virginia,  Wisconsin  and  Wyoming. 

Fifteen  States  levy  a  collateral  tax  only,  namely,  Iowa, 
Kentucky,  Missouri,  New  Hampshire,  New  Jersey,  Ohio, 
Pennsylvania,  Tennessee,  Vermont  and  Virginia,  all  at  a  5 
per  cent,  rate ;  Maine,  4  per  cent. ;  Maryland,  2J  per  cent. ; 
North  Dakota,  2  per  cent.,  and  Texas  from  2  to  12  per  cent. 

Only  twelve  States  have  no  inheritance  tax,  namely, 
Alabama,  Arizona,  Florida,  Georgia,  Indiana,  Kansas,  Mis- 
sissippi, Nevada,  New  Mexico,  Oklahoma,  Rhode  Island 
and  South  Carolina. 

The  American  Acts  generally  tax  collaterals  at  the  rate 
of  5  per  cent,  and  lineals  from  %  per  cent.  (Connecticut) 
to  3  per  cent.  (Louisiana),  though  Minnesota  and  Utah 
make  no  distinction  between  direct  and  collateral  heirs. 
However,  in  all  other  cases  in  which  direct  heirs  are  taxed 
the  rates  are  much  lower  and  the  exemption  (except  in 
Connecticut  and  North  Carolina)  much  larger  than  for 
collateral  heirs.  Many  States  graduate  the  tax  in  more 
than  two  classes,  according  to  the  degrees  of  relationship 
between  the  decedent  and  beneficiary.  In  1897  Pennsyl- 
vania enacted  a  direct  inheritance  tax  law  which  exempted 
estates  of  $5,000  in  value.  In  consequence  of  the  grading 
effected  by  this  exemption,  the  law  was  declared  un- 
constitutional by  the  Supreme  Court  and  no  attempt  to 
impose  it  in  any  form  has  since  been  made.  A  table  is 
submitted  herewith  (see  page  152)  showing  the  inherit- 
ance tax  laws  in  force  in  the  various  States  of  the  Union 
with  respect  to  the  rates  and  grading  thereof  both  as  to 
the  degrees  of  relationship  and  the  size  of  the  estate. 


135 

Pennsylvania  by  taxing  collaterals  only  seriously  re- 
stricts its  revenue-producing  power.  The  New  York  in- 
heritance tax  (5  per  cent,  collateral  and  1  per  cent  direct) 
averages  more  than  $5,000,000  a  year,  while  in  Pennsyl- 
vania the  average  annual  receipts  from  our  5  per  cent, 
collateral  inheritance  tax  in  the  past  five  years  has  been 
$1,582,780.95. 

Your  Committee  proposes  a  direct  inheritance  tax 
therefore  of  1  per  cent,  upon  all  estates  not  subject  to  the 
collateral  inheritance  tax,  and  submits  herewith  a  draft  of 
an  Act  for  that  purpose  (see  page  141).  The  Act  sub- 
mitted is  based  very  largely  on  the  Acts  now  existing 
in  this  Commonwealth  with  reference  to  collateral  inherit- 
ance taxes.  For  the  sake  of  uniformity  both  are  pro- 
vided for  by  the  same  statute.  In  its  preparation  your 
Committee  has  aimed  at  the  following: 

1.  A  reasonable  tax  which  will  provide  a  fair  revenue ; 

2.  One  that  is  definitely  fixed  and  easily  computed ; 

3.  A  tax  avoiding  double  taxation,  in  the  case  of  estates 
>f  citizens  of  those  of  our  sister  Commonwealths  that  pro- 
dde  a  like  exemption  in  favor  of  the  estates  of  citizens  of 

us  Commonwealth. 

A  reference  to  the  table  annexed  to  this  report  (see 
ige  152),  will  show  the  reasonableness  of  the  tax   (5 
>er  cent,  collateral  and  1  per  cent,  direct)  as  compared 
ith  similar  taxes  in  other  States.    Such  an  inheritance 
has  many  advantages  and  is  not  open  to  any  serious 
Ejection.     It  is  the  price  paid  for  the  privilege  given 
law  of  taking  by  will  or  descent.     It  is  a  source  of 
jvenue  which  cannot  be  evaded,  as  the  estates  of  de- 
jedents  must  be    inventoried    and    administered.     It    is 
sasily  collected  and  one  that  equitably  apportions  public 
burdens  in  proportion  to  the  ability  to  bear  them.    One 
cause  of  the  great  popularity  of  the  inheritance  tax  is  that 
it  is  imposed  upon  the  person  paying  it  at  a  time  when 
he  least  feels  the  burden,  and  when  he  is  receiving  a  bene- 


136 

fit  more  or  less  unexpected  and  which  he  receives  by 
virtue  of  State  laws  permitting  the  succession  of  prop- 
erty at  the  time  of  death.  It  is  taking  something  from 
him  before  he  gets  it. 

Your  Committee  is  in  hearty  accord  with  the  modern 
tendency  of  legislation  to  graduate  the  rate  of  the  tax 
according  to  the  size  of  the  estate.  This  has  been  the 
policy  of  Pennsylvania  from  the  beginning  in  one  par- 
ticular, as  estates  of  $250  and  less  have  been  exempted 
by  our  collateral  inheritance  tax  law.  The  Act  of  1897 
was  in  line  with  this  policy.  Inasmuch,  however,  as  our 
Constitution  forbids  this  grading,  owing  to  the  require- 
ment in  Article  9,  Section  1,  that  taxes  shall  be  uniform 
upon  the  same  class  of  subjects,  such  a  tax  cannot  now 
be  levied. 

Your  Committee,  therefore,  recommends  that  a  constitu- 
tional amendment  be  proposed  permitting  such  a  grading 
and  submits  herewith  a  draft  of  a  Joint  Resolution  for 
that  purpose  (see  page  150). 

The  amendment  as  drawn  will  provide  for  the  grading 
in  this  manner  of  other  subjects  of  taxation  as  well  as  in- 
heritances, and  will  permit  the  exemption  of  small  estates 
from  all  kinds  of  tax.  It  has  been  advocated,  for  ex- 
ample, that  $500  of  moneyed  investments  be  freed  from 
personal  property  tax.  This,  of  course,  is  not  now  pos- 
sible. The  principle  of  graduation,  that  is,  the  laying 
of  a  larger  percentage  on  a  larger  sum — seems  to  your 
Committee  both  just  and  expedient,  especially  as  applied 
to  inheritance  taxes,  in  which  a  high  progressive  rate 
should  tend  to  counteract  the  piling  up  of  colossal  for- 
tunes, which  experience  has  shown  are  not  conducive  to 
the  public  welfare. 

They  put  into  the  hands  of  a  very  few  an  abnormal 
power  over  the  many,  which  no  matter  how  well  dis- 
posed its  possessors  may  be,  can  but  be  harmful  to  the 
social  and  political  sovereignty  of  the  people.  There 
should  be  some  remedy  for  such  a  condition  where  a 
few,  a  very  few,  comparatively,  can  have  such  power. 


137 

Your  Committee  in  recommending  the  graduated  taxes 
well  know  that  the  small  percentage  suggested  will  have 
little  if  any  effect  in  securing  a  general  distribution  of 
these  fortunes,  but  the  suggestion  is  made  in  the  hope 
that  it  will  be  the  means  of  promoting  discussion  of 
this  most  important  subject,  with  a  probable  beneficial 
result.  The  leading  nations  of  continental  Europe  and  the 
Provinces  of  Canada  have  graduated  inheritance  taxes. 
Such  a  tax  has  been  approved  by  modern  economists 
and  statesmen.  Mr.  Edwin  R.  A.  Seligman,  Professor 
of  Political  Economy  and  Finance  in  Columbia  Univer- 
sity, a  leading  authority  on  taxation  and  a  member  of 
the  New  York  State  Commission  of  1906,  fully  discussed 
this  question  in  his  work  on  Progressive  Taxation,  pages 
213  and  215,  with  the  conclusion  "that  the  theory 
of  progression  is  more  applicable  to  the  inheritance  tax 
than  to  any  other  part  of  the  fiscal  system ;  and  that  *  *  * 
**********  some  scale  of  progression  is  both  desir- 
able and  practicable  (Essays  on  Taxation,  Chapter  5 — the 
Inheritance  Tax,  page  133). "  The  same  authority  says,  "In 
the  United  States  also,  there  is  now  a  decided  movement 
toward  the  progressive  inheritance  tax — and  it  is  more 
than  probable  that  progressive  inheritance  taxes  will  play 
by  no  means  an  insignificant  role  in  the  fiscal  systems  of 
the  future"  (Supra,  pages  133,  135).  Moreover,  such  a 
has  been  sustained  by  the  United  States  Supreme 
/ourt,  which  decided  in  Magoun  vs.  Trust  and  Savings 
Sank,  170  U.  S.  283  (1898),  that  the  progressive  scale  or 
>rinciple  of  graduation  in  inheritance  taxes  was  not  in 
violation  of  the  Fourteenth  Amendment.  Under  this  de- 
cision the  principle  of  progression  is  applicable  to  the 
direct  taxes  as  well.  Partly  as  a  consequence  of  this  de- 
cision a  number  of  progressive  inheritance  tax  bills  have 
been  introduced  and  now  many  of  our  State  statutes  show 
graduated  rates  of  tax.  Ohio  was  the  first  State  in  the 
Union  to  apply  this  principle  to  the  inheritance  tax,  but 
the  tax  now  is  in  some  degree  progressive  in  sixteen  States, 


138 

as  follows :  California,  Idaho,  Illinois,  Massachusetts,  Min- 
nesota, New  York,  West  Virginia  and  Wisconsin  have  pro- 
gressive rates  for  both  direct  and  collateral  heirs.  In  Ar- 
kansas, Colorado,  Nebraska,  North  Carolina,  Oregon  and 
South  Dakota  the  progressive  rates  apply  only  to  distant 
relatives  and  strangers  in  blood,  while  in  Washington  and 
Texas  they  apply  to  all  collateral  heirs.  However,  our 
own  Legislature  is  subject  to  the  above  mentioned  re- 
striction in  Article  9,  Section  1  of  our  Constitution,  which 
as  interpreted  by  our  Supreme  Court  in  Cope's  Estate, 
191  Pa.  1,  decided  in  1899,  prevents  the  levying  of  such  a 
tax  in  Pennsylvania  without  some  such  constitutional 
amendment  as  that  proposed  by  your  Committee. 

Some  States  have  got  progressive  taxation  without 
constitutional  amendments.  In  South  Carolina,  for  ex- 
ample, where  the  State  Constitution  requires  the  Legisla- 
ture to  provide  for  a  uniform  and  equal  rate  of  assessment 
and  taxation  and  prescribes  regulations  to  secure  a  just 
valuation  for  taxation  for  all  property,  but  provides  ' '  that 
the  General  Assembly  may  provide  for  a  graduated  tax 
on  incomes, ' '  the  South  Carolina  Supreme  Court  in  Alder- 
man vs.  Wells,  27  L.  R.  A.  (N.  S.)  864,  in  sustaining  a 
graduated  income  tax  which  exempts  incomes  under  a 
specified  amount  and  increases  the  tax  as  the  income 
reaches  stated  amounts  above  that  sum,  said,  "It  is  im- 
possible to  conceive  how  a  tax  on  incomes  could  be 
graduated  without  exempting  some  incomes  or  without 
making  the  tax  higher  on  some  than  others."  Many  of 
the  States  have  upheld  the  constitutionality  of  such  a  tax 
by  declaring  it  to  be  a  tax  on  the  devolution  of  property. 
It  is  a  tax  not  on  wealth,  but  on  the  transfer  of  wealth. 
Thus  the  Louisiana  inheritance  tax  was  originally  upheld 
by  the  Federal  Supreme  Court  in  Meger  vs.  Grima,  et  al.,  8 
Howard  490,  as  a  simple  regulation  of  inheritance. 

Your  Committee  finds  that  other  States  than  Pennsyl- 
vania have  had  constitutional  troubles  in  the  taxation  of 
inheritances.  One  of  the  constitutional  amendments 


139 

adopted  by  New  Hampshire  in  1903  extended  the  permis- 
sible objects  of  taxation  to  include  franchises  and  "prop- 
erty when  passing  by  will  or  inheritance/'  In  Minnesota 
the  Supreme  Court  decided  that  a  progressive  inheritance 
tax  passed  by  the  Legislature  in  1875  violated  the  constitu- 
tional requirement  that  all  taxes  must  be  "as  nearly 
equal  as  may  be,"  both  by  its  $2,000  exemption  and  by  its 
arbitrary  schedule.  In  1894,  a  constitutional  amendment 
authorizing  a  tax  either  proportional  or  progressive,  but 
not  exceeding  5  per  cent,  on  inheritances  above  a  fixed 
amount,  was  adopted.  The  amendment  which  was  in  the 
form  of  a  proviso  added  to  the  section  enjoining  equality 
of  taxation,  reads  as  follows:  "And  providing  further, 
that  there  may  be  by  law  levied  and  collected  a  tax  upon 
all  inheritances,  devises,  bequests,  legacies  and  gifts  of 
every  kind  and  description  above  a  fixed  and  specified 
sum  of  any  and  all  natural  persons  and  corporations. 
Such  tax  above  such  exempted  sum  may  be  uniform  or  it 
may  be  graded  or  progressive,  but  shall  not  exceed  a 
maximum  tax  of  5  per  cent."  in  1905,  a  progressive  in- 
heritance tax  was  enacted  which  was  held  by  the  Supreme 
Court  of  Minnesota  in  State  ex  rel  Foote  vs.  Bazille,  6 
L.  R.  A.  (N.  S.),  732,  not  to  be  contrary  to  the  Constitution 
as  above  amended  and  was  sustained,  the  Court  saying, 
"The  authority  to  make  the  tax  graded  or  progressive 
was  incorporated  in  the  law  advisedly,  and  in  view  of  the 
well  known  and  firmly  established  system  of  such  taxa- 
tion in  force  in  this  country  based  upon  the  wise  and 
wholesome  doctrine  that  ability  to  pay  is  the  true  basis 
for  all  taxation.  Though  it  results  in  a  measure  in  in- 
equality, it  conforms  to  a  system  sanctioned  and  supported 
by  the  authorities  generally  and  is  not  repugnant  to  con- 
stitutional principles.  * ' 

It  may  be  added  that  the  new  Constitution  of  Oklahoma 
expressly  authorizes  progressive  taxation  of  both  direct 
and  collateral  inheritances.  In  addition  to  the  effect  of 
the  amendment  recommended  by  your  Committee  on  the 


140 

question  of  grading  inheritance  taxes,  your  Committee  be- 
lieves the  amendment  suggested  to  be  in  line  with  the 
thought  that  a  Constitution  should  be  a  declaration  of  gen- 
eral principles  rather  than  a  specification  of  particulars. 
The  wording  will  permit  greater  freedom  to  the  Legisla- 
ture in  taxing  other  property  in  this  way,  if  the  advance 
of  modern  legislation,  keeping  pace  with  progressive 
civilization,  makes  it  advisable. 

While  it  remains  the  policy  of  the  State  to  give  aid 
to  charity,  it  seems  unnecessarily  circuitous  to  levy  a  tax 
upon  bequests  for  that  purpose.  To  exempt  such  bequests 
merely  means  a  gift  in  another  form,  and  without  the  idle 
act  of  taking  away  and  then  giving  again.  The  amount 
would  not  be  large.  For  the  years  1908,  1909  and  eight 
months  in  1910  in  thirty  counties  reporting  to  your  Com- 
mittee, the  tax  on  bequests  to  charity  as  shown  by  the 
local  records  amounts  to  $587,684.45.  Such  a  concession 
has  been  long  asked  for  by  those  interested  in  charitable 
work  and  it  seems  only  just.  The  Constitution  of  the 
State  permits  the  exemption  from  taxation  of  "institu- 
tions of  purely  public  charity."  The  adoption  of  the 
same  language  as  the  measure  of  the  actual  exemption 
would  exclude  all  gifts  other  than  those  going  to  the 
benefit  of  persons  who  must  otherwise  be  the  subject  of 
State  aid.  Accordingly  it  is  recommended  that  this  ex- 
emption be  granted  and  an  Act  accomplishing  that  purpose 
is  submitted  herewith  (see  page  150). 

This  exemption  really  forms  part  of  the  scheme  of 
taxation  of  inheritances,  but  is  put  in  the  form  of  a  sep- 
arate Act  in  order  that  it  may  be  considered  separately 
for  the  convenience  of  the  Legislature,  and  in  order  that 
any  alterations  which  are  deemed  advisable  may  be  con- 
veniently made  without  affecting  the  general  scheme  of 
taxing  inheritances  by  reason  of  creating  unlawful  ex- 
emptions in  that  Act. 


141 


AN  Aci  LAYING  A  STATE  TAX  ON  ESTATES  PASSING  EITHER  BY  WILL 

OB  UNDER  THE  INTESTATE  LAWS  OF  THIS  COMMONWEALTH  OB  BY 
DEED,  GBANT,  BARGAIN  OB  SALE,  MADE  OR  INTENDED  TO  TAKE  EF- 
FECT AFTER  THE  DEATH  OF  THE  GRANTOR  OR  BARGAINER  AND 
PROVIDING  FOR  THE  COLLECTION  THEREOF. 

SECT.  1.  Be  it  enacted,  etc.,  That  all  estates,  real,  personal 
and  mixed,  of  every  kind  whatsoever,  situated  within  this  State, 
whether  the  person  or  persons  dying-  seized  thereof  be  domiciled 
within  or  out  of  this  State,  and  all  such  estates  situated  in 
another  State,  territory  or  country,  when  the  person  or  persons 
dying-  seized  thereof  shall  have  their  domicile  within  this  Com- 
monwealth, passing  from  any  person  who  may  die  seized  or  pos- 
sessed of  such  estates,  either  by  will  or  under  the  intestate  laws 
of  this  State,  or  any  part  of  such  estate  or  estates,  or  interest 
therein,  transferred  by  deed,  grant,  bargain  or  sale,  made  or 
intended  to  take  effect,  in  possession  or  enjoyment  after  the 
death  of  the  grantor  or  bargainer,  to  or  for  the  use  of  father, 
mother,  husband,  wife,  children,  and  lineal  descendants  born 
in  lawful  wedlock,  children  adopted  according  to  law  and  their 
lineal  descendants,  children  of  a  former  husband  or  wife,  or 
the  wife  or  widow  of  the  son  of  the  person  dying  seized  or 
possessed  thereof,  shall  be,  and  they  are  hereby  made  subject 
to  a  tax  of  one  dollar  on  every  hundred  dollars  of  the  clear 
value  of  such  estate  or  estates,  and  at  and  after  the  same  rate 
for  any  less  amount,  to  be  paid  to  the  use  of  the  Commonwealth ; 
and  all  such  estates  passing  to  any  other  person  or  persons  or 
to  bodies  corporate  or  politic  in  trust  or  otherwise  shall  be  and 
they  are  hereby  made  subject  to  a  like  tax  of  five  dollars  on 
every  hundred  dollars ;  and  all  owners  of  such  estates,  and  all 
executors  and  administrators  and  their  sureties,  shall  only  be 
discharged  from  liability  for  the  amount  of  such  taxes  or  duties, 
the  settlement  of  which  they  may  be  charged  with,  by  having 
paid  the  same  over,  for  the  use  aforesaid,  as  hereinafter  directed. 

SECT.  2.  Where  a  testator  appoints  or  names  one  or  more 
executors,  and  makes  a  bequest  or  devise  of  property  to  them, 
in  lieu  of  their  commissions  or  allowances,  or  appoints  them 
his  residuary  legatees,  and  said  bequests,  devises,  or  residuary 
legacies,  exceed  what  would  be  a  fair  compensation  for  their 
services,  such  excess  shall  be  subject  to  the  payment  of  the  tax 
provided  by  this  Act;  the  rate  of  compensation  to  be  fixed  by 
the  proper  Courts  having  jurisdiction  in  the  case. 

SECT.  3.  In  all  cases  where  there  has  been  or  shall  be  a  devise, 
descent  or  bequest  to  take  effiect  in  possession,  or  come  into 


142 

actual  enjoyment  after  the  expira.tion  of  one  or  more  life  es- 
tates, or  a  period  of  years,  the  tax  on  such  estate  shall  not  be 
payable,  nor  interest  begin  to  run  thereon,  until  the  person  or 
persons,  bodies  corporate  or  politic  liable  for  the  same  shall 
come  into  actual  possession  of  such  estate,  by  the  termination 
of  the  estates  for  life  or  years,  and  the  tax  shall  be  assessed 
upon  the  value  of  the  estate  at  the  time  the  right  of  possession 
accrues  to  the  owner  as  aforesaid:  Provided,  that  the  owner 
shall  have  the  right  to  pay  the  tax  at  any  time  prior  to  his 
coming  into  possession,  and,  in  such  cases,  the  tax  shall  be 
assessed  on  the  value  of  the  estate  at  the  time  of  the  payment 
of  the  tax,  after  deducting  the  value  of  the  life  estate  or  estates 
for  years:  And,  provided  further,  that  the  tax  on  real  estate 
shall  remain  a  lien  on  the  real  estate  on  which  the  same  is 
chargeable  until  paid.  And  the  owner  of  any  personal  estate 
shall  make  a  full  return  of  the  same  to  the  Register  of  Wills 
of  the  proper  county  within  one  year  from  the  death  of  the 
decedent,  and  within  that  time  enter  into  security  for  the  pay- 
ment of  the  tax  to  the  satisfaction  of  such  register ;  and  in  case 
of  failure  to  do  so,  the  tax  shall  be  immediately  payable  and 
collectible. 

SECT.  4.  If  the  tax  provided  by  this  Act  shall  be  paid  within 
three  months  after  the  death  of  the  decedent,  a  discount  of  5 
per  centum  shall  be  made  and  allowed;  and  if  the  said  tax 
is  not  paid  at  the  end  of  one  year  from  the  death  of  the  de- 
cedent, interest  shall  then  be  charged  at  the  rate  of  12  per 
centum  per  annum  on  such  tax;  but  where  from  claims  made 
upon  the  estate,  litigation,  or  other  iinavoidable  cause  of  delay, 
the  estate  of  any  deeedent  or  a  part  thereof  cannot  be  settled 
up  at  the  end  of  the  year  from  his  or  her  decease,  6  per  centum 
per  annum  shall  be  charged  upon  the  tax  provided  by  this  Act, 
arising  from  the  unsettled  part  thereof,  from  the  end  of  such 
year  until  there  be  default :  Provided  further,  that  where  real 
or  personal  estate  withheld  by  reason  of  litigation  or  other  cause 
of  delay  in  manner  aforesaid  from  the  parties  entitled  thereto, 
subject  to  said  tax,  has  not  been,  or  shall  not  be  productive  to 
the  extent  of  6  per  centum  per  annum,  they  shall  not  be  com- 
pelled to  pay  a  greater  amount  as  interest  to  the  Commonwealth 
than  they  may  have  realized,  or  shall  realize  from  such  estate 
during  the  time  the  same  has  been  or  shall  be  withheld  as  afore- 
said. 

SECT.  5.  The  executor,  or  administrator,  or  other  trustee,  pay- 
ing any  legacy  or  share  in  the  distribution  of  any  estate,  sub- 
ject to  the  tax  provided  by  this  Act,  shall  deduct  therefrom  at 


143 

the  rate  of  one  dollar  or  five  dollars  on  every  hundred  dollars, 
as  the  case  may  be,  as  provided  in  Section  1  of  this  Act,  upon  the 
whole  legacy  or  sum  paid ;  or  if  not  money,  he  shall  demand 
payment  of  a  sum,  to  be  computed  at  the  rate  of  tax  chargeable 
thereon,  lipon  the  appraised  value  thereof,  for  the  use  of  the 
Commonwealth ;  and  no  executor  or  administrator  shall  be  com- 
pelled to  pay  or  deliver  any  specific  legacy  or  article  to  be  dis- 
tributed, subject  to  tax,  except  on  the  payment  into  his  hands  of 
a  sum  computed  on  its  value  as  aforesaid ;  and  in  case  of  neglect 
or  refusal  on  the  part  of  said  legatee  to  pay  the  same,  such  speci- 
fic legacy  or  article,  or  so  much  thereof  as  shall  be  necessary, 
shall  be  sold  by  such  executor  or  administrator  at  public  sale, 
after  notice  to  such  legatee,  and  the  balance  that  may  be  left 
in  the  hands  of  the  executor  or  administrator  shall  be  dis- 
tributed, as  is  or  may  be  directed  by  law;  and  every  sum  of 
money  retained  by  any  executor  or  administrator,  or  paid  into 
his  hands  on  account  of  any  legacy  or  distributive  share,  for  the 
use  of  the  Commonwealth,  shall  be  paid  by  him  without  delay. 

SECT.  6.  If  the  legacy  subject  to  the  tax  provided  by  this 
Act  be  given  to  any  person  for  life,  or  for  a  term  of  years, 
or  for  any  other  limited  period,  upon  a  condition  or  con- 
tingency, if  the  same  be  money,  the  tax  thereon  shall  be  re- 
tained upon  the  whole  amount ;  but  if  not  money,  applica- 
tion shall  be  made  to  the  Orphans'  Court  having  jurisdiction 
of  the  accounts  of  the  executors  or  administrators  to  make 
apportionment,  if  the  case  requires  it,  of  the  sum  to  be  paid  by 
such  legatees,  and  for  such  further  order  relative  thereto  as 
equity  shall  require. 

SECT.  7.  Whenever  such  legacy  shall  be  charged  upon  or  pay- 
able out  of  real  estate  the  heir  or  devisee  before  paying  the 
same  shall  deduct  therefrom  the  tax  chargeable  thereon,  and 
pay  the  amount  so .  deducted  to  the  executor;  and  the  same 
shall  remain  a  charge  upon  such  real  estate  until  so  paid,  and 
the  payment  thereof  shall  be  enforced  by  the  decree  of  the 
Orphans'  Court  in  the  same  manner  as  the  payment  of  such 
legacy  may  be  enforced. 

SECT.  8.  Whenever  any  real  estate  of  which  any  decedent  may 
di«  is  seized  shall  be  subject  to  the  tax  provided  by  this  Act,  it 
shall  be  the  duty  of  executors  and  administrators  to  give  in- 
formation thereof  to  the  Register  of  the  county,  where  admin- 
istration had  been  granted,  within  six  months  after  they 
undertake  the  execution  of  their  respective  duties,  or  if  the 
fact  be  not  known  to  them  within  that  period,  within  one 
month  after  the  same  shall  have  come  to  their  knowledge;  and 


144 

it  shall  be  the  duty  of  the  owners  of  such  estates,  immediately 
upon  the  vesting  of  the  estate,  to  give  information  thereof  to 
the  Register  having  jurisdiction  of  the  granting  of  adminis- 
tration. 

SECT.  9.  It  shall  be  the  duty  of  any  executor  or  administrator, 
on  the  payment  of  the  tax  provided  by  this  Act,  to  take  dupli- 
cate receipts  from  the  Register,  one  of  which  shall  be  for- 
warded forthwith  to  the  Auditor  General,  whose  duty  it  shall 
be  to  charge  the  Register  receiving  the  money  with  the  amount, 
and  seal  with  the  seal  of  his  office  and  countersiga  the  receipt 
and  transmit  it  to  the  executor  or  administrator,  whereupon 
it  shall  be  a  proper  voucher  in  the  settlement  of  the  estate ; 
but  in  no  event  shall  an  executor  or  administrator  be  entitled 
to  a  credit  in  his  account  unless  the  said  receipt  is  so  sealed 
and  countersigned  by  the  Auditor  General. 

SECT.  10.  Whenever  any  foreign  executor,  or  administrator, 
or  trustee,  shall  assign  or  transfer  any  stocks  or  loans  in  this 
Commonwealth  standing  in  the  name  of  the  decedent  or  in 
trust  for  a  decedent  which  shall  be  liable  for  the  tax  provided 
by  this  Act,  such  tax  shall  be  paid,  on  the  transfer  thereof,  to 
the  Register  of  the  county  where  such  transfer  is  made;  other- 
wise the  corporation  permitting  such  transfer  shall  become 
liable  to  pay  such  tax. 

SECT.  11.  Whenever  debts  shall  be  proven  against  the  estate 
of  a  decedent  after  distribution  of  legacies  from  which  the  tax 
provided  by  this  Act  has  been  deducted  in  compliance  with 
this  Act  and  the  legatee  is  required  to  refund  any  portion  of  a 
legacy,  a  proportion  of  the  said  tax  shall  be  repaid  to  him  by 
the  executor  or  administrator  if  the  said  tax  has  not  been  paid 
into  the  State  or  County  Treasury,  or  by  the  County  Treasurer, 
if  it  has  so  been  paid. 

SECT.  12.  It  shall  be  the  duty  of  the  Register  of  Wills  of  the 
county  in  which  letters  testamentary  or  of  administration  are 
granted  to  appoint  an  appraiser,  as  often  as  and  whenever 
occasion  may  require,  to  fix  the  valuation  of  estates  which  are, 
or  shall  be,  subject  to  the  tax  provided  by  this  Act;  and  it 
shall  be  the  duty  of  such  appraiser  to  make  a  fair  and  con- 
scionable  appraisement  of  such  estates ;  and  it  shall  further 
be  the  duty  of  such  appraiser  to  assess  and  fix  the  cash  value 
of  all  annuities  and  life  estates  growing  out  of  said  estates, 
upon  which  annuities  and  life  estates  the  tax  provided  by  this 
Act  shall  be  immediately  payable  out  of  the  estate  at  the  rate 
of  such  valuation :  Provided,  That  any  person  or  persons,  bodies 
corporate  or  politic  not  satisfied  with  said  appraisement  shall 


145 

have  the  right  to  appeal  within  thirty  days  to  the  Orphans* 
Court  of  the  proper  county  or  city,  on  paying1,  or  giving  se- 
curity to  pay,  all  costs,  together  with  whatever  tax  shall  be 
fixed  by  said  Court,  and  upon  such  appeal  said  Courts  shall 
have  jurisdiction  to  determine  all  questions  of  valuation,  and 
of  the  liability  of  the  appraised  estate  for  such  tax,  subject 
to  the  right  of  appeal  to  the  Supreme  or  Superior  Court  as  in 
other  cases. 

SECT.  13.  The  compensation  of  such  appraisers  shall  be  as 
follows,  namely :  For  each  and  every  day  on  which  an  ap- 
praiser shall  actually  be  engaged  in  making  appraisements  of 
property  subject  to  said  tax,  he  shall  receive  the  sum  of  two 
dollars:  Provided,  That  if,  in  the  discharge  of  his  duties,  it 
shall  be  necessary  for  him,  the  said  appraiser,  to  travel  from 
his  place  of  residence  to  appraise  property  subject  to  said  tax, 
he  shall  be  allowed  such  actual  necessary  traveling  expenses 
as  he  may  incur,  which  expenses  shall  be  itemized  in  a  sworn 
statement  to  be  returned  to  the  Eegister  and  subject  to  the 
final  approval  of  the  Auditor  General. 

SECT.  14.  When,  by  virtue  of  the  complicated  nature  of  an 
estate  subject  to  the  payment  of  the  tax  provided  by  this  Act 
the  interest  of  the  Commonwealth  shall  require  the  appoint- 
ment as  appraiser  of  said  estate,  of  a  person  possessed  of  ex- 
pert or  technical  knowledge  to  ascertain  the  value  thereof, 
reasonable  additional  compensation  shall  be  allowed  said  ap- 
praiser for  the  exercise  of  such  expert  or  technical  knowledge, 
and  in  cases  where,  after  the  appointment  of  an  appraiser  to 
appraise  the  value  of  said  estate,  it  shall  appear  that  the  proper 
appraisement  of  said  estate  will  require  the  services  of  a  per- 
son possessed  of  expert  or  technical  knowledge  whereof  the 
appraiser  appointed  to  appraise  said  estate  is  not  possessed,  he, 
the  said  appraiser,  may  employ  the  services  of  a  person  pos- 
sessed of  expert  or  technical  knowledge  to  assist  him  in  the 
appraisement  of  said  estate,  and  for  such  services  the  person 
so  employed  shall  receive  reasonable  compensation:  Provided, 
That  in  all  such  cases  the  Register  of  Wills  appointing  the  ap- 
praiser shall  certify  to  the  Auditor  General  that  there  is  actual 
necessity  for  the  appointment  of  an  appraiser  possessed  of 
expert  or  technical  knowledge,  or  that  the  appraiser  already  ap- 
pointed to  appraise  the  estate  in  question  should  be  assisted 
by  a  person  possessed  of  such  knowledge,  and  no  person  shall 
be  appointed  as  such  expert  appraiser,  or  as  expert  assistant 
to  an  appraiser,  without  the  approval  of  the  Auditor  General 
of  said  appointment  first  had  and  obtained,  nor  shall  any  pay- 


146 

merit  be  made  to  any  appraiser,  or  to  any  person  employed  by 
him,  under  this  section,  until  an  itemized  statement  of  the  ser- 
vices performed  and  the  compensation  recommended  shall  have 
been  rendered,  under  oath  or  affirmation,  to  the  Auditor  Gen- 
eral for  his  approval  and  shall  have  received  the  same :  And 
provided  further,  That  no  clerk  or  other  person  employed  in  the 
office  of  a  Eegister  of  Wills  shall  be  appointed  an  expert  ap- 
praiser of  an  estate  subject  to  the  payment  of  the  tax  provided 
by  this  Act  nor  as  an  expert  to  assist  the  appraiser  of  such 
estate. 

SECT.  15.  It  shall  be  a  misdemeanor  in  any  appraiser,  ap- 
pointed by  the  Register  to  make  any  appraisement  in  behalf 
of  the  Commonwealth,  to  take  any  fee  or  reward  from  any 
executor  or  administrator,  legatee,  devisee,  next  of  kin,  or  heir 
of  any  decedent,  and  for  any  such  offense  the  register  shall  dis- 
miss him  from  such  service,  and,  upon  conviction  in  the  Quarter 
Sessions,  lie  shall  be  fined  not  exceeding  five  hundred  dollars, 
and  imprisoned  not  exceeding  one  year,  or  both,  or  either,  at 
the  discretion  of  the  Court. 

SECT.  16.  It  shall  be  the  duty  of  the  Register  of  Wills  to  enter 
in  a  book,  to  be  provided  at  the  expense  of  the  Commonwealth, 
to  be  kept  for  that  purpose,  and  which  shall  be  a  public  record, 
the  returns  made  by  all  appraisers  under  this  Act,  opening  an 
account  in  favor  of  the  Commonwealth  against  the  decedent's 
estate,  and  the  Register  may  give  certificates  of  payment  of 
such  tax  from  such  record,  and  it  shall  be  the  duty  of  the 
Register  to  transmit  to  the  Auditor  General,  on  the  first  day 
of  each  month,  a  statement  of  all  returns  made  by  appraisers 
during  the  preceding  month,  upon  which  the  taxes  remain  un- 
paid, which  statement  shall  be  entered  by  the  Auditor  Gen- 
eral in  a  book  to  be  kept  by  him  for  that  purpose.  And  when- 
ever any  such  tax  shall  have  remained  due  and  unpaid  for  one 
year,  it  shall  be  lawful  for  the  Register  to  apply  to  the  Orphans' 
Court,  by  bill  or  petition,  to  enforce  the  payment  of  the  same ; 
whereupon  said  Court,  having  caused  due  notice  to  be  given  to 
the  owner  of  the  real  estate  charged  with,  the  tax,  and  to  such 
other  persons  as  may  be  interested,  shall  proceed,  according 
to  equity,  to  make  such  decrees  or  orders  for  the  payment  of 
the  said  tax  out  of  such  real  estate  as  shall  be  just  and 
proper. 

SECT.  17.  If  the  Register  shall  discover  that  any  tax  pro- 
vided by  this  Act  has  not  been  paid  over  according  to  law,  the 
Orphans'  Court  shall  be  authorized  to  cite  the  executors  or  ad- 
ministrators of  the  decedent,  whose  estate  is  subject  to  the 


147 

tax,  to  file  an  account  or  to  issue  a  citation  to  the  executors, 
administrators,  or  heirs,  citing  them  to  appear  on  a  certain 
day  and  show  cause  why  the  said  tax  should  not  be  paid,  and 
when  personal  service  cannot  be  had,  notice  shall  be  given  for 
four  weeks,  once  a  week,  in  at  least  one  newspaper  published 
in  said  county ;  and  if  the  said  tax  shall  be  found  to  be  due  and 
unpaid,  the  said  delinquent  shall  pay  said  tax  and  costs.  And 
it  shall  be  the  duty  of  the  Kegister,  or  of  the  Auditor  Gen- 
eral, to  employ  an  attorney  of  the  proper  county,  to  sue  for 
the  recovery  and  amount  of  such  tax,  and  the  Auditor  Gen- 
eral is  authorized  and  empowered,  in  settlement  of  accounts 
of  any  Register,  to  allow  him  costs  of  advertising  and  other 
reasonable  fees  and  expenses,  incurred  in  the  collection  of  the 
tax. 

SECT.  18.  The  Registers  of  Wills  of  the  several  counties  of 
this  Commonwealth,  upon  their  filing  with  the  Auditor  General 
the  bond  hereinafter  required,  shall  be  the  agents  of  the  Com- 
monwealth for  the  collection  of  the  tax  provided  by  this  Act,  and 
for  services  rendered  in  collecting  and  paying  over  the  same,  the 
said  agents  shall  be  allowed  to  retain  for  their  own  use  5  per 
centum  upon  the  tax  collected,  if  the  said  tax  shall  amount  to 
a  sum  less  than  two  hundred  thousand  dollars  in  any  year;  or 
4  per  centum  upon  the  said  tax,  if  the  same  shall  amount  to 
two  hundred  thousand  dollars  and  less  than  three  hundred 
thousand  dollars  in  any  year  or  3  per  centum  upon  the  said  tax, 
if  the  tax  collected  shall  amount  to  three  hundred  thousand 
dollars  or  more  in  any  year. 

SECT.  19.  The  said  Register  shall  give  bond  to  the  Common- 
wealth in  such  penal  sum  as  the  Orphans'  Court  of  the  county 
may  direct,  with  two  or  more  sufficient  sureties  for  the  faithful 
performance  of  the  duties  hereby  imposed,  .and  for  the  regular 
accounting  and  paying  over  of  the  amounts  to  be  collected  and 
received;  and  said  bond,  on  its  execution  and  approval  by  the 
said  Orphans'  Court,  to  be  forwarded  to  the  Auditor  General. 

SECT.  20.  It  shall  be  the  duty  of  the  Register  of  Wills  of  each 
county  to  make  returns  and  payment  to  the  State  Treasurer  of 
all  the  tax  provided  by  this  Act  which  he  shall  have  received, 
stating  for  what  estate  paid,  on  the  first  Mondays  of  April,  July, 
October  and  January,  in  each  year ;  and  for  all  taxes  collected  by 
him,  and  not  paid  over  within  one  month  after  his  quarterly 
return  of  the  same,  he  shall  pay  interest  at  the  rate  of  12  per 
centum  per  annum  until  paid. 

SECT.  21.  The  lien  of  the  taxes  provided  by  this  Act  shall  con- 
tinue until  the  said  taxes  are  settled  and  satisfied :  Provided, 


148 

That  the  said  lien  shall  be  limited  to  the  property  chargeable 
therewith :  And  provided  further,  That  all  said  taxes  shall  be 
sued  for  within  five  years  after  they  are  due  and  legally  de- 
mandable,  otherwise  they  shall  be  presumed  to  have  been  paid 
and  cease  to  be  a  lien  as  against  any  purchasers  of  real  estate. 

SECT.  22.  In  all  cases  where  any  amount  of  the  tax  provided  by 
this  Act  has  heretofore  been  paid,  or  may  hereafter  be  paid, 
erroneously,  either  with  respect  to  the  amount  of  the  estate  or 
the  rate  of  the  tax  to  the  Register  of  Wills  of  the  proper  county, 
for  the  use  of  the  Commonwealth,  it  shall  be  lawful  for  the 
State  Treasurer,  on  satisfactory  proof  rendered  to  him  by  said 
Kegister  of  Wills  of  such  erroneous  payment,  to  refund  and  pay 
over  to  the  executor,  administrator,  person  or  persons  who  may 
have  heretofore  paid  or  may  hereafter  pay  any  of  such  tax  in  er- 
ror, the  amount  of  such  tax  thus  erroneously  paid:  Provided, 
That  all  such  applications  for  the  repayment  of  such  aforesaid 
tax,  erroneously  paid  into  the  Treasury,  shall  be  made  within 
two  years  from  the  date  of  said  payment,  except  when  the  es- 
tate, upon  which  such  tax  shall  have  been  so  erroneously  paid 
shall  have  consisted  in  whole  or  in  part  of  a  partnership,  or 
other  interest  of  uncertain  value,  or  shall  have  been  involved  in 
litigation,  by  reason  whereof  there  shaii  have  been  an  overvalua- 
tion of  that  portion  of  the  estate  on  which  the  tax  has  beeyv 
assessed  and  paid,  which  overvaluation  could  not  have  been  as- 
certained witnin  said  period  of  two  years ;  then,  and  in  such  case, 
the  application  for  repayment  may  be  made  to  the  State  Treas- 
urer within  one  year  from  the  termination  of  such  litigation,  or 
ascertainment  of  such  overvaluation. 

SECT.  23.  Property  of  a  resident  of  the  Commonwealth  which 
is  not  therein  at  the  time  or  his  death  shall  not  be  taxable  un- 
der the  provisions  of  this  Act  if  legally  subject  in  another  State 
or  country  to  a  tax  of  like  character  and  amount  to  that  hereby 
imposed,  and  if  such  tax  be  actually  paid  or  guaranteed  or  se- 
cured in  accordance  with  law  in  such  other  State  or  country ;  if 
legally  subject  in  another  State  or  country  to  a  tax  of  like  char- 
acter but  of  less  amount  than  that  hereby  imposed  and  such  tax 
be  actually  paid  or  guaranteed  or  secured  as  aforesaid,  such  prop- 
erty shall  be  taxable  under  this  Act  to  the  extent  of  the  differ- 
ence between  the  tax  thus  actually  paid,  guaranteed  or  secured, 
and  the  amount  for  which  such  property  would  otherwise  be 
liable  hereunder.  Property  of  a  non-resident  decedent  which 
is  within  the  jurisdiction  of  the  Commonwealth  at  the  time  of 
his  death,  if  subject  to  a  tax  of  like  character  with  that  imposed 
by  this  Act  by  the  law  of  the  State  or  country  of  his  residence, 


149 

shall  be  subject  only  to  such  portion  of  the  tax  hereby  imposed 
as  may  be  in  excess  of  such  tax  imposed  by  the  laws  of  such 
State  or  country :  Provided,  That  a  like  exemption  is  made  by  the 
laws  of  such  other  State  or  country  in  favor  of  estates  of  citizens 
of  this  Commonwealth,  but  no  such  exemption  shall  be  allowed 
until  such  tax  provided  for  by  the  law  of  such  other  State  or 
country  shall  be  actually  paid,  guaranteed,  or  secured  in  accord- 
ance with  law. 


NOTES. 

Section  1  is  based  on  the  first  section  of  the  Act  of  May 
6,  1887,  relating-  to  collateral  inheritance  taxes.  The  Two  hun- 
dred and  fifty  dollars  exemption  therein  provided  is  dropped  and 
estates  passing  to  "father,  mother,  husband,  wife,  children,  and 
lineal  descendants  born  in  lawful  wedlock,  or  the  wife,  or  wid- 
ow of  the  son"  and  "children  of  a  former  husband  or  wife"  of 
the  person  dying  seized  heretofore  exempt  under  Section  1,  Act 
May  1,  1887,  P.  L.  79,  as  amended  by  the  Act  of  April  22,  1905, 
P.  L.  259,  are  made  subject  to  a  1  per  cent.  tax.  There  is 
also  added  to  this  class  "children  adopted  according  to  law  and 
their  lineal  descendants."  This  changes  the  law  as  made  by  the 
decision  in  Com.  vs.  Nancrede,  32  Pa.  389.  The  change  better 
accords  with  the  spirit  of  the  law  and  the  provision  in  other 
States.  The  Constitutional  provision,  Article  9,  Section  1,  de- 
claring that  all  taxes  shall  be  uniform  upon  the  same  class 
of  subjects,  as  interpreted  in  Cope's  Estate,  191  Pa.  1,  requires 
the  elimination  of  the  Two  hundred  and  fifty  dollars  exemption 
as  to  direct  inheritances,  and  it  has  seemed  to  your  Committee, 
therefore,  more  consistent  to  likewise  strike  it  out  as  to  collater- 
als. 

Sections  2,  3,  4,  5,  6,  7,  8,  9,  10,  11  and  12  are  based  on  the  like 
sections  of  the  Act  of  May  6,  1887. 

Sections  13  and  14  are  based  on  Sections  1  and  2  of  the  Act 
of  June  26,  1895,  P.  L.  325. 

Sections  15,  16  and  17  are  based  on  Sections  13,  14  and  15  of 
the  Act  of  May  6,  1887. 

Section  18  is  based  on  Act  of  May  14,  1891,  P.  L.  59,  which 
amended  Section  16  of  the  Act  of  May  6,  1887. 

Sections  19,  20  and  21  are  based  on  Sections  17,  19  and  20 
of  the  Act  of  May  6,  1887. 

Section  22  is  based  on  Act  of  March  25,  1901,  P.  L.  59,  which 
amended  Act  of  June  12.  1878. 

Section  23  is  based  on  Section  3  of  the  Massachusetts  Inheri- 
tance Tax  Act  of  June  12,  1909,  P.  L.  647.  Its  purpose  is  to 
prevent  double  taxation  and  while  giving  a  proper  share  of  the 
taxable  estate  to  any  State  enacting  a  similar  provision,  to  re- 
lieve the  estates  of  our  citizens  so  far  as  they  are  taxed  abroad 
in  such  States. 


150 


AN  ACT  TO  EXEMPT  FROM  THE  PAYMENT  OF  INHERITANCE  TAXES 
BEQUESTS  AND  DEVISES  TO  INSTITUTIONS  OF  PURELY  PUBLIC 
CHARITY. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  all  bequests  and 
devises  to  institutions  of  purely  public  charity  shall  be  exempt 
from  liability  for  inheritance  taxes. 


A  JOINT  RESOLUTION,  PROPOSING  AN  AMENDMENT  TO  SECTION  ONE 
OF  ARTICLE  NINE  OF  THE  CONSTITUTION  OF  PENNSYLVANIA, 
RELATING  TO  TAXATION. 

SECT.  1.  Be  it  resolved,  etc.,  that  the  following  is  proposed  as 
an  amendment  to  the  Constitution  of  the  Commonwealth  of 
Pennsylvania  in  accordance  with  the  provisions  of  the  eighteenth 
article  thereof. 

SECT.  2.  Amend  Section  1  of  Article  9  of  the  Constitution  of 
Pennsylvania,  which  reads  as  follows: 

"All  taxes  shall  be  uniform,  upon  the  same  class  of  subjects, 
within  the  territorial  limits  of  the  authority  levying  the  tax, 
and  shall  be  levied  and  collected  under  general  laws;  but  the 
General  Assembly  may,  by  general  laws,  exempt  from  taxation 
public  property  used  for  public  purposes,  actual  places  of  re- 
ligious worship,  places  of  burial  not  used  or  held  for  private  ©r 
corporate  profit,  and  institutions  of  purely  public  charity,"  so  us 
to  read  as  follows : 

All  taxes  shall  be  uniform  upon  the  same  class  of  subjects 
within  the  territorial  limits  of  the  authority  levying  the  tax. 
and  shall  be  levied  and  collected  under  general  laws,  and  tlic 
subjects  of  taxation  may  be  classified  for  the  purpose  of  laying 
graded  or  progressive  taxes,  but  the  General  Assembly  may, 
by  general  laws,  exempt  from  taxation  public  property  used 
for  public  purposes,  actual  places  of  religious  worship,  places 
of  burial  not  used  or  held  for  private  or  corporate  profit,  and 
institutions  of  purely  public  charity. 


NOTE. 

This  form  your  Committee  recommends  for  the  purpose 
of  freeing  the  Legislature  to  apply  the  principle  of  grad- 
uation as  may  be  thought  necessary,  a  freedom  which  most  other 
States  have.  If  it  be  thought  well,  however,  to  confine  the  pres- 
ent amendment  to  inheritance  taxes  the  following  alternative 
is  proposed)  : 


151 

All  taxes  shall  be  uniform,  upon  the  same  class  of  subjects, 
within  the  territorial  limits  of  the  authority  levying  the  tax, 
and  shall  be  levied  and  collected  under  general  laws;  but  the 
General  Assembly  may,  by  general  laws,  provide  for  a  uniform  or 
graduated  or  progressive  tax  upon  all  estates  passing  either  by 
will  or  under  intestate  laws  or  by  any  instrument  intended  to 
take  effect  after  death,  and  exempt  from  taxation  a  fixed  and 
specified  amount  of  such  estate  and  public  property  used  for 
public  purposes,  actual  places  of  religious  worship,  places  of 
burial  not  used  or  held  for  private  or  corporate  profit  and  in- 
stitutions of  purely  public  charity. 


152 


1 

O> 

03 

a> 
'3 

If 

PH     PH 

I 

O 

£ 

"to 

'§ 

-0     -o 

T3 

I 

a     a 

ci        c3 

g    | 

g 

a 

03 

f     | 

rr-<           Ot        r 
)~         •<-; 

i 

'O 

•s 

T3 

2    2 

2   i 

3 

03 

08 

o    o 

o    «    c 

s 

5 

5 

i 

B 

i 

.2 

o      o 

O        O        1 

r 

§ 

g 

5 

i 

> 
> 

S 

f  T 

•  o 

M 

i 

i 

CS 

K 

!  * 

i 

i 

1 

4 

0          CO          L 

i 

10 

cs 

1      ! 

! 

T 

«s 

(M           ^H 

•O                              T- 

•i 

-H           < 

(Q 

a 

1    ! 

i  1 

C 

i   l 

VI 

1 

a 

0       c 

»        0 

-»         r-l 

5 

< 

5      i 

S      « 

5 
g 

a 

7  ' 

T 

H         C 

^ 

<u 

< 

1 

. 

M 

i 

1  1 

I 

03 

a 

0         ^ 

!j< 

3 

f"s 

co      c 

<I 

M 

c 

o      <? 

1 

8 

I 

r 

•i         r- 

^ 

t 

«tH  c 
O    CE 

i 

~. 

S 

4 

[ 

|  g  | 

i  §  i 

pt 

> 

j= 

I 

1 

i  I 

'       & 

g 

is 

fl 

•: 

ll 

0 

,-- 

o 
fc 

c 
ft 

| 

!    S    S 

S         CO 

^ii 

^o 

0 

0 

i 

! 

i 

• 

/. 

1 

! 

CS 

a 

( 

t 

Jt 

a 

- 

o 

'- 

BA 

3 

<M 

^ 

Alabama 

5 

Arizona  , 

< 

r 
c 

Jj 

i  1 

o    2 
S    5 

0      0 

-Sd      o 

S   | 

a     P 
S    « 

| 

1 

£ 

m 

1 

m 

'S 

* 

03 

M 

O 

1 

Indiana  . 

M 

M 

i 

Kansas  .. 

153 


O 

> 

"bfl 

bo 

o 

00 

o 

>-l 

1 

P4 

« 

-a     ^ 

C3 

•o 

"ba 

P)       bfl 

B 

M 

03 

1 

•e    ^ 

1 

03 
t-i 

O 

fl 

I    1 

•^ 

i 

_. 

-    -o 

A 

i 

c 

bO 

o 

fi 

1 
5 

II 

9 

§- 

^      o 

o 

- 

5        O 

3 

- 

§ 

S 

i 

.-•_ 

- 

S 

S        S 

10         S 

^ 

rH 

0 

(M 

<M 

o. 

| 

1 

*« 

s 

Oi 

| 

"o 
O 

oTfl 

O         l£ 

5        -J 

4 

5     m 

L 

•5         CO 

L' 

V 

in      « 

|1 

1 

CO 

S 

1 

1     i 

m      r^i 

a 

! 

2 

S  ? 

o 

! 

! 

o      < 

5     o 

rs      o 

o      o 

"a 

c 

3 

o"     «• 

S        0 

--      c 

1 

1 

X 

g 

"3 

W 

§ 



S 

Jj 

^ 

M 

<N 

r-i         m 

r-t        i- 

in     **" 

lk 

I 

1 

1 

rH 

o 

q     •« 

1 

1   ; 

< 

H 

5 

1  S 

52     kc 

c 

* 

v 

OD        C 

r 

n   i 

I 

i 

s 

p      jO>      A 

1 

03 

P 

|1« 

"5  1 

0)          «- 

S 

I 

i 

1  1 

1     1 

M      »£) 

^        00 

; 

5 

I 

:  • 

S 

i  ' 

I 

5 

; 

o     .i     ,1 

S 

g 

05 

02 

j 

CB 

Kentucky  (13 

Louisiana  -- 

a 

^ 
'^ 

Maryland 
Massachusett 

Michigan  (13' 
Minnesota  _ 

Mississippi  - 

K 

~ 

g 

S 

Montana  

a 

\ 
B 

V 

/; 

Nevada  

S 

| 

S 

| 

t 

New  Mexico 
New  York  __ 
North  Carol 

154 


I 


1 

i 

I 

A 

1 

o> 

f 

( 

0 

i  •§  5 

1 

"3 

"ba 

S 

I 

!' 

"bfl       OS        SB 

e  >  1 

1 

a? 

I 

i 

1 

D 

•0       o      -0 

O             tH             R 

03       fi{        03 

1 

1 
i 

Graded 

| 

o 

"S     r   -g 
111 

i  S  1 

i 

! 

1 

1  1 

<M 

i  1 

1     |     |     c 

O       0       O       g 

rt 

i 

•f 

i  * 

C-J       0 

jj 

6 

Q 



O 

B 

o? 

QD*  fl 

§ 

10 

(O      >r 

O> 

o     ic 

IN       US       1C 

tO         C-!          IK          IK 

^    QJ 

I 

1 

77 

«s 

<N 

eo 

<N 

(N 

CC         OT         rH 

• 

§ 

1 

P 

1 

§  1  § 

| 

US 

10 

S 

o     to"     o 

•3 

3 

g  g 

V 

O        C^l 

a 

1-1 

3 

^ 

,_, 

« 

r-t 

10 

r-l       CO        CO 

i§ 

| 

1    1 

S| 

rH 

r-.          rH 

•s" 

!  s 

g 

l 

> 

1  i 

I    1 

1    S 

i  §  i 

g        J^        g        CO 

• 

m  ^3 

F» 

r-I 

<S 

rH        r- 

rH        j; 

* 

rH         r 

r-i        T-(         r- 

r^        rH        rH        rH 

"S; 

o 

I1! 

I 

S 

I 

i  i 

c 

£ 

< 

i 

1  i 

iiH 

O         t-i 

S 

w 

: 

i 

North  Dakota 

0 

O 

Oklahoma  (5-14 

Oregon  
Pennsylvania  _ 

0      1 

S   « 

1  § 

02 

1 

g 

a 
£ 

3 

K 

08 

II 

Texas  
Utah  
Vermont  (14)— 

£    S1 

S?      q      O      C- 

COM 

S  1  P  1 

till 

155 


2    2 


g  i  a 


a  5  g 

S  £  A 

X  73  «o 

§  §  § 

:  •§  •§ 

B  -a  -o 


c 


o 

|  8  §  §  §  §  §  I  I  § 

M 

iQiQWOinOtCOlTj; 

Pi 

l—  *                         rH                        r-  1 

1 

I 

«•                         ^ 

1 



S 

•« 

moooooob-iaoi 

£  § 

w   V 

7  T  t  t  T  i  T 

10      i-i      10      10      w      e^     10     . 

a 

II  II   §§  §  III 

A 

OlOi&lCOtOOOlOLO 

1 

•1 

a 

a 

<MlOlOOCliOQO?100lO 

1? 

1     i     '     i    i     '     i     '      ' 

rH        *           T-lrlicNrH^-trHr-! 

Og^-g 

Illl 


^   ^ 


^      as 


a   | 

S  jg 


•S    2    « 


•°    ^    ¥.    c 


fe      * 
en      •£ 

a 


co     o 


o     a 
25     O 


8 


£       i     a 

85  '  06 
£  Q  ^ 
'C  C  » 

W  ^ 

i«! 


S  ;  *%v*K 

1  IPl^I 
•SSS-a^r 
5:Sf| 

siilfci 


156 


TAX  ON  AUTOMOBILES. 

The  present  Act  of  1909  divides  automobiles  into  three 
classes.  The  first  class  (under  20  horse  power),  pays 
$5.00;  the  second  class  (between  20  and  50  horse  power), 
pays  $10.00,  and  the  third  class  (over  50  horse  power) ,  pays 
$15.00.  The  number  of  automobiles  registered  to  nearly 
the  close  of  the  year  1910  is  as  follows : 
Vehicles  less  than  20  horse 

power  755  at     $5.00        $3,775.00 

Vehicles  20  horse  power,  but 

less  than  50  horse  power 20,304  at     10.00      203,040.00 

Vehicles  50  horse  power  or 

more  .  12,273  at     15.00       184,195.00 


Total 33,332  $391,010.00 

In  addition  there  was  received : 

Dealers'  registrations  „ 2,908  at  $5.00      $14,540.00 

Motor  cycle  registrations 3,808  at  2.00          7,616.00 

Chauffeurs'  licenses 15,845  at  2.00         31,690.00 

Special  juvenile  licenses 684 


A  grand  total  of 56,577  $444,856.00 

New  Jersey  divides  automobiles  into  three  classes,  the 
points  of  division  being  at  10  and  30  horse  power,  and 
taxes  the  classes  $3.00,  $5.00  and  $10.00  respectively. 
Massachusetts  divides  them  into  five  classes  with  the  points 
of  division  at  20,  30,  40  and  50  horse  power  and  taxes  them 
$5.00,  $10.00,  $15.00,  $20.00  and  $25.00  respectively.  Con- 
necticut divides  them  into  five  classes  with  the  division  at 
20,  30,  35  and  40  horse  power  and  taxes  them  $6.00, 
$10.00,  $15.00,  $20.00  and  $30.00  respectively.  All  these 
States  provide  that  the  money  thus  raised  shall  be  at  the 
disposition  of  the  Commissioner  of  Highways,  without  fur- 
ther appropriation  to  expend  on  the  roads  of  the  State. 


157 

This  tax  can  be  collected  with  absolute  certainty. 
The  automobile  is  a  luxury  which  can  easily  bear  the  in- 
creased tax  and  if  the  amount  realized  was  expended  in 
the  improvement  of  the  roads,  the  owners  of  the  automo- 
biles would  be  so  benefited  that  they  would  doubtless 
cheerfully  pay  it.  At  the  same  time  it  would  be  a  great 
relief  to  local  communities  which  are  put  to  additional 
expense  in  maintaining  road  surfaces  injuriously  affected 
by  automobile  traffic. 

Your  Committee  therefore  recommends  the  imposition 
of  a  tax  of  $25.00,  $50.00  and  $75.00  upon  the  respective 
classes  of  registration  of  vehicles  as  now  established.  This 
on  the  basis  of  1910  would  produce  a  revenue  of 

Under  20  horse  power $18,875.00 

20  to  50  horse  power 1,051,200.00 

50  horse  power  or  more , 920,475.00 


Total  $1,954,550.00 

Under  the  present  law  this  fund  is  paid  to  the  State 
Elighway  Department  "to  be  used  for  the  improvement  of 
the  roads  of  this  Commonwealth. ' '  It  should  also  be  avail- 
able for  maintenance  of  improved  roads. 

A  draft  of  an  Act  to  accomplish  this  change  is  accord- 
ingly submitted  herewith  (see  page  157). 


AN  ACT  TO  AMEND  SECTIONS  2  AND  21  OF  AN  ACT  ENTITLED  "AN 

ACT  RELATING  TO  MOTOR-VEHICLES  :  REGULATING  THEIR  SPEED 
UPON  THE  PUBLIC  STREETS  AND  HIGHWAYS  OF  THE  COMMON- 
WEALTH OF  PENNSYLVANIA;  PROVIDING  FOR  THEIR  REGISTRA- 
TION, AND  THE  LICENSING  OF  OPERATORS,.  BY  THE  STATE  HlGH- 

WAY  DEPARTMENT;  ESTABLISHING  THE  RIGHTS  OF  MOTOR- 
VEHICLES  UPON  THE  PUBLIC  HIGHWAYS,  WITH  RELATION  TO 
OTHER  VEHICLES  ;  REGULATING  THE  SERVICE  OF  PROCESS  AND  OF 
PROCEEDINGS  IN  ACTIONS  FOR  DAMAGES  ARISING  THEREFROM  ; 
PRESCRIBING  THE  PENALTIES  FOR  VIOLATIONS  OF  THE  PROVISIONS 
OF  THIS  ACT,  AND  PROVIDING  FOR  THE  DISPOSITION  OF  FINES 
IMPOSED  THEREUNDER."  APPROVED  APRIL  27,  1909. 


158 

SECT.  1.  Be  it  enacted,  etc.,  That  Section  2  of  an  Act  entitled 
"An  Act  relating-  to  motor-vehicles :  regulating  their  speed  upon 
the  public  streets  and  highways  of  the  Commonwealth  of  Penn- 
sylvania, providing  for  their  registration,  and  the  licensing  of 
operators,  by  the  State  Highway  Department;  establishing  the 
rights  of  motor-vehicles  upon  the  public  highways,  with  re- 
lation to  other  vehicles;  regulating  the  service  of  process  and 
of  proceedings  in  actions  for  damages  arising  therefrom ;  pre- 
scribing the  penalties  for  violations  of  the  provisions  of  this 
Act,  and  providing  for  the  disposition  of  fines  imposed  there- 
under." Approved  April  27,  1909,  which  reads  as  follows: 

"SECT.  2.  Application  for  the  registration  of  motor-vehicles 
shall  be  made  to  the  State  Highway  Department,  or  to  a  lawful 
agent  appointed  by  the  Highway  Commissioner.  The  applica- 
tion shall  contain  the  name,  place  of  residence,  and  correct 
post-office  address  of  the  owner;  with  a  brief  description  of 
the  motor-vehicle,  stating  the  name  of  the  maker,  the  manu- 
facturer's number,  the  character  of  the  motive  power,  and  the 
rated  horse-power.  The  said  application  shall  be  made  upon  a 
blank  provided  for  the  purpose  by  the  State  Highway  Depart- 
ment. It  shall  be  signed  by  the  owner,  and  be  verified  by  oath 
or  affirmation.  Upon  receipt  of  the  application,  and  a  fee  of 
five  dollars  ($5.00)  for  motor- vehicles  of  less  than  twenty 
horse-power,  ten  dollars  ($10.00)  for  motor- vehicles  of  twenty 
horse-power  or  more  and  less  than  fifty  horse-power,  and  fif- 
teen dollars  ($15.00)  for  motor-vehicles  of  fifty  horse-power  or 
over,  or  in  the  case  of  a  motor-cycle,  two  dollars  ($2.00),  the 
State  Highway  Department  shall  register  the  said  motor- 
vehicle  or  motor-cycle  in  a  book  to  be  kept  for  that  purpose ; 
and  shall  issue  to  the  owner  a  registration  certicate,  and  two 
(2)  number  tags  having  thereon  the  registration  number,  the 
figures  of  which  shall  be  not  less  than  five  (5)  inches  in  height, 
the  maker's  number  of  the  car,  the  abbreviated  name  of  the 
State,  and  the  year:  Provided,  however,  That  non-residents 
of  this  Commonwealth  shall  be  exempt  for  a  period  of  ten  (10) 
days  from  the  provisions  of  this  section,  if  they  have  complied 
with  the  requirements  of  the  State  in  which  they  reside,  and 
display  upon  their  motor-vehicle  number-tags  that  indicate  the 
State  by  which  they  are  issued  and  their  register  number : 
Provided  further,  That  this  privilege  shall  not  apply  to  resi- 
dents of  States  which  do  not  extend  similar  privileges  to  resi- 
dents of  this  Commonwealth:  Provided  further,  That  motor- 
cycles under  this  Act,  in  lieu  of  the  specific  form  of  tag  or 
tags  as  required  herein,  shall  be  required  to  have  painted  or 


159 

attached  on  the  rear  mud-guard  of  such  motor-cycle  the  regis- 
tration number,  in  letters  and  figures  of  not  less  than 
three  inches  in  height  and  not  less  than  three-eights  of  an 
inch  in  width,  which  shall  be  displayed  in  some  conspicuous 
color  or  design  other  than  that  of  which  the  said  motor- 
cycle is  painted;  but  no  metal  sign  shall  be  required  in 
order  that  the  sajd  letters  and  figures  can  be  plainly  readable. 
The  manner  of  numbering  said  motor-cycles  shall  be  regarded 
as  a  compliance  with  the  terms  of  this  Act,  as  though  a  tag 
or  tags  had  actually  been  furnished  and  supplied  by  the  said 
Highway  Department.  Any  neglect  or  failure  to  carry  out  the 
terms  or  provisions  of  this  section  as  to  numbers  shall  be  con- 
strued and  regarded  as  a  violation  of  this  Act,  with  the  same 
force  and  effect  as  though  the  provisions  herein  mentioned  in 
regard  to  tag  or  tags  had  been  violated. 

"Applicants  for  registration  or  license  who  reside  outside  of 
this  State  shall,  in  addition  to  the  above  requirements,  desig- 
nate in  their  application  a  resident  of  this  State  as  their  au- 
thorized agent  upon  whom  process  may  be  served,"  be  and  the 
same  is  hereby  amended  to  read  as  follows : 

SECT.  2.  Application  for  the  registration  of  motor-vehicles  shall 
be  made  to  the  State  Highway  Department,  or  to  a  lawful  agent 
appointed  by  the  Highway  Commissioner.  The  application  shall 
contain  the  name,  place  of  residence,  and  correct  post-office 
address  of  the  owner;  with  a  brief  description  of  the  motor- 
vehicle,  stating  the  name  of  the  maker,  the  manufacturer's 
number,  the  character  of  the  motive  power,  and  the  rated 
horse-power.  The  said  application  shall  be  made  upon  a  blank 
provided  for  the  purpose  by  the  State  Highway  Department. 
It  shall  be  signed  by  the  owner,  and  be  verified  by  oath  or 
affirmation.  Upon  receipt  of  the  application,  and  a  fee  of 
twenty- five  dollars  ($25.00)  for  motor-vehicles  of  less  than 
twenty  horse-power,  fifty  dollars  ($50.00)  for  motor-vehicles  of 
twenty  horse-power  or  more  and  less  than  fifty  horse-power, 
and  seventy-five  dollars  ($15.00)  for  motor-vehicles  of  fifty 
horse-power  or  over,  or  in  the  case  of  a  motor-cycle,  two  dollars 
($2.00),  the  State  Highway  Department  shall  register  the  said 
motor-vehicle  or  motor-cycle  in  a  book  to  be  kept  for  that  pur- 
pose and  shall  issue  to  the  owner  a  registration  certificate,  and 
two  (2)  number  tags  having  thereon  the  registration  number, 
the  figures  of  which  shall  be  not  less  than  five  (5)  inches  in 
height,  the  maker's  number  of  the  car,  the  abbreviated  name 
of  the  State,  and  year:  Provided,  however,  That  non-residents 
of  this  Commonwealth  shall  be  exempt  for  a  period  of  ten  (10) 


160 

days  from  the  provisions  of  this  section,  if  they  have  complied 
with  the  requirements  of  the  State  in  which  they  reside,  and 
display  upon  their  motor- vehicle  number-tags  that  indicate  the 
State  by  which  they  are  issued  and  their  registry  number :  Pro- 
vided further,  that  this  privilege  shall  not  apply  to  residents 
of  States  which  do  not  extend  similar  privileges  to  residents 
of  this  Commonwealth:  Provided  further,  That  motor-cycles 
under  this  Act,  in  lieu  of  the  specific  form  of  tag  or  tags  as 
required  herein,  shall  be  required  to  have  painted  or  attached 
on  the  rear  mud-guard  of  such  motor-cycles  the  registration 
number,  in  letters  and  figures  of  not  less  than  three  inches  in 
height  and  not  less  than  three-eighths  of  an  inch  in  width, 
which  shall  be  displayed  in  some  conspicuous  color  or  design 
other  than  that  of  which  the  said  motor-cycle  is  painted;  but 
no  metal  sign  shall  be  required  in  order  that  the  said  letters 
and  figures  can  be  plainly  readable.  The  manner  of  number- 
ing said  motor-cycles  shall  be  regarded  as  a  compliance  with 
the  terms  of  this  Act,  as  though  a  tag  or  tags  had  actually 
been  furnished  and  supplied  by  the  said  Highway  Department. 
Any  neglect  or  failure  to  carry  out  the  terms  or  provisions  of 
this  section  as  to  numbers  shall  be  construed  and  regarded  as 
a  violation  of  this  Act,  with  the  same  force  and  effect  as  though 
the  provisions  herein  mentioned  in  regard  to  tag  or  tags  had 
been  violated. 

Applicants  for  registration  or  license  who  reside  outside  of 
this  State  shall,  in  addition  to  the  above  requirements,  desig- 
nate in  their  application  a  resident  of  this  State  as  their  au- 
thorized agent  upon  whom  process  may  be  served. 

SECT.  2.  That  Section  21  of  the  said  Act,  which  reads  as  follows : 
"SECT.  21.  The  revenues  derived  from  the  registration  of  motor- 
vehicles,  and  from  licensing  operators  thereof,  under  the  pro- 
visions of  this  Act,  shall  be  paid  by  the  State  Highway  Depart- 
ment to  the  State  Treasurer,  to  be  used  for  the  improvement 
of  the  roads  of  this  Commonwealth,"  be,  and  the  same  is, 
hereby  amended  to  read  as  follows : 

"SECT.  21.  The  revenues  derived  from  the  registration  of 
motor-vehicles,  and  from  licensing  operators  thereof,  under  the 
provisions  of  this  Act,  shall  be  paid  by  the  State  Highway  De- 
partment to  the  State  Treasurer,  to  be  used  for  the  improvement 
of  the  roads  of  this  Commonwealth  and  the  maintenance  thereof" 


161 


TAX  ON  ANTHRACITE  COAL. 

Many  recommendations  were  made  to  your  Committee, 
that  a  tax  be  imposed  on  some  of  the  natural  resources 
of  the  State,  such  as  the  gross  production  of  mines,  oil  and 
gas  wells.  This  was  one  of  the  requests  of  the  State 
Grange.  So  far  as  these  natural  products  come  in  competi- 
tion with  those  produced  by  other  States,  it  would  be  a 
considerable  burden  upon  the  operation  of  such  industries 
in  this  Commonwealth  to  lay  any  tax.  This  would  apply 
to  oil,  gas  and  bituminous  coal.  It  would  in  the  end  be  a 
tax  upon  the  real  estate  from  which  such  products  were 
derived,  and  would  be  an  exception  to  the  general  policy 
of  the  Commonwealth,  not  to  tax  real  estate  specifically 
for  State  purposes,  but  to  leave  it  to  bear  the  principal 
burden  of  local  taxation. 

As  to  anthracite  coal,  however,  in  which  this  Common- 
wealth has  a  practical  monopoly,  competition  would  not 
exist.  Such  a  tax  would  be  like  the  tax  on  gross  receipts 
of  transportation  and  other  similar  companies,  a  tax  on 
business  operations  as  to  which  there  is  more  or  less  of 
a  monopoly.  Moreover,  as  the  tax  could  be  laid  on  the 
coal  before  it  became  the  subject  of  interstate  commerce, 
a  large  part  of  the  burden  would  be  passed  on,  if  any 
change  in  price,  to  the  citizens  of  other  States.  It  is  esti- 
mated that  80  per  cent,  of  this  coal  goes  out  of  the  State. 

At  the  meeting  held  at  Scranton  disinterested  public 
men  warmly  advocated  such  a  tax,  and  reference  was  made, 
among  other  considerations,  to  the  number  of  accidents 
in  the  anthracite  coal  mines,  which  left  a  burden  of  dis- 
abled men,  widows  and  orphans  to  fall  upon  State  aid. 
The  proportion  is  much  greater  in  the  anthracite  regions, 
being  for  1908,  618  fatal  and  3,526  non-fatal  accidents 
in  the  production  of  70,238,530  tons  of  anthracite,  to  531 
fatal  and  3,005  non-fatal  accidents  in  the  production  of 
118,313,525  tons  of  bituminous.  The  yearly  averages  in 
10 


162 

the  anthracite  mines  up  to  1907  showed  deaths  of  573, 
leaving  322  widows  and  770  orphans ;  for  the  bituminous,. 
475  deaths,  leaving  252  widows  and  546  orphans. 

The  Department  of  Mines  made  the  necessity  of  re- 
lieving this  burden  the  subject  of  earnest  comment  in 
its  report  of  1907,  advised  a  tax  of  three-fourths  of  a  cent 
per  ton  on  bituminous  coal  and  one  and  one-half  cents  on 
anthracite,  the  sum  realized  to  be  applied  to  this  specific 
purpose,  and  repeated  the  recommendation  in  1909. 

Your  Committee  therefore  recommends  the  imposition  of 
a  State  tax  of  2J  per  cent,  of  the  value  of  all  anthracite 
coal  at  the  mouth  of  the  mine,  as  provided  by  the  draft  of 
an  Act  submitted  herewith.  (See  page  165.) 

The  product  of  anthracite  coal  in  this  Commonwealth 
in  the  year  1908  amounted  to  70,238,530  tons  of  the 
value  of  $153,917,458,  and  in  1909  to  80,223,833  tons  of  the 
value  of  $180,503,624.  Upon  the  basis  of  the  production 
of  1908  the  tax  would  realize  $3,847,936.45,  and  upon  the 
basis  of  1909  the  sum  of  $4,512,580.60,  and  would  form 
very  substantial  addition  to  the  State  revenue.  This  wouL 
be  at  the  rate  of  approximately  5J  cents  per  ton,  ir- 
respective of  size. 

One  especially  interesting  suggestion  made  was  that 
the  coal  in  situ  be  relieved  of  local  taxation,  and  a  por- 
tion of  the  anthracite  coal  tax  be  returned  to  the  countii 
to  compensate  for  this.  It  is  often  the  case  that  the  surfac 
is  owned  by  one  person  and  the  coal  by  another,  the 
division  being  horizontal  instead  of  vertical.  The  coal  is 
then  assessed  separately  as  real  estate,  and  whether  as- 
sessed this  way  or  with  the  surface,  the  uncertainties  of 
valuation  owing  to  ignorance  of  the  extent  of  the  coal 
cause  much  difficulty  and  feeling  between  the  taxing  offi- 
cials and  owners.  Instances  may  be  found  in  the  cases 
of  Delaware,  Lackawanna  and  Western  Eailway  Com- 
pany's Assessment,  224  Pa.  240,  where  the  court  held  that 
it  was  not  uniform  taxation  to  assess  coal  lands  at  a  ratio 
of  actual  to  assessed  value  different  from  other  lands ;  and 


163 

in  Lehigh  and  Wilkes  Barre  Coal  Company's  Assessment, 
225  Pa.  272,  the  court  condemned  the  unvarying  use  of 
the  so-called  ''foot-acre"  method,  whereby  all  coal  in  place 
is  valued  according  to  a  unit  of  cubical  content,  to  wit,  an 
acre  of  coal  a  foot  thick,  without  regard  to  quality  and 
accessibility,  which  greatly  affect  the  actual  value.  Then 
again,  the  County  Commissioners  of  the  different  counties 
adopt  different  values  for  the  unit,  Lackawanna  county, 
$200;  Luzerne  county,  $67,  and  like  variations  in  other 
counties.  These  difficulties  would  be  done  away  with  by 
the  method  suggested.  On  the  other  hand,  there  are  prac- 
tical difficulties  in  local  distribution,  owing  to  local  taxes 
for  roads,  schools,  poor  and  the  like  in  the  subdivisions  of 
the  counties. 

As  the  primary  purpose  of  the  tax  at  this  time  is  the 
raising  of  State  revenue,  your  Committee  does  not  recom- 
mend that  the  system  of  local  distribution  be  now  put 
in  effect.  After  the  yield  of  the  tax  has  been  determined, 
and  statistics  have  been  gathered  as  to  the  amount  and 
kind  of  local  taxes  to  be  displaced,  a  system  may  be  es- 
tablished by  which  from  an  increase  of  the  State  tax 
the  present  local  taxes  may  be  supplied  and  discontinued. 
Information  on  these  points  is  still  being  sought,  and  if 
proper  data  can  be  obtained  and  a  practical  scheme 
worked  out  before  adjournment  of  the  Legislature,  fur- 
ther report  on  the  subject  will  be  made. 

A  somewhat  similar  suggestion  as  to  timber  was  made, 
that  is,  to  exempt  it  from  taxes  until  fit  for  market.  The 
situation  is  different.  Timber  land  has  no  value  apart 
from  timber  until  it  is  cleared,  and  in  many  localities 
there  would  be  little  land  left  to  pay  the  expenses  of  local 
government.  The  coal  is  always  fit  for  market,  and  i& 
always  being  mined  and  revenue  realized.  But  we  must 
wait  for  a  revenue  from  timber  in  this  way. 

A  draft  of  an  Act  laying  an  ad  valorem  tax  on  coal  at 
the  mouth  of  the  mine  is  therefore  submitted  herewith 
(see  page  165).  An  alternative  is  suggested  in  case 


1(54 

it  should  be  the  opinion  of  the  Legislature  that  it  is  more 
desirable  to  lay  the  tax  at  a  flat  rate  per  ton  (see  page 
165) .  The  tax  according  to  value  would  be  more  uniform, 
and  the  tax  at  a  flat  rate  easier  of  ascertainment. 

With  respect  to  oil,  gas  and  bituminous  coal  a  tax  of 
the  same  amount  laid  by  all  of  the  States  in  which  these 
are  produced  which  come  in  competition  with  the  products 
of  our  State  without  the  necessity  of  a  long  haul  to  market, 
would  so  equalize  conditions  that  there  would  be  no  un- 
fairness. West  Virginia  in  particular  is  seeking  a  proper 
method  of  taxing  its  oil  and  gas  products.  A  conference 
between  these  States  would  be  beneficial  to  all  concerned, 
and  your  Committee  recommends  that  an  invitation  be 
extended  to  them  to  meet  delegates  appointed  by  the  Gov- 
ernor of  Pennsylvania  to  discuss  the  subject,  the  expenses 
of  the  delegates  to  be  provided  for  in  the  general  appro- 
priation bill.  For  this  purpose  the  following  Joint  Resolu- 
tion is  proposed : 


A  JOINT  RESOLUTION  PROVIDING  FOR  THE  ISSUING  OF  AN  INVITATION 
TO  NEIGHBORING  STATES  TO  A  CONFERENCE  WITH  RESPECT  TO  THE 
TAXING  OF  OIL,  GAS  AND  BITUMINOUS  COAL. 

Resolved,  if  the  concur.  That  the  Governor 

of  the  Commonwealth  be  requested  to  issue  an  invitation  to  the 
States  of  Ohio,  West  Virginia,  and  Maryland  to  participate  in 
a  joint  conference  with  this  State  upon  the  subject  of  a  tax 
of  the  same  amount  to  be  laid  by  each  State  upon  oil,  gas  and 
bituminous  coal,  and  upon  the  method  of  laying  the  same ;  and, 

Be  it  further  Resolved,  That  upon  the  Governor  of  the  Com- 
monwealth receiving-  from  the  Governors  of  the  States  of  Ohio. 
West  Virginia  and  Maryland  an  indication  of  the  willingness 
of  their  respective  States  to  participate  in  such  a  conference, 
the  Governor  be  and  he  is  hereby  authorized  to  appoint  three 
delegates  to  meet  and  confer  with  delegates  from  all  those 
States  when  the  same  shall  be  designated,  at  a  time  and  place 
to  be  mutually  agreed  upon ;  and 

Be  it  further  Resolved,  That  the  expenses  of  such  delegates  be 
paid  out  of  a  sum  to  be  appropriated  in  the  general  appropria- 
tion bill  and  be  drawn  from  the  State  Treasury  upon  the  warrant 
of  the  chairman  of  the  delegation,  who  shall  be  designated  as 
such  by  the  Governor. 


165 


AN  ACT  LAYING  A  STATE  TAX  ON  ANTHRACITE  COAL  AND  PROVIDING 
FOR  THE  COLLECTION  OF  THE  SAME. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  every  ton  of  an- 
thracite coal  of  the  weight  of  two  thousand  two  hundred  and 
forty  pounds  avoirdupois  mined  in  this  Commonwealth  shall  be 
subject  to  a  State  tax  of  five  cents  to  be  settled  and  collected  as 
provided  by  law  for  other  State  taxes. 

(Or  as  an  alternative  title  and  first  section.) 

AN  ACT  LAYING  A  STATE  TAX  ON  ANTHRACITE  COAL  AND  PROVIDING 
FOR  THE  COLLECTION  OF  THE  SAME. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  every  ton  of  an- 
thracite coal  of  the  weight  of  two  thousand  two  hundred  and 
forty  pounds  avoirdupois  mined  in  this  Commonwealth  shall  be 
subject  to  a  State  tax  of  two  and  one-half  per  centum  of  the 
value  thereof  at  the  mouth  of  the  mine,  to  be  settled  and  col- 
lected as  provided  by  law  for  other  State  taxes. 

SECT.  2.  Every  operator  of  an  anthracite  coal  mine  or  mines 
in  this  Commonwealth  shall  report  to  the  Auditor  General  in 
the  month  of  January  in  each  year  hereafter  the  number  of  such 
tons  of  anthracite  coal  mined  by  such  operator  within  the 
calendar  year  then  next  preceding,  and  the  value  thereof  at  the 
mouth  of  the  mine.  Such  report  shall  be  in  writing  under  the 
oath  of  the  operator  if  an  individual,  or  of  one  of  them  if  more 
than  one  individual,  or  of  a  principal  executive  officer  if  a  cor- 
poration, limited  partnership  or  joint  stock  association. 

SECT.  3.  If  any  such  operator  shall  fail  to  furnish  such  report 
within  the  time  required,  it  shall  be  the  duty  of  the  accounting 
officers  of  the  Commonwealth  to  add  10  per  centum  to  the  tax 
for  each  and  every  year  for  which  such  report  was  not  so 
furnished,  which  percentage  shall  be  settled  and  collected  with 
the  said  tax  in  the  usual  manner  ol  settling  accounts  and  col- 
lecting such  taxes ;  and  if  any  individual  operator  or  the  officers 
of  an  operator  being  a  corporation,  limited  partnership,  or  joint 
stock  association,  or  any  of  them,  shall  intentionally  fail  to 
make  such  report  for  three  successive  years,  he  or  they  shall 
be  deemed  guilty  of  a  misdemeanor,  and  on  conviction  thereof 
shall  be  sentenced  to  pay  a  fine  of  five  hundred  dollars  and 
undergo  an  imprisonment  not  exceeding  one  year,  or  both  or 
either,  at  the  discretion  of  the  Court. 

SECT.  4.  If  the  Auditor  General  or  State  Treasurer  is  not  satis- 
fied with  the  report  so  made,  they  are  hereby  authorized  and 


166 

empowered  to  make  an  estimate  of  the  number  of  tons  mined 
by  the  operator  and  to  settle  an  account  on  the  basis  of  such 
estimate  for  the  taxes,  penalties  and  interest  due  the  Common- 
wealth thereon,  with  the  right  to  the  operator  dissatisfied  with 
any  settlement  so  made  to  appeal  therefrom  in  the  manner  pro- 
rided  by  law ;  and  if  no  such  report  is  made  the  Auditor  General 
and  State  Treasurer  shall  make  an  estimate  and  settle  an  ac- 
count as  aforesaid,  from  which  settlement  there  shall  be  a  right 
of  appeal  in  the  manner  provided  by  law. 


NOTE. 

The  classification  of  anthracite  coal  as  distinguished  from 
bituminous  coal  has  been  sanctioned  by  long  existing  legis- 
lation with  reference  to  the  different  modes  of  inspection  of 
bituminous  and  anthracite  mines  and  the  classification  sustained 
in  the  case  of  Durkin  vs.  Kingston  Coal  Co.,  171  Pa.  193. 

By  an  Act  of  1864,  P.  L.  218,  a  tonnage  tax  of  2  cents  was  put 
on  the  products  of  mines.  This  was  amended  by  an  Act  of  the 
same  year,  P.  L.  988,  continued  by  an  Act  of  1868,  P.  L.  108,  and 
finally  abolished  by  an  Act  of  1864  P.  L.  68.  The  latter  Act 
substituted  a  tax  on  the  number  of  tons  of  coal  mined  or  pur- 
chased by  companies  engaged  in  the  mining  or  purchasing  and 
selling  of  coal  at  the  rate  of  3  cents  per  ton.  This  was  sus- 
tained as  a  tax  on  franchises  or  privileges  of  the  company  and 
the  classification  of  these  companies  separately  for  purposes  of 
taxation  was  approved  in  the  case  of  Kittanning  Coal  Company 
vs.  Commonwealth,  79  Pa.  103. 

By  the  Act  of  1879,  P.  L.  112,  the  tax  was  abolished  as  of  July 
1,  1881.  It  was  held  unconstitutional  by  the  Supreme  Court  of 
the  United  States  as  to  interstate  tonnage  bv  the  case  of  Phila- 
delphia &  Reading  R.  R.  Co.  vs.  Penna.,  15  Wall.  232. 

The  method  of  report  and  settlement  of  the  tax  is  based  on 
the  method  with  regard  to  capital  stock  tax  of  corporations. 


167 


MERCANTILE  LICENSE  TAX. 

The  largest  number  of  protests  made  to  your  Committee 
against  existing  taxes  is  that  made  against  the  mercantile 
license  tax.  The  principal  complaint  is  that  as  a  tax  on 
gross  sales  instead  of  on  profit,  it  bears  on  those  who  do 
a  large  volume  of  business  in  staple  articles  upon  a  small 
margin  of  profit.  As  the  tax  bears  equally  upon  all  of 
the  competitors  of  such  a  merchant  there  is  no  preference 
of  any  one,  and  the  tax  can  easily  be  allowed  for  as  an 
item  of  expense  of  the  business.  The  tax  as  now  laid  has 
the  advantage  of  being  easily  and  accurately  ascertain- 
able.  To  ascertain  the  amount  of  profit  would  necessitate 
far  more  inquisition  than  the  present  method,  and  this 
matter  of  prying  into  the  affairs  of  merchants  is  even  now 
a  matter  of  complaint.  The  same  difficulty  of  accurate 
estimate  would  be  met  with  in  any  attempt  to  tax  on  the 
amount  of  capital  involved  in  the  business.  The  mercantile 
license  tax  has  existed  in  this  State  continuously  in  various 
forms  since  the  year  1821.  It  is  not  large  in  amount,  being 
only  one  mill  on  retail  dealers,  one-half  mill  on  wholesale 
dealers,  and  one-quarter  mill  on  dealers  at  exchange. 
Business  of  all  kinds  has  become  so  accustomed  to  the  tax 
as  to  have  adjusted  itself  thereto,  and  it  seems  only  fair 
that  the  private  business  man  should  bear  part  of  the 
burdens  of  the  Government  by  which  he  benefits,  when 
corporations  are  called  upon  to  bear  so  much  heavier 
burdens  in  the  way  of  capital  stock  tax,  and  public  service 
corporations  bear  in  addition  a  gross  receipts  tax  of  eight 
mills  upon  the  business  which  they  conduct,  which  is  also 
a  tax  upon  privilege  and  is  laid  in  the  same  way.  It  is 
proposed  hereafter  to  impose  a  tax  on  manufacturing  cor- 
porations also,  as  some  of  the  merchants  have  suggested, 
so  that  this  privilege  will  not  escape.  Money  which  is 
active  in  business  and  is  thus  being  repeatedly  turned 
over  is  specially  fitted  for  taxation,  and  in  all  States  is  a 


168 

special  object  of  such  taxation.  If  the  money  of  the  mer- 
chant is  not  taxed,  a  large  amount  will  escape  its  share 
of  the  public  burden.  This  is  opposed  to  the  principle  of 
equalizing  taxes  on  property  of  the  same  class  so  far  as  it 
is  practical  to  subject  it  to  successful  taxation. 

The  cost  of  collecting  this  tax  is  not  so  large  as  might 
be  supposed.  The  average  cost  for  the  year  1907  was 
10.6  per  cent.,  and  for  1908,  10.5  per  cent.  One  of  the 
items  in  this  cost  is  advertising  of  the  mercantile  tax 
lists,  which  is  now  made  everywhere  except  at  Philadel- 
phia, although  there  is  authority  to  order  it  there.  This 
publicity  is  in  line  with  the  general  movement  for  pub- 
licity in  all  tax  matters,  a  striking  instance  of  which  is  the 
provisions  of  the  Federal  Corporation  Tax  law.  Many 
recommendations  have  been  made  with  respect  to  real 
estate  assessment,  that  lists  be  published  of  the  values  so 
that  the  conflicting  opinions  and  interests  of  neighbors 
may  produce  greater  equality  in  valuations.  Your  Com- 
mittee thinks  that  if  a  list  were  published  including  not 
merely  the  names  and  classification  but  also  the  amount 
of  business  on  which  a  tax  is  laid  (which  could  be  done 
at  slight  expense)  the  lists  would  be  of  great  value  in 
securing  equalization. 

They  therefore  recommend  the  enactment  of  the  follow- 
ing Act : 

AN  ACT  RELATIVE  TO  MERCANTILE   APPRAISERS'  LISTS. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  the  Mercantile  Ap- 
praisers' Lists  published  in  each  county  of  the  Commonwealth, 
in  addition  to  the  names  and  classification  of  each  person  sub- 
ject to  license,  shall  also  give  the  amount  of  the  gross  volume 
of  business  transacted  annually  upon  which  the  tax  is  assessed. 

Your  Committee  therefore  recommends  that  the  mercan- 
tile license  tax  be  continued  as  now  laid. 


169 


TAXES  ON  INSURANCE  COMPANIES. 

Insurance  companies  now  pay  the  capital  stock  tax  if 
they  have  capital  stock,  and  the  four  mills  tax  on  money 
at  interest  (except  in  such  extraordinary  cases  as  that 
of  the  Provident  Life  and  Trust  Company,  elsewhere  re- 
ferred to),  and  an  eight  mills  tax  upon  the  premiums 
received  for  business  done  within  the  State.  Foreign  com- 
panies pay  2  per  cent,  of  the  premiums  upon  business 
done  within  the  State.  Some  of  the  companies,  and  also 
the  Insurance  Commissioner,  have  advocated  that  the  tax 
on  premiums  be  increased  and  all  other  taxes  abolished. 
This  tax  is  like  that  on  the  gross  receipts  of  certain  public 
service  corporations.  It  is  very  easy  to  ascertain  and  col- 
lect, as  it  falls  upon  all  classes  of  companies  alike,  none 
is  able,  by  reason  of  special  circumstances  or  any  con- 
cealment, to  evade  it.  Such  a  tax  would  reach  even  the 
evasive  Provident  Life  and  Trust  Company.  It  should 
extend  to  both  foreign  and  domestic  companies  and  all 
those  in  the  insurance  business,  except  fraternal  orders, 
which  stand  on  a  different  basis,  to  wit,  that  of  benevol- 
ence. 

This,  at  the  same  time,  would  adjust  the  complaints 
which  are  made  even  by  our  own  insurance  companies  of 
the  excessive  rate  charged  to  foreign  companies.  The 
practical  result  is  to  bear  hard  upon  our  companies  when 
they  go  abroad  to  do  business,  because  they  are  met  in 
the  most  important  States  with  a  retaliatory  tax  of  the 
same  kind,  and  hence  do  business  there  at  a  disadvantage 
with  their  competitors.  Under  the  very  stringent  pro- 
visions of  our  law  as  to  the  registration  and  inspection 
and  reserves  of  foreign  companies,  our  citizens  are  as 
safe  in  dealing  with  them  as  with  domestic  companies, 
and  both  should  do  business -upon  the  same  basis. 

It  was  represented  by  certain  of  the  insurance  com- 
panies that  a  tax  of  2  per  cent,  on  the  gross  permiums 
would  yield  a  revenue  which  would  be  approximately  equal 


170 

to  that  derived  from  the  present  taxes,  for  which  it  is 
substituted.  The  suggestion  of  this  tax,  however,  unites 
in  the  minds  of  the  Committee  with  a  demand  for  in- 
creased taxation  upon  the  insurance  companies.  These 
companies  have  control  of  very  large  funds,  and  as  such 
form  a  concrete  body  of  wealth  which  is  easily  and  effi- 
ciently taxed,  and  the  burden  of  the  tax  thereby  dis- 
tributed over  the  portion  of  the  community  doing  busi- 
ness with  them,  a  class  well  able  to  bear  it.  In  this  re- 
spect they  are  analogous  to  banking  institutions. 

Your  Committee,  therefore,  submits  herewith  a  draft 
of  an  Act  designed  to  accomplish  the  result  suggested, 
and  modeled  upon  the  existing  Act  of  1895,  imposing  the 
tax  at  the  rate  of  3  per  cent,  (see  page  170). 


AN  ACT  TO  FURTHER  AMEND  SECTION  24  OF  AN  ACT  ENTITLED  "A 
FURTHER  SUPPLEMENT  TO  AN  ACT  ENTITLED  'AN  ACT  TO  PRO- 
VIDE REVENUE  BY  TAXATION/  APPROVED  THE  SEVENTH  DAY  OF 
JUNE,  ANNO  DOMINI  ONE  THOUSAND  EIGHT  HUNDRED  AND 
SEVENTY-NINE,"  APPROVED  THE  1ST  DAY  OF  JUNE,  ANNO  DOMINI 
1889. 

SECT.  1.  Be  it  enacted,  etc.,  That  Section  24  of  an  Act  entitled 
"A  further  supplement  to  an  Act  entitled  'An  Act  to  provide 
revenue  by  taxation,'  approved  the  seventh  day  of  June,  Anno 
Domini  one  thousand  eight  hundred  and  seventy-nine,"  approved 
the  1st  day  of  June,  Anno  Domini  1889,  which  as  heretofore 
amended  reads  as  follows : 

"That  hereafter  it  shall  be  the  duty  of  the  President,  Secre- 
tary or  other  proper  officer  of  each  and  every  insurance  com- 
pany or  association,  incorporated  by  or  under  any  law  of  this 
Commonwealth,  except  companies  doing-  business  upon  the  purely 
mutual  plan  without  any  capital  stock  or  accumulated  reserve, 
and  purely  mutual  beneficial  associations  whose  funds  for  the 
benefit  of  members,  their  families  or  heirs  are  made  up  en- 
tirely of  the  weekly  or  monthly  contributions  of  their  members 
and  the  accumulated  interest  thereon,  to  make  report  in  writing- 
to  the  Auditor  General,  semi-annually,  upon  the  first  days  of 
July  and  January  in  each  year,  setting  forth  the  entire  amount 
of  premiums  and  assessments  received  by  such  company  or 
association  during  the  preceding  six  months,  whether  said  pre- 
mium* and  »*«*»**TTwnt«  vroro  r*»opiivpsr|  in  TOATiev  w  iti  thft  font* 


171 

of  notes,  credits  or  other  substitutes  for  money ;  and  every  such 
company  or  association  shall  pay  into  the  State  Treasury, 
semi-annually,  on  the  last  days  of  January  and  July,  in  addi- 
tion to  any  other  taxes  to  which  it  may  be  liable  under  the 
first  and  twenty-first  sections  of  this  Act,  a  tax  of  eight  mills 
on  the  dollar  upon  the  gross  amount  of  said  premiums  and  as- 
sessments received  from  business  transacted  within  this 
Commonwealth:  Provided,  That  said  reports  shall  be  made 
under  oath  or  affirmation,  and  it  shall  be  the  duty  of  the  ac- 
counting officers  of  the  Commonwealth  to  add  10  per  centum 
to  the  account  of  any  company  or  association  whose  officers 
shall  neglect  or  refuse  for  a  period  of  thirty  days  to  make  said 
report,  or  to  pay  into  the  State  Treasury  the  tax  imposed  by 
this  section :  And  provided  further,  That  hereafter  the  annual 
tax  upon  premiums  of  insurance  companies  of  other  States  or 
foreign  Governments,  shall  be  at  the  rate  of  2  per  centum  upon 
the  gross  premiums  of  every  character  and  description  received 
from  business  done  within  this  Commonwealth  within  the  en- 
tire calendar  year  preceding,"  be  amended  to  read  as  follows : 
That  hereafter  it  shall  be  the  duty  of  the  President,  Secretary 
or  other  proper  officer  of  each  and  every  insurance  company  or 
association  of  every  kind  whatsoever  and  wheresoever  incorpo- 
rated, including  stock  and  mutual  companies,  and  mutual  bene- 
ficial associations,  doing  business  in  this  Commonwealth,  to  make 
report  in  writing  to  the  Auditor  General  annually  in  the  month  of 
January  in  each  year  hereafter,  setting  forth  the  entire  amount 
of  premiums  and  assessments  received  by  such  company  or 
association  during  the  preceding  calendar  year,  whether  said 
premiums  and  assessments  were  received  in  money  or  in  the 
form  of  notes,  credits  or  other  substitutes  for  money;  and 
every  such  company  or  association  shall  pay  into  the  State 
Treasury  annually  on  the  last  day  of  January  in  each  year  a 
tax  of  three  per  cent,  upon  the  gross  amount  of  such  premiums 
and  assessments  received  from  business  transacted  within  this 
Commonwealth :  Provided,  That  said  report  shall  be  made  under 
oath  or  affirmation,  and  that  it  shall  be  the  duty  of  the  ac-. 
counting  officers  of  the  Commonwealth  to  add  ten  per  centum 
to  the  account  of  any  company  or  association  whose  officers 
shall  neglect  or  refuse  for  a  period  of  thirty  days  to  make  said 
report  or  to  pay  into  the  State  Treasury  the  tax  hereby  im- 
posed: And  provided  further,  That  the  tax  hereby  imposed 
shall  be  in  lieu  of  any  tax  to  which  such  companies  might 
otherwise  be  liable  under  the  first  section  of  this  Act,  and  in 
lieu  of  any  tax  to  which  it  might  otherwise  be  liable  under 
the  twenty-first  section  of  this  Act  as  respects  so  much  of  its 
capital  as  is  invested  in  the  business  of  insurance. 


172 


TRANSFER  COMPANIES. 

In  connection  with  the  gross  receipts  tax,  it  may  be  well 
to  mention  that  companies  transferring  baggage  and  doing 
a  like  business  do  not  pay  the  tax.  It  might  be  supposed 
that  they  were  included  in  the  term  "express  companies," 
upon  which  a  special  Act  of  1899  imposes  the  eight  mills 
gross  receipts  tax.  But  in  practice  the  tax  has  not  been 
collected  from  these  companies,  and  as  their  business  is 
exactly  analogous  to  that  of  express  companies  and  as 
they  are  an  important  class  of  public  service  corporations, 
your  Committee  recommends  the  imposition  of  the  tax 
upon  them,  and  submits  herewith  a  draft  of  an  amendment 
to  the  Act  of  1899  above  mentioned,  to  accomplish  that 
end  (see  page  172). 


AN  ACT  TO  AMEND  SECTION  2  OF  AN  ACT  ENTITLED  "A  SUPPLE- 
MENT TO  AN  ACT  ENTITLED  'AN  ACT  TO  PROVIDE  REVENUE  BY 
TAXATION,'  APPROVED  THE  SEVENTH  DAY  OF  JUNE,  ANNO 
DOMINI  ONE  THOUSAND  EIGHT  HUNDRED  AND  SEVENTY-NINE, 
AMENDING  AND  EXTENDING  THE  PROVISIONS  THEREOF,"  APPROVED 
THE  28TH  DAY  OF  APRIL,  A.  D.  1899. 

SECT.  1.  Be  it  enacted,  etc.,  That  Section  2  of  an  Act  entitled 
"A  supplement  to  an  Act,  entitled  'An  Act  to  provide  revenue 
by  taxation,'  approved  the  seventh  day  of  June,  Anno  Domini 
one  thousand  eight  hundred  and  seventy-nine,  amending-  and 
extending  the  provisions  thereof,"  which  reads  as  follows: 

"SECT.  2.  Every  corporation,  limited  partnership,  joint  stock 
association,  partnership,  firm  or  association  of  individuals,  in- 
corporated or  unincorporated,  engaged  in  the  business  com- 
monly known  as  express  business,  shall  pay  to  the  State  Treas- 
urer, for  the  use  of  the  Commonwealth,  a  tax  of  eight  mills 
upon  the  amount  of  their  gross  receipts  from  express  business 
done  wholly  within  this  State,  the  said  tax  shall  be  paid  semi- 
annually  upon  the  last  days  of  January  and  July  in  each  year; 
and  for  the  purpose  of  ascertaining  the  amount  of  the  same, 
it  shall  be  the  duty  of  the  Treasurer,  or  other  proper  officer 
of  the  said  corporation,  limited  partnership,  joint  stock  asso- 
ciation, partnership,  firm  or  association  of  individuals,  to  trans- 


173 

rn.it  to  the  Auditor  General  a  statement,  under  oath  or  affirma- 
tion, of  the  amount  of  gross  receipts  of  the  said  corporation, 
limited  partnership,  joint  stock  association,  partnership,  firm,  or 
association  of  individuals,  incorporated  or  unincorporated,  de- 
rived from  all  sources,  and  of  the  gross  receipts  from  business 
done  wholly  within  the  State  during  the  preceding  six  months 
ending  upon  the  first  days  of  January  and  July  in  each  year ; 
and  if  any  such  corporation,  limited  partnership,  joint  stock 
association,  partnership,  firm,  or  association  of  individuals,  in- 
corporated or  unincorporated,  shall  neglect  or  refuse  for  a 
period  of  thirty  days  after  such  tax  becomes  due  to  make  said 
returns,  or  to  pay  the  said  tax,  the  amount  thereof,  with  an 
addition  of  10  per  centum  thereto,  shall  be  collected  for  the 
use  of  the  Commonwealth  as  other  taxes  are  recoverable  by 
law.  No  other  tax  upon  express  receipts,  or  upon  the  privilege 
of  transacting  express  business,  shall  be  collected  without 
further  authority  of  law  to  be  hereafter  enacted :  Providing, 
That  this  Act  shall  not  be  construed  to  repeal  or  take  the  place 
of  the  tax  upon  capital  stock  now  imposed  by  law;  but  the 
tax  on  gross  receipts  hereby  imposed  shall  be  in  addition  to 
the  tax  on  capital  stock  imposed  by  existing  law  upon  any  of 
the  corporations,  companies  or  associations  hereby  taxed,"  be, 
and  the  same  is  hereby  amended  so  as  to  read  as  follows : 

SECT.  2.  Every  corporation,  limited  partnership,  joint  stock 
association,  partnership,  firm,  or  association  of  individuals,  in- 
corporated or  unincorporated  engaged  in  the  business  of  carry- 
ing baggage  or  persons  or  in  the  business  commonly  known  as 
express  business,  or  in  any  other  business  of  a  like  character 
and  commonly  known  as  transfer  companies,  express  companies 
and  companies  doing  similar  business,  shall  pay  to  the  State 
Treasurer,  for  the  use  of  the  Commonwealth,  a  tax  of  eight 
mills  upon  the  amount  of  their  gross  receipts  from  transfer, 
express  and  similar  business  done  wholly  within  this  State,  the 
said  tax  shall  be  paid  semi-annually  upon  the  last  days  of 
January  and  July  in  each  year;  and  for  the  purpose  of  ascer- 
taining the  amount  of  the  same,  it  shall  be  the  duty  of  the 
Treasurer,  or  other  proper  officer  of  the  said  corporation,  limited 
partnership,  joint  stock  association,  partnership,  firm,  or  asso- 
ciation of  individuals,  to  transmit  to  the  Auditor  General  a 
statement,  under  oath  or  affirmation,  of  the  amount  of  gross 
receipts  of  the  said  corporation,  limited  partnership,  joint  stock 
association,  partnership,  firm,  or  association  of  individuals,  in- 
corporated or  unincorporated,  derived  from  all  sources,  and  of 
the  gross  receipts  from  business  done  wholly  within  the  State, 
during  the  preceding  six  months  ending  upon  the  first  days 


174 

of  January  and  July  in  each  year ;  and  if  any  such  corporation, 
limited  partnership,  joint  stock  association,  partnership,  firm, 
or  association  of  individuals,  incorporated  or  unincorporated, 
shall  neglect  or  refuse  for  a  period  of  thirty  days  after  such 
tax  becomes  due  to  make  said  returns,  or  to  pay  the  said  tax, 
the  amount  thereof,  with  an  addition  of  10  per  centum  thereto, 
shall  be  collected  for  the  use  of  the  Commonwealth  as  other 
taxes  are  recoverable  by  law.  No  other  tax  upon  transfer,  ex- 
press and  similar  receipts,  or  upon  the  privilege  of  transacting 
transfer,  express  and  similar  business,  shall  be  collected  with- 
out further  authority  of  law  to  be  hereafter  enacted :  Provid- 
ing, That  this  act  shall  not  be  construed  to  repeal  or  take  the 
place  of  the  tax  upon  capital  stock  now  imposed  by  law ;  but 
the  tax  on  gross  receipts  hereby  imposed  shall  be  in  addition  to 
the  tax  on  capital  stock  imposed  by  existing  law  upon  any  of 
the  corporations,  companies  or  associations  hereby  taxed. 


175 


EXEMPTION   OF   SAVINGS   INSTITUTIONS   FROM 
FOUR  MILLS  TAX. 

The  Legislature  of  1909,  P.  L.  298,  exempted  savings 
institutions  not  having  a  capital  stock  from  the  four  mills 
tax  on  monied  investments,  with  the  proviso  that  this 
should  not  relieve  from  payment  corporations  which  had 
issued  loans  free  of  tax.  This  Act  is  wrong  in  principle. 
These  institutions  are  not  charitable  organizations.  While 
few  in  number,  they  have  the  control  of  a  great  amount 
of  money,  the  total  deposits  amounting  (November  6, 
1909),  to  $167,068,144.72),  of  which  the  Philadelphia 
Savings  Fund  Society  alone  had  $92,259,930.43. 

The  passage  of  this  Act  was  advocated  on  the  plea  that 
it  would  benefit  the  depositors  in  this  class  of  depositories 
whose  funds  are  largely  made  up  of  small  savings.  But 
the  result  intended  has  not  been  accomplished.  While  in 
theory  a  tax  on  the  creditor,  it  really  falls  upon  the  debtor, 
and  yet  though  exempt  from  the  tax  there  has  been  no 
change  influenced  by  the  Act  in  the  rate  of  interest  de- 
manded by  these  institutions  since  its  passage. 

Nor  has  the  exemption  benefited  the  depositors.  The 
rate  of  interest  paid  (3.65  per  cent.)  is  the  same  as  before, 
and  the  money  realized  has  gone  to  swell  the  already  large 
surplus  which  is  never  divided,  and  for  the  Philadelphia 
Savings  Fund  alone  amounted,  on  November  10,  1910,  to 
$9,574,159.36. 

If  the  interest  charged  was  lower  than  the  current  rate 
(because  of  the  exemption  from  the  four  (mills  tax), 
it  would  appear  to  tend  to  favoritism  in  the  granting  of 
loans,  and  it  could  not  be  otherwise  than  a  profitable 
abuse.  Indeed,  it  is  not  difficult  to  conclude  that  the  only 
material  benefit  because  of  this  exemption  will  accrue 
to  those  corporations  or  other  borrowers  who  are  able, 
through  their  relations  with  the  officials  of  the  institu- 
tions, to  do  business  with  them  and  save  the  tax,  and  there 


176 

can  be  no  legal  or  moral  reason  for  an  exemption  from 
which  there  could  possibly  flow  such  a  preference. 

If  there  could  be  a  legal  exemption  from  taxation  of 
the  man  who  has  but  small  savings,  one  which  could 
fairly  tend  to  his  thrift  and  uplift,  your  Committee  would 
be  only  too  glad  to  make  a  recommendation  to  that  end, 
and  in  that  spirit  have  elsewhere  suggested  the  adoption 
of  a  Constitutional  Amendment  which  will,  if  adopted, 
secure  such  a  result  (see  page  150). 

As  this  Act  of  May  1,  1909,  P.  L.  298,  serves  no  useful 
purpose  its  repeal  is  recommended,  and  a  draft  of  an  Act 
therefor  is  herewith  submitted  (see  page  176). 

It  may  be  well  to  call  attention  to  the  evils  attendant 
upon  the  accumulations  of  reserve  and  surplus  in 
institutions  of  this  sort,  and  of  insurance  companies. 
This  subject  was  very  thoroughly  exposed  in  the  in- 
vestigation of  the  New  York  insurance  companies  in 
1905;  and  the  opportunities  given  to  their  managers  for 
profit  through  the  wielding  of  such  sums,  even  in  invest- 
ing them  with  perfect  safety.  All  the  profits  of  our 
savings  funds  should  go  to  depositors.  But  the  margin 
between  the  rate  of  interest  on  investments  and  the  rate 
paid  depositors,  permits  the  accumulation  of  a  surplus, 
laid  away  under  the  guise  of  providing  for  the  unlikely 
contingencies  of  a  remote  day,  far  beyond  what  appears  to 
your  Committee  to  be  the  necessity  of  the  case.  No  case 
of  actual  abuse  yet  appears,  but  the  best  safety  lies 
in  fear,  and  your  Committee  will  be  gratified  if  their  fur- 
ther investigations  find  a  way  of  limiting  these  funds. 


AN   ACT  TO  REPEAL  AN   ACT  ENTITLED   "AN   ACT  TO   AMEND  THE  FIRST 

SECTION  OF  AN  ACT,  ENTITLED  'A  FURTHER  SUPPLEMENT  TO  AN 
ACT,  ENTITLED  "AN  ACT  TO  PROVIDE  REVENUE  BY  TAXATION," 
APPROVED  THE  SEVENTH  DAY  OF  JUNE,  ANNO  DOMINI  ONE 
THOUSAND  EIGHT  HUNDRED  AND  SEVENTY-NINE,'  APPROVED  THE 
FIRST  DAY  OF  JUNE,  ONE  THOUSAND  EIGHT  HUNDRED  AND 
EIGHTY-NINE,  AS  AMENDED  BY  AN  ACT  APPROVED  THE  EIGHTH 
DAY  OF  JUNE.  ANNO  DOMINI  ONE  THOUSAND  EIGHT  HUNDRED 
AND  NINETY-ONE,  ENTITLED  'AN-  ACT  TO  PROVIDE  INCREASED 


177 


BEVENUES  FOB  THE  PUBPOSE  OF  BELIEVING  THE  BUBDENS  OP 
LOCAL  TAXATION,  BEING  SUPPLEMENTABY  TO  AN  ACT,  ENTITLED 
"AN  ACT  TO  PBOVIDE  BEVENUE  BY  TAXATION,"  APPBOVED  THE 
SEVENTH  DAY  OF  JUNE,  ANNO  DOMINI  ONE  THOUSAND  EIGHT 
HUNDBED  AND  SEVENTY-NINE,  AMENDING  THE  FIBST,  FOUBTEENTH, 
SIXTEENTH,  TWENTIETH,  TWENTY-FIBST,  TWENTY-FIFTH,  AND 
TWENTY-SIXTH  SECTIONS  OF  AN  ACT  SUPPLEMENTABY  THEBETO, 

WHICH  BECAME  A  LAW  ON  THE  FIBST  DAY  OF  JUNE,  ANNO 
DOMINI  ONE  THOUSAND  EIGHT  HUNDBED  AND  EIGHTY-NINE,  EN- 
TITLED 'A  FUBTHEB  SUPPLEMENT  TO  AN  ACT,  ENTITLED  "AN  ACT 
TO  PBOVIDE  BEVENUE  BY  TAXATION,"  APPBOVED  THE  SEVENTH 
DAY  OF  JUNE,  ANNO  DOMINI  ONE  THOUSAND  EIGHT  HUNDBED 
AND  SEVENTY-NINE,'  AND  PBOVIDING  FOB  GBEATEB  UNIFOBMITY 
OF  TAXATION  BY  TAXING  ALL  OF  THE  PBOPEBTY  OF  COBPOBATIONS, 
LIMITED  PABTNEBSHIPS,  AND  JOINT  STOCK  ASSOCIATIONS  HAVING 
CAPITAL  STOCK,  AT  THE  BATE  OF  FIVE  MILLS  ON  EACH  DOLLAB 

OF  ITS  ACTUAL  VALUE,  BY  BELIEVING  AND  EXEMPTING  FBOM  THE 
PROVISIONS  THEBEOF  SAVINGS  INSTITUTIONS  HAVING  NO  CAPITAL 
STOCK,"  APPBOVED  MAY  1,  1909. 

SECT.  1.  Be  it  enacted,  etc.,  That  an  Act  entitled  "An  Act  to 
amend  the  first  section  of  an  Act,  entitled  'A  further  supple- 
ment to  an  Act,  entitled  "An  Act  to  provide  revenue  by  taxation," 
approved  the  seventh  day  of  June,  Anno  Domini  one  thousand 
eight  hundred  and  seventy-nine,'  approved  the  first  day  of  June, 
one  thousand  eight  hundred  and  eighty-nine,  as  amended  by  an 
Act  approved  the  eighth  day  of  June,  Anno  Domini  one  thou- 
sand eight  hundred  and  ninety-one,  entitled  "An  Act  to  provide 
increased  revenues  for  the  purpose  of  relieving  the  burdens  of 
local  taxation,  being  supplementary  to  an  Act  entitled  'An  Act 
to  provide  revenue  by  taxation,'  approved  the  seventh  day  of 
June,  Anno  Domini  one  thousand  eight  hundred  and  seventy- 
nine,  amending  the  first,  fourteenth,  sixteenth,  twentieth,  twenty- 
first,  twenty-fifth,  and  twenty-sixth  sections  of  an  Act  supple- 
mentary thereto,  which  became  a  law  on  the  first  day  of  June, 
Anno  Domini  one  thousand  eight  hundred  and  eighty-nine,  en- 
titled 'A  further  supplement  to  an  Act,  entitled  "An  Act  to  pro- 
vide revenue  by  taxation,'  approved  the  seventh  day  of  June, 
Anno  Domini  one  thousand  eight  hundred  and  seventy-nine," 
and  providing  for  greater  uniformity  of  taxation  by  taxing  all 
of  the  property  of  corporations,  limited  partnerships,  and  joint 
stock  associations  having  capital  stock,  at  the  rate  of  five  mills 
on  each  dollar  of  its  actual  value,"  by  relieving  and  exempting 
from  the  provisions  thereof  savings  institutions  having  no  cap- 
ital stock,"  approved  May  1,  1909,  be,  and  the  same  is  hereby 
repealed. 


178 


CAPITAL  STOCK  TAX  ON  MANUFACTURING  COR- 
PORATIONS. 

There  is  a  very  general  feeling  throughout  the  State, 
to  which  the  Pennsylvania  State  Grange  gave  particularly 
forceful  expression,  that  manufacturing  corporations,  like 
other  corporations,  should  pay  tax  upon  the  capital 
stock.  This  tax  is  imposed  on  the  value  of  the  assets  as 
represented  by  the  capital  stock,  but  as  it  is  not  imposed 
upon  other  similar  non-corporate  assets,  it  is  in  effect  a  tax 
on  the  privilege  of  existing  as  a  corporation.  These  cor- 
porations share,  with  others,  this  governmental  privilege. 
The  only  ground  for  the  exemption  is  the  supposed  en- 
couragement that  has  thus  been  given  to  the  location  of 
manufacturing  industries  within  the  State.  Primarily, 
however,  the  location  of  a  manufacturing  plant  will  depend 
upon  the  nearness  to  source  of  supply  or  to  markets,  or  to 
supply  of  labor  or  the  like,  and  the  imposition  of  the  tax, 
while  a  material  element,  is  a  minor  one.  Pennsylvania 
and  New  York  alone  treat  manufacturing  corporations  dif- 
ferently from  other  general  business  corporations  with  re- 
spect to  State  taxes,  and  the  pre-eminence  of  these  States 
in  that  regard  is  largely  due  to  natural  advantages.  New 
York  exempts  only  those  corporations  which  employ  40 
per  cent,  of  their  capital  in  manufacturing  within  the 
State.  Even  a  manufacturing  State  like  Massachusetts 
does  not  so  favor  them.  From  the  expression  of  opinions 
before  it,  your  Committee  believes  that  manufacturers 
themselves  feel  that  as  they  have  been  exempt  from  1885 
on  the  theory  of  "infant  industries,"  a  small  tax  would 
be  now  not  an  appreciable  burden.  In  order,  however,  that 
there  need  be  no  sudden  readjustment  of  the  conditions 
under  which  the  manufacturer  may  conduct  his  business, 
in  competition  with  like  activities  in  other  States,  the  tax 
ought  to  be  a  small  one. 

A  change  in  the  subject  of  taxation  is  often  more  op- 


179 

pressive  than  an  existing  unjust  tax,  because  the  incidence 
of  the  tax  has  been  determined,  consciously  or  uncon- 
sciously, and  allowance  for  it  has  been  made. 

The  capital  stock  of  manufacturing  corporations  doing 
business  in  this  State  in  1905  (the  last  estimate  avail- 
able), amounted  to  $1,600,000,000,  now,  probably, 
$2,000,000,000.  A  tax  of  one  mill  on  this  latter  amount 
would  yield  to  the  State  the  substantial  sum  of  $2,000,000 
per  year,  and  your  Committee  recommends  that  it  be  laid. 

A  draft  of  an  Act  to  accomplish  this  result  is  here- 
with submitted  (see  page  181). 

By  the  same  Act  your  Committee  proposes  to  stop  a 
gap  in  the  existing  law  which  the  Legislature  of  1907 
made  a  possibly  ineffectual  attempt  to  fill.  Companies 
doing  an  insurance  business,  as  well  as  a  general  trust 
company  business — notably  the  Provident  Life  and  Trust 
Company,  of  Philadelphia — hold  certain  investments  for 
their  insurance  department  reserves.  It  was  first  decided 
at  the  suit  of  this  company  that  these  assets  should  not 
be  reckoned  as  part  of  the  capital  stock,  as  they  did  not 
belong  to  the  stockholders.  (Com.  vs.  Provident  Life  and 
Trust  Co.,  9  District  Rep.  479.)  It  was  then  attempted 
to  impose  the  four  mills  tax  on  money  at  interest  upon 
these  assets ;  but  this  was  successfully  resisted  on  the  ground 
that  they  were  owned  by  the  company  in  its  own  right 
and  not  as  trustee  for  its  policy  holders,  and  hence  ex- 
empt from  the  four  mills  tax,  under  the  express  wording 
of  the  Act  of  1891,  imposing  the  capital  stock  tax. 
(Provident  Life  and  Trust  Co.  vs.  Durham,  212  Pa.  68) 
Accordingly  the  Act  of  1907,  P.  L.  430,  declared  that 
the  exemption  should  not  extend  to  securities  in  which 
the  stockholders  did  not  have  the  entire  equitable  interest, 
thus  attempting  to  exclude  the  shadowy  borderland  within 
which  these  $30,000,000  of  assets  fell. 

But  in  giving  a  title  to  this  Act  a  mistake  was  made. 
In  the  body  of  the  Act  the  section  intended  to  be  amended 
was  correctly  quoted,  and  in  the  marginal  note  to  the 


180 

Pamphlet  Laws  it  is  correctly  called  the  Act  of  1893. 
But  in  the  title,  the  Act  to  be  amended  is  called  the  Act 
of  June  27, 1879.  The  parent  Act  of  all  this  series  is  an  Act 
of  1879,  which  has  long  since  been  superseded.  But  it  is 
the  Act  of  June  7,  not  June  27.  In  spite  of  this  the  Court 
of  Common  Pleas  No.  2,  of  Philadelphia,  has  decided  that 
the  assets  in  question  (now  amounting  to  fifty  million  dol- 
lars) do  not  come  within  the  wording,  at  the  same  time 
declaring  the  title  correct.  Your  Committee  would  recom- 
mend an  alteration  in  the  wording  of  the  Act  as  in  the  draft 
submitted  herewith,  and  also  a  correction  of  the  title  to 
meet  a  possible  adverse  decision  by  the  Supreme  Court, 
where  the  case  is  now  on  appeal. 

Capital  stock  not  invested  in  manufacturing  is  taxed 
at  five  mills,  as  heretofore. 


ARTIFICIAL   GAS   COMPANIES. 

Since  the  exemption  of  manufacturing  companies  from 
capital  stock  tax  by  the  original  Act  of  1885  imposing 
this  species  of  tax,  gas  companies  have  been  exempt  on 
the  ground  that  they  were  manufacturing  companies.  Com- 
monwealth vs.  Allegheny  Gas  Co.,  1  Dauph.  93 ;  Common- 
wealth vs.  Chester  Gas  Co.,  5  Dauph.  121.  At  the  same 
time  it  was  held  that  their  competitors,  the  electric  light 
companies,  were  subject  to  this  tax.  Commonwealth  vs. 
Northern  Electric  Light  and  Power  Company,  145  Pa. 
105.  By  the  Act  of  1889,  the  electric  light  companies 
were  also  subjected  to  the  tax  of  eight  mills  on  the  gross 
receipts,  which  is  laid  on  transportation  companies  of 
various  sorts.  As  a  result,  the  gas  companies,  many  of 
which  have  a  local  monopoly  unlike  the  electric  light 
companies,  are  free  from  two  taxes  which  their  com- 
petitors bear.  Your  Committee  is  of  opinion  that  the 
imposition  of  both  these  taxes  on  gas  companies  would 
equalize  taxes  on  concerns  which  are  legitimate  competi- 


181 

tors  of  one  another,  and  at  the  same  time  would  secure 
a  substantial  item  of  revenue.  As  long  as  the  expense 
of  electric  light  continues  greater,  and  with  the  increased 
use  of  gas  as  domestic  fuel,  these  companies  will  con- 
tinue to  thrive.  The  local  monopoly  given  them  by  law 
makes  them  (like  coal)  a  natural  subject  of  taxation. 

In  the  draft  of  the  Act  imposing  capital  stock  tax  on 
manufacturing  corporations  (see  page  181)  there  has 
therefore  been  inserted,  also,  appropriate  words  to  impose 
on  artificial  gas  companies  the  regular  capital  stock  tax  of 
five  mills. 

An  amendment  to  the  Act  of  1889,  imposing  the 
gross  receipts  tax  on  these  companies,  is  also  submitted 
herewith  (see  page  183). 


AN  ACT  TO  FURTHER  AMEND  SECTION  TWENTY-ONE  OF  AN  ACT 
ENTITLED  "A  FURTHER  SUPPLEMENT  TO  AN  ACT  ENTITLED  'AN 
ACT  TO  PROVIDE  REVENUE  BY  TAXATION/  APPROVED  THE  SEVENTH 
DAY  OF  JUNE.  ANNO  DOMINI  ONE  THOUSAND  EIGHT  HUNDRED 
AND  SEVENTY-NINE,"  APPROVED  JUNE  1,  1889. 

SECT.  1.  Be  it  enacted,  etc.,  That  Section  21  of  an  Act  entitled 
"A  further  supplement  to  an  Act  entitled  'An  Act  to  provide 
revenue  by  taxation,'  approved  the  seventh  day  of  June,  Anno 
Domini  one  thousand  eight  hundred  and  seventy-nine,"  approved 
June  1,  1889,  which  as  heretofore  amended  reads  as  follows : 

"SECT.  21.  That  every  corporation,  joint  stock  association,  lim- 
ited partnership  and  company  whatsoever,  from  which  a  report 
is  required  under  the  twentieth  section  hereof,  shall  be  subject 
to  and  pay  into  the  Treasury  of  the  Commonwealth,  annually, 
a  tax  at  the  rate  of  five  mills  upon  each  dollar  of  the  actual 
value  of  its  whole  capital  stock  of  all  kinds,  including-  com- 
mon, special  and  preferred,  as  ascertained  in  the  manner  pre- 
scribed in  said  twentieth  section,  and  it  shall  be  the  duty  of 
the  treasurer  or  other  officers  having  charge  of  any  such  cor- 
poration, joint  stock  association  or  limited  partnership,  upon 
which  a  tax  is  imposed  by  this  section,  to  transmit  the  amount 
of  said  tax  to  the  Treasury  of  the  Commonwealth  within  thirty 
days  from  the  date  of  settlement  of  the  account  by  the  Auditor 
General  and  State  Treasurer:  Provided,  That  for  the  purposes 


182 

of  this  Act,  interests  in  limited  partnerships  or  joint  stock 
associations  shall  be  denied  to  be  capital  stock  and  taxable 
accordingly:  Provided  also,  That  corporations,  limited  partner- 
ships and  joint  stock  associations,  liable  to  tax  on  capital  stock 
under  this  section,  shall  not  be  required  to  make  any  report 
or  pay  any  further  tax  on  mortgages,  bonds  and  other  securi- 
ties owned  by  them  in  their  own  right;  but  corporations, 
limited  partnerships  and  joint  stock  associations  holding  such 
securities  as  trustees,  executors,  administrators,  guardians,  or  in 
any  other  manner,  shall  return  and  pay  the  tax  imposed  by 
this  Act  upon  all  securities  so  held  by  them  as  in  the  case  of  in- 
dividuals :  And  Provided  Further,  That  the  provisions  of  this 
section  shall  not  apply  to  the  taxation  of  so  much  of  the  capi- 
tal stock  of  corporations,  limited  partnerships  or  joint  stock 
associations,  organized  for  manufacturing  purposes,  which  is 
invested  in  and  actually  and  exclusively  employed  in  carrying  on 
manufacturing  within  the  State,  except  companies  engaged  in 
the  brewing  or  distilling  of  spirits  or  malt  liquors  and  such  as 
enjoy  and  exercise  the  right  of  eminent  domain ;  but  every  manu- 
facturing corporation,  limited  partnership  or  joint  stock  asso- 
ciation shall  pay  the  State  tax  of  five  mills  herein  provided, 
upon  such  proportion  of  its  capital  stock,  if  any,  as  may  be 
invested  in  any  property  or  business  not  strictly  incident  or 
appurtenant  to  its  manufacturing  business,  in  addition  to  the 
local  taxes  assessed  upon  its  property  in  the  districts  where 
located,  it  being  the  object  of  this  proviso  to  relieve  from  State 
taxation  only  so  much  oi  the  capital  stock  as  is  invested  purely 
in  the  manufacturing  plant  and  business :  Provided  further,  In 
case  of  fire  or  marine  insurance  companies  the  tax  imposed  by 
this  section  shall  be  at  the  rate  of  three  mills  on  each  dollar 
of  the  actual  value  of  the  whole  capital  stock,"  be  and  the 
same  is  hereby  amended  so  as  to  read  as  follows : 

SECT.  21.  That  every  corporation,  joint  stock  association, 
limited  partnership,  and  company  whatsoever,  from  which  a 
report  is  required  under  the  twentieth  section  hereof,  shall  be 
subject  to  and  pay  into  the  Treasury  of  the  Commonwealth, 
annually,  a  tax  at  the  rate  of  five  mills  upon  each  dollar  of  the 
actual  value  of  its  whole  capital  stock  of  all  kinds,  including 
common,  special  and  preferred,  as  ascertained  in  the  manner 
prescribed  in  said  twentieth  section;  and  it  shall  be  the  duty 
of  the  treasurer  or  other  officers  having  charge  of  any  such  cor- 
poration, joint  stock  association,  or  limited  partnership,  upon 
which  a  tax  is  imposed  by  this  section,  to  transmit  the  amount 
of  said  tax  to  the  Treasury  of  the  Commonwealth  within  thirty 
days  from  the  date  of  the  settlement  of  the  account  by  the 


183 

Auditor  General  and  the  State  Treasurer:  Provided,  That  for 
the  purpose  of  this  Act,  interests  in  limited  partnerships  01 
joint  stock  associations  shall  be  deemed  to  be  capital  stock,  and 
taxable  accordingly :  Provided  also,  That  corporations,  limited 
partnerships,  and  joint  stock  associations,  liable  to  tax  on  capital 
stock  under  this  section,  shall  not  be  required  to  pay  any 
further  tax  on  the  mortgages,  bonds,  and  other  securities  owned 
by  them,  which  form  part  of  its  capital  stock  surplus  and  un- 
divided  profits  belonging  to  the  whole  body  of  stockholders  or 
members  as  such;  but  corporations,  limited  partnerships,  and 
joint  stock  associations,  owning  or  holding  such  securities  as 
trustees,  executors,  administrators,  guardians,  or  in  any  other 
manner  than  as  aforesaid,  shall  return  and  pay  the  tax 
imposed  by  this  Act  upon  all  securities  so  owned  or  held  by 
them,  as  in  the  case  of  individuals ;  And  Provided  Further,  That 
the  capital  stock  of  corporations,  limited  partnerships  and 
joint  stock  associations  organized  for  manufacturing  purposes 
which  is  invested  in  and  actually  and  exclusively  employed  in 
carrying  on  manufacturing  within  tJie  State,  except  companies 
engaged  in  the  brewing  or  distilling  of  spirits  or  malt  liquors, 
and  the  manufacture  of  artificial  gas,  and  such  as  enjoy  and 
exercise  the  right  of  eminent  domain,  shall  be  taxed  at  the  rate 
of  one  mill  upon  each  dollar  of  the  actual  value  thereof;  but  so 
much  thereof  as  may  be  invested  in  any  property  or  business  not 
strictly  incident  or  appurtenant  to  its  manufacturing  business 
shall  be  taxed  at  the  rate  of  five  mills  upon  each  dollar  of  the 
actual  value  thereof:  Provided  further,  In  case  of  fire  and  ma- 
rine insurance  companies,  the  tax  imposed  by  this  section  shall 
be  at  the  rate  of  three  mills  upon  each  dollar  of  the  actual  value 
of  the  whole  capital  stock. 


AN  ACT  TO  AMEND  SECTION  TWENTY-THBEE  OF  AN  ACT  ENTITLED 
"A  FURTHER  SUPPLEMENT  TO  AN  ACT  ENTITLED  'AN  ACT  TO 
PROVIDE  REVENUE  BY  TAXATION/  APPROVED  THE  SEVENTH  DAY 
OF  JUNE,  ANNO  DOMINI  ONE  THOUSAND  EIGHT  .HUNDRED  AND 
SEVENTY-NINE,"  APPROVED  JUNE  1.  1889. 

SECT.  1.  Be  it  enacted,  etc.,  That  Section  23  of  an  Act  entitled 
"A  further  supplement  to  an  Act  entitled  'An  Act  to  provide 
revenue  by  taxation,  approved  the  seventh  day  of  June,  Anno 
Domini  one  thousand  eight  hundred  and  seventy-nine,"  approved 

Jrt-nf*  1.  1RRQ.  w>n^>i  rear!  «.s 


184 

SECT.  23.  That  every  railroad  company,  pipe  line  company, 
conduit  company,  steamboat  company,  canal  company,  slack 
water  navigation  company,  transportation  company,  street  pas- 
senger railway  company,  and  every  other  company,  joint  stock 
association  or  limited  partnership,  now  or  hereafter  incorpor- 
ated or  organized  by  or  under  any  law  of  this  Commonwealth 
or  now  or  hereafter  organized  or  incorporated  by  any  other 
State  or  by  the  United  States  or  any  foreign  Government,  and 
doing  business  in  this  Commonwealth,  and  owning,  operating 
or  leasing  to  or  from  another  corporation,  company,  associa- 
tion, joint  stock  association  or  limited  partnership,  any  railroad, 
pipe  line,  slack  water  navigation,  street  passenger  railway,  canal 
or  other  device  for  the  transportation  of  freight  or  passengers 
or  oil,  and  every  telephone  or  telegraph  company  incorporated 
under  the  laws  of  this  or  any  other  State  of  the  United  States 
and  doing  business  in  this  Commonwealth,  and  every  express 
company,  incorporated  or  unincorporated,  doing  business  in  this 
Commonwealth,  and  every  firm,  co-partnership  or  joint  stock 
company  or  association  doing  express  business  in  this  Common- 
wealth, and  every  electric  light  company,  and  every  palace  car 
and  sleeping  car  company,  incorporated  or  unincorporated,  doing 
business  in  this  Commonwealth,  shall  pay  to  the  State  Treasurer 
a  tax  of  eight  mills  upon  the  dollar  upon  the  gross  receipts  of 
said  corporation,  company  or  association,  limited  partnership, 
firm  or  co-partnership,  received  from  passengers  and  freight 
traffic  transported  wholly  within  this  State,  and  from  telegraph, 
telephone  or  express  business  done  wholly  within  this  State, 
or  from  business  of  electric  light  companies  and  from  fhe  trans- 
portation of  oil  done  wholly  within  the  State ;  the  said  tax 
shall  be  paid  semi-annually  upon  the  last  days  of  January 
and  July  in  each  year;  and  for  the  purpose  of  ascertaining 
the  amount  of  the  same  it  shall  be  the  duty  of  the  treasurer 
or  other  proper  officers  of  the  said  company,  firm,  co-partner- 
ship, limited  partnership,  joint  stock  association  or  corporation 
to  transmit  to  the  Auditor  General  a  statement,  under  oath  or 
affirmation,  of  the  amount  of  gross  receipts  of  the  said  com- 
panies, co-partnerships,  corporations,  joint  stock  associations,  or 
limited  partnerships  derived  from  all  sources  and  of  gross  re- 
ceipts from  business  done  wholly  within  the  State,  during  the 
preceding  six  months  ending  on  the  first  days  of  January  and 
July  in  each  year;  and  if  any  such  company,  firm,  co-partner- 
ship, joint  stock  association,  association  or  limited  partnership 
or  corporation,  shall  neglect  or  refuse  for  a  period  of  thirty 
days  after  such  tax  becomes  due  to  make  said  returns  or  to  pay 
the  same,  the  amount  thereof,  with  an  addition  of  ten  per 


185 

centum  thereto,  shall  be  collected  for  the  use  of  the  Common- 
wealth as  other  taxes  are  recoverable  by  law :  Provided,  That 
in  any  case  where  the  works  of  one  corporation,  company,  joint 
stock  association  or  limited  partnership  are  leased  to  and  op- 
erated by  another  corporation,  company,  association  or  limited 
partnership,  the  taxes  imposed  by  this  section  shall  be  appor- 
tioned between  the  said  corporations,  companies,  associations  or 
limited  partnerships  in  accordance  with  the  terms  of  their  re- 
spective leases  or  agreements,  but  for  the  payment  of  the  said 
taxes  the  Commonwealth  shall  first  look  to  the  corporation, 
company,  association  or  limited  partnership  operating  the  works, 
and  upon  payment  by  the  said  company,  corporation,  association 
or  limited  partnership  of  a  tax  upon  the  receipts  as  herein 
provided  derived  from  the  operation  thereof,  the  corporation 
company,  joint  stock  association,  or  limited  partnership  from 
which  the  said  works  are  leased,  shall  not  be  held  liable  under 
this  section  for  any  tax  upon  the  proportion  of  said  receipts  re- 
ceived by  it  as  rental  for  the  use  of  said  works." 

be  and  the  same  is  hereby  amended  to  read  as  follows : 
SECT.  23.  That  every  railroad  company,  pipe  line  company, 
conduit  company,  steamboat  company,  canal  company,  slack 
water  navigation  company,  transportation  company,  street  pas~ 
senger  railway  company,  and  every  other  company,  joint  stock 
association  or  limited  partnership,  now  or  hereafter  incorpo- 
rated or  organized  by  or  under  any  law  of  this  Commonwealth, 
or  now  or  hereafter  organized  or  incorporated  by  any  other 
State  or  by  the  United  States  or  any  foreign  Government,  and 
doing  business  in  this  Commonwealth,  and  owning,  operating, 
or  leasing  to  or  from  another  corporation,  company,  associ- 
ation, joint  stock  association  or  limited  partnership,  any  rail- 
road, pipe  line,  slack  water  navigation,  street  passenger  rail- 
way, canal  or  other  device  for  the  transportation  of  freight  or 
passeng-ers  or  oil,  and  every  telephone  or  telegraph  company  in- 
corporated under  the  laws  of  this  or  any  other  State  or  of  the 
United  States  and  doing  business  in  this  Commonwealth,  and 
every  express  company,  incorporated  or  unincorporated,  doing 
business  in  this  Commonwealth,  and  every  firm,  co-partnership, 
or  joint  stock  company  or  association  doing  express  business  in 
this  Commonwealth,  and  every  electric  light  company,  and  every 
artificial  gas  company,  and  every  palace  car  and  sleeping  car 
company,  incorporated  or  unincorporated,  doing  business  in  this 
Commonwealth,  shall  pay  to  the  State  Treasurer  a  tax  of  eight 
mills  upon  the  dollar  upon  the  gross  receipts  of  said  corpo- 
ration, company  or  association,  limited  partnership,  firm  or  co- 


186 

partnership,  received  from  passenger  and  freight  traffic  trans- 
ported wholly  within  this  State,  and  from  telegraph,  telephone 
or  express  business  done  wholly  within  this  State,  or  from  busi- 
ness of  electric  light  companies,  or  from  business  of  artificial 
gas  companies,  and  from  the  transportation  of  oil  done  wholly 
within  the  State;  the  said  tax  shall  be  paid  annually  in  the 
month  of  January  of  each  year  for  the  last  preceding  calendar 
year;  and  for  the  purpose  of  ascertaining  the  amount  of  the 
same,  it  shall  be  the  duty  of  the  Treasurer  or  other  proper 
officer  of  the  said  company,  firm,  co-partnership,  limited  part- 
nership, joint  stock  association  or  corporation,  to  transmit  to 
the  Auditor  General  a  statement,  under  oath  or  affirmation,  of 
the  amount  of  gross  receipts  of  the  said  companies,  co-partner- 
ships, corporations,  joint  stock  associations  or  limited  partner- 
ships derived  from  all  sources,  and  of  gross  receipts  from  busi- 
ness done  wholly  within  the  State,  during  the  preceding  cal- 
endar year,  and  if  any  such  company,  firm,  co-partnership,  joint 
stock  association,  or  limited  partnership  or  corporation,  shall 
neglect  or  refuse  for  a  period  of  thirty  days  after  such  tax 
becomes  due,  to  make  said  returns  or  to  pay  fhe  same,  the 
amount  thereof  with  an  addition  of  ten  per  centum  thereto,  shall 
be  collected  for  the  use  of  the  Commonwealth  as  other  taxes  are 
rcoverable  by  law :  Provided,  That  in  any  case  where  the  works 
of  one  corporation,  company,  joint  stock  association  or  limited 
partnership  are  leased  to  and  operated  by  another  corporation, 
company,  association  or  limited  partnership,  the  taxes  imposed 
by  this  section  shall  be  apportioned  between  the  said  corpo- 
rations, companies,  associations  or  limited  partnerships  in  ac- 
cordance with  the  terms  of  their  respective  leases  or  agreements, 
but  for  the  payment  of  the  said  taxes  the  Commonwealth  shall 
first  look  to  the  corporation,  company,  association  or  limited 
partnership  operating  the  works,  and  upon  payment  by  the  said 
company,  corporation,  association  or  limited  partnership  of  a 
tax  upon  the  receipts  as  herein  provided  derived  from  the  oper- 
ation thereof,  the  corporation,  company,  joint  stock  association 
or  limited  partnership  from  which  the  said  works  are  leased, 
shall  not  be  held  liable  under  this  section  for  any  tax  upon  the 
proportion  of  said  receipts  received  by  it  as  rental  for  the  use  of 
said  works." 


187 


LOCAL  REAL  ESTATE  OF  PUBLIC  SERVICE 
CORPORATIONS. 

By  existing  laws  the  real  estate  of  railroad  and  other 
public  service  corporations  which  is  necessary  to  their  op- 
eration is  not  taxable  locally,  as  other  real  estate.  So  far  as 
the  actual  right  of  way  of  a  railroad  is  concerned,  this  pol- 
icy is  unquestionably  sound.  The  value  of  such  a  right  of 
way  is  not  the  same  as  that  of  another  piece  of  real  estate 
of!  equal  area.  It  is  part  of  an  integral  system  stretching 
in  many  cases  across  the  State,  and  the  valuation  of  a 
comparatively  small  section  of  it  is  not  only  beyond  the 
capacity  of  the  local  assessor,  but  would  result  in  un- 
avoidable inequality  and  injustice  in  the  conflict  be- 
tween various  localities.  For  this  reason  other  States 
which  permit  such  a  taxation  also  have  machinery  by 
means  of  State  Boards  of  Equalization,  which  we  have 
not,  and  the  like,  for  adjusting  the  valuation  among  the 
several  communities.  This  system  has  been  the  subject 
of  much  friction  and  litigation. 

In  Philadelphia  and  Pittsburgh,  however,  by  virtue  of 
special  Acts  of  long  standing  the  real  estate  of  railroads, 
which  is  not  part  of  the  right  of  way  (except  water  stations 
in  Philadelphia),  has  been  subject  to  local  taxation.  The 
consequence  is  that  such  structures  as  passenger  and 
freight  depots,  coal  tipples,  office  buildings  and  the  like, 
which  can  easily  be  valued  as  pieces  of  real  estate,  with 
the  improvements  thereon,  apart  from  their  connection 
with  the  actual  line  of  tracks,  have  been  taxed  for  general 
governmental  purposes,  and  also  for  municipal  improve- 
ments. 

Under  the  present  construction,  the  law  universally  per- 
mits local  taxation  of  such  property  which  is  remote  from 
and  disconnected  with  the  operation  of  the  road.  The 
same  rule  has  been  extended  to  gas,  water,  electric,  bridge 
and  numerous  other  public  service  corporations,  and  so 


188 

far  as  concerns  pipes,  mains,  wires,  bridge  structures  and 
the  like,  your  Committee  feels  that  it  should  be  maintained 
for  the  same  reason. 

Even  the  exemption  of  pieces  of  real  estate  which  might 
stand  alone,  such  as  power  houses  and  railroad  stations, 
is  attended  with  difficulty  because  a  large  part  of  their 
value  depends  on  their  connection  with  the  system,  and 
standing  alone  they  may  be  worth  little  more  than  the 
ground. 

Your  Committee  feels  that  the  whole  subject  is  attended 
with  such  difficulties  of  practical  administration,  when 
their  great  hope  has  been  to  reduce  those  difficulties,  that 
they  do  not  recommend  any  change  in  this  regard  at  pres- 
ent. Other  States  and  the  United  States  are  considering 
this  matter.  It  would  be  better  to  get  the  full  result  of 
their  deliberations  and  experience  before  moving  our- 
selves. At  the  same  time,  an  Act  which  it  is  believed  would 
accomplish  the  change  is  submitted  herewith,  with  a  note 
giving  the  history  of  the  law  and  the  reason  for  the 
language  used,  if  the  Legislature  deem  the  change  de- 
sirable and  practical. 


AN  ACT  TO  RAISE  REVENUE  BY  SUBJECTING  TO  TAXATION  CERTAIN  REAL 
ESTATE  NOT  HERETOFORE  TAXABLE  AS  SUCH.  OF  RAILROAD  COM- 
PANIES, STREET  RAILWAY  COMPANIES,  CANAL  COMPANIES,  BRIDGE 
COMPANIES,  GAS  COMPANIES,  PIPE  LINE  COMPANIES,  FERRY  COM- 
PANIES, ELECTRIC  LIGHT,  HEAT  AND  POWER  COMPANIES,  WATER 
COMPANIES,  TELEGRAPH  COMPANIES,  TELEPHONE  COMPANIES,  EX- 
PRESS COMPANIES,  AND  OTHER  PUBLIC  SERVICE  CORPORATIONS  OF 
THE  SAME  OR  OTHER  KINDS. 

SECT.  1.  Be  it  enacted,  etc.,  That  all  real  estate  of  railroad 
companies,  street  railway  companies,  canal  companies,  bridge 
companies,  gas  companies,  pipe  line  companies,  ferry  companies, 
electric  light,  heat  and  power  companies,  water  companies, 
telegraph  companies,  telephone  companies,  express  companies, 
and  other  public  service  corporations  of  the  same  or  other 
kinds,  which  has  not  heretofore  been  taxable  as  such,  except 


189 

the  right  of  way.  road  bed  and  superstructure  of  railroad  com- 
panies, the  tracks  and  right  of  way  of  street  railway  companies 
the  bed,  berme-bank  and  tow  path  of  canal  companies,  such  por- 
tion of  the  bridges  of  bridge  companies  as  may  be  necessary 
to  span  the  gap,  the  pipes  or  mains  of  gas  companies  and  pipe 
lines  companies,  the  poles  and  wires  of  electric  light,  heat  and 
power  companies,  telegraph  companies  and  telephone  companies, 
and  the  pipes  or  conduits  of  water  companies,  is  hereby  made 
subject  to  taxation  by  counties,  cities,  boroughs,  townships, 
school  districts  and  other  municipal  corporations,  the  same  as 
other  real  estate. 

SECT.  2.  All  Acts  or  parts  of  Acts,  general,  special  or  local, 
inconsistent  herewith,  be  and  the  same  are  hereby  repealed. 


NOTE. 

By  the  long  settled  construction  of  the  laws  of  the  Com- 
monwealth (particularly  the  Acts  of  1834  and  1844),  that  part 
of  the  real  estate  of  railroads  wiiich  was  indispensable  to  the 
proper  exercise  of  the  corporate  franchises,  or  reasonably  neces- 
sary to  the  business  of  the  corporation  and  which  constitutes  a 
part  of  its  corporate  machinery,  was  not  taxable  locally,  because 
it  entered  into  the  value  of  its  franchises  as  a  whole  and  was 
taxable  as  such.  Numerous  decisions  have  pretty  well  settled 
what  was  and  what  was  not  within  this  principle.  By  these 
decisions  practically  the  only  property  outside  of  Philadelphia 
and  Pittsburgh  subject  to  taxation  for  local  purposes  was  shops 
for  original  construction  of  rolling  stock,  warehouses,  coal  yards, 
coal  chutes,  wood  yards,  houses  used  for  boarding  employes  and 
buildings  remote  from  the  right  of  way  used  as  general  offices. 
By  the  Act  of  April  21,  1858,  P.  L.  385,  Section  1,  applying  only 
to  Philadelphia,  "the  offices,  depots,  car  houses  and  other  real 

property  of  railroad  corporations  the  superstructure  of 

the  road  and  water  stations  only  excepted,"  were  subjected  to 
City  taxation.  An  Act  applying  only  to  Pittsburgh  did  the  like 
for  all  "real  estate"  in  the  city.  Act  of  January  4,  1859,  P.  L. 
828,  Sec.  3.  In  construing  the  Philadelphia  Act  it  has  been  held 
to  exempt  only  the  "road  bed"  or  "right  of  way"  under  the  word 
"superstructure,"  and  all  else,  except  water  stations  specifi- 
cally mentioned,  is  liable  for  municipal  assessment  as  well  as 
taxes  proper.  Philadelphia  vs.  P.  &  K.  E.  Co.,  177  Pa.  292.  Ac- 
cordingly the  words  so  used  are  adopted  by  the  proposed  Act  in 
order  that  the  settled  construction  may  be  applied  to  the  great 
variety  of  circumstances  which  may  arise  under  the  new  law. 

The  same  rule  with  respect  to  the  taxation  of  the  real  estate 
of  railroad  companies  has  been  held  to  apply  to  street  railway 
companies,  canal  companies,  bridge  companies,  gas  and  pipe  line 
companies,  electric  light,  heat  and  power  companies,  and  water 
companies,  and  the  real  estate  which  has  been  deemed  necessary 


190 

to  the  proper  exercise  of  their  corporate  franchises  has  been 
exempted  from  local  taxation.  Such  exempted  property  included 
practically  all  the  real  estate  of  these  companies,  and  the  only 
real  estate  taxable  was  such  as  may  be  disconnected  with  the 
actual  operation  of  the  plant  or  property,  as,  for  example,  resi- 
dences of  officials  or  employes,  mountain  lands  of  water  com- 
panies, tanks  of  pipe  line  companies,  etc.  Under  the  Act  as  pre- 
pared a  great  dea1  of  the  property  of  these  companies  will  be 
taxable,  such  as  car  barns  of  street  railway  companies,  power 
houses  of  electric  light  companies,  gas  plants  of  gas  companies, 
reservoirs  of  water  companies,  etc.,  and  only  the  property  specifi- 
cally mentioned,  such  as  rights  of  way,  poles,  wires,  pipes,  con- 
duits, tracks,  etc.,  will  be  exempt. 


191 


(D)    COLLECTION   OF  REVENUE. 


One  of  the  most  striking  features  of  our  present  system 
of  taxation  is  the  much  greater  relative  efficiency  of  the 
collection  of  taxes  as  compared  with  other  States.  The 
State  taxes,  such  as  collateral  inheritance  taxes,  capital 
stock  '-axes  and  gross  receipts  taxes,  are  easy  to  get  at  be- 
cause either  the  subjects  of  taxation  are  matters  of  in- 
evitable public  record,  or  the  corporations  paying  the  tax 
are  compelled  to  record  themselves  in  order  to  preserve 
their  legal  existence ;  and  each  individual  taxable  is  there- 
fore within  reach  of  the  Auditor  General's  office  so  that 
it  may  be  compelled  to  render  an  account. 

The  principal  exception  is  to  be  found  in  foreign  corpora- 
tions, and  the  foreign  corporation  law,  herein  suggested 
(page  16),  will  tend  to  force  these  to  register  in  greater 
numbers  than  before.  The  greater  powers  of  investiga- 
tion given  to  the  Auditor  General  by  other  Acts  which 
your  Committee  recommends  will  also  aid  in  this  regard. 

Another  possible  exception  is  found  in  those  corpora- 
tions which  are  chartered  by  the  courts  and  are  only  re- 
quired to  record  their  charters  locally.  While  most  of 
these  are  not  for  profit  (and  are  so  classed  in  the  books), 
yet  some  may  engage  in  business  occupations — as  for  ex- 
ample, baseball  and  exhibition  companies — and  these  are 
now  required  by  law  to  register  with  the  Auditor  General. 
But  it  is  not  necessary  to  their  existence  that  they  should 
do  so.  If  the  granting  of  a  charter  is  reported  by  the 
Prothonotary  of  the  court  to  the  Auditor  General — a  means 
of  checking  like  the  report  of  judgments  and  mortgages 
recorded — the  information  will  be  in  the  hands  of  the 
State  authorities  and  a  means  of  compelling  reports  can 


192 

be  found.    A  draft  of  an  Act  to  this  end  is  herewith  sub- 
mitted (See  page  193). 

The  same  observations  apply  to  the  tax  on  corporate 
loans  where  the  treasurer  of  the  corporation  is  made 
the  assessor  and  collector,  although  it  is  really  a  tax  on 
the  creditor  of  the  corporation.  He  is  required  to  deduct 
the  tax  from  the  interest  paid  the  creditor,  and  the  cor- 
poration is  liable  personally  for  his  doing  so.  The  same 
is  done  by  treasurers  of  municipalities  and  the  like  who 
have  no  interest  to  fail  in  their  duty.  The  law  intends, 
under  the  name  of  "incorporated  districts,"  that  school 
districts  should  also  make  this  return,  and  the  Attorney 
General  has  so  ruled  (35  Pa.  County  Ct.  Rep.  606).  The 
Auditor  General  had  not  previously  required  this,  and 
the  reports  are  not  even  now  actually  made.  To  avoid 
misunderstandings  by  officials  and  tax  payers  an  amend- 
ment to  the  law  expressly  including  them  is  herewith 
submitted  (see  page  193).  Even  the  dealer  who  pays  a 
mercantile  license  tax  is  more  within  the  reach  of  taxing 
officials  than  the  ordinary  tax  payer  because  he  must 
make  himself  known  to  the  world,  and  his  tranactions 
are  matters  of  record  because  of  the  necessities  of  his 
business. 

In  the  matter  of  the  general  tax  on  certain  personal 
property,  the  success  of  Pennsylvania  has  been  so  great 
as  to  win  the  praise  of  economists.  Prof.  Charles  J. 
Bullock,  of  Harvard  University,  addressing  the  second 
International  Tax  Conference  at  Ontario,  Canada,  says 
of  Pennsylvania:  "The  success  achieved  with  im- 
perfect laws  and  methods  of  administration  has  been  little 
short  of  surprising,  and  should  lead  the  candid  student 
to  revise  his  ideas  of  the  impossibility  of  taxing  intangible 
wealth." 

But  the  imperfections  which  do  exist  are  the  same  in 
kind  as  elsewhere.  They  are  only  less  in  degree.  Your 
Committee  has  therefore  given  special  consideration  to 
this  subject. 


193 


AN  ACT  PROVIDING  FOB  THE  BEPORT  TO  THE  AUDITOR  GENEBAL  BY  THE 
PROTHONOTARIES  OF  THE  COURTS  OF  COMMON  PLEAS  OF  COR- 
PORATIONS INCORPORATED  BY  SUCH  COURTS. 

SECT.  1.  Be  it  enacted,  etc.,  That  the  Prothonotary  of  each 
Court  of  Common  Pleas  in  this  Commonwealth  shall  report  to 
the  Auditor  General  each  month  the  names  of  the  corporations 
incorporated  by  the  said  Court,  with  the  names  and  addresses 
of  the  directors  thereof,  and  for  so  doing  shall  receive  a  fee 
of  one  dollar  from  each  of  such  corporations. 


AN  ACT  AMENDING  SECTION  FOUR  OF  AN  ACT  ENTITLED  "AN  ACT 
IMPOSING  ADDITIONAL  TAXES  FOR  STATE  PURPOSES  AND  TO 
ABOLISH  THE  REVENUE  BOABD,"  APPBOVED  THE  THIRTIETH  DAY  OF 

APRIL,  A.  D.  1864. 

SECT.  1.  Be  it  enacted,  etc.,  that  Section  4  of  an  Act  entitled 
"An  Act  imposing  additional  taxes  for  State  purposes  and  to 
abolish  the  revenue  board,"  approved  the  thirtieth  day  of  April, 
A.  D.  1864,  which  reads  as  follows: 

"SECT.   4.  That  the   Treasurer   of   each   County   and   City,   the 
burgess,  or  other  chief  officer,  of  each  incorporated  district,  or 
borough  of  this   Commonwealth,  within  ninety  days  after  the 
passage  of  this  Act,  shall  make  return,  under  oath  or  affirmation, 
to  the  Auditor  General,  of  the  amount  of  scrip,  bonds  or  cer- 
tificates of  indebtedness,  outstanding  by  said  county,  city,  dis- 
trict, borough  or  incorporation,  as  the  same  existed  on  the  first 
day  of  January,  one  thousand  eight  hundred  and  sixty-four,  and 
of  each  succeeding  year  thereafter,  together  with  the  rates  of 
interest   thereon,   at  each  of  those   periods,   under  the  penalty 
of  five  thousand  dollars,  the  amount  to  be  settled  by  the  Auditor 
General,  and  the  amount  thereof  sued  for,  and  collected,  as  debts 
due  by  defaulting  public  officers  are  collected ;  Provided,  That 
on  the  receipt  of  said  returns,  the  Auditor  General  shall  proceed 
to  settle  the  accounts   of  each  county,  city  and  borough  with 
the  Commonwealth,  fix  the  State  tax  due,  and  unpaid,  and  trans- 
mit notice  of  the   amount,  by  mail,  to  officers  making  said  re- 
turns ;  and  that  if  the  amount  so  found  due  shall  not  be  paid 
within  sixty  days,  the  Attorney  General  shall  sue  and  collect  the 
same,  with  interest,  from  the  date  of  such  settlement ;  and  here- 
after it  shall  be  the  duty  of  the  treasurer,  of  every  county,  city, 
borough   and   incorporated    district,    in   this    Commonwealth,    to 
deduct  the  said  State  tax,  on  payment  of  any  interest,  or  divi- 
11 


194 

dend,  on  debts  due  by  the  county,  city,  borough,  or  incorporated 
district,  and  pay  the  same  over  to  the  State  Treasurer,  within 
thirty  days  after  the  said  interest,  or  dividend  has  fallen  due." 

Be  and  the  same  is  hereby  amended  so  as  to  read  as  follows : 

SECT.  4.  That  the  treasurer  of  each  school  district,  county 
and  city,  the  burgess  or  other  chief  officer  of  each  incorporated 
district  or  borough  of  this  Commonwealth,  within  ninety  days 
after  the  passage  of  this  Act,  shall  make  return,  under  oath  or 
affirmation,  to  the  Auditor  General,  of  the  amount  of  scrip, 
bonds,  or  certificates  of  indebtedness,  outstanding  by  said  county, 
city,  incorporated  district,  school  district,  borough,  or  incorpora- 
tion, as  the  same  existed  on  the  first  day  of  January,  one 
thousand  eight  hundred  and  sixty-four,  and  of  each  succeeding 
year  thereafter,  together  with  the  rates  of  interest  thereon, 
at  each  of  those  periods,  under  the  penalty  of  five  thousand 
dollars,  the  amount  to  be  settled  by  the  Auditor  General,  and 
the  amount  thereof  sued  for,  and  collected,  as  debts  due  by  de- 
faulting public  officers  are  collected;  Provided,  that  on  the  re- 
ceipt of  said  returns,  the  Auditor  General  shall  proceed  to 
settle  the  accounts  of  each  county,  city,  incorporated  district, 
school  district  and  borough  with  the  Commonwealth,  fix  the 
State  tax  due,  and  unpaid,  and  transmit  notice  of  the  amount, 
by  Inail,  to  officers  making  said  returns ;  and  that  if  the  amount, 
so  found  due  shall  not  be  paid  within  sixty  days,  the  Attorney 
General  shall  "sue  and  collect  the  same,  with  interest,  from  the 
date  of  such  settlement ;  and  hereafter,  it  shall  be  the  duty  of  the 
treasurer  of  every  county,  city,  borough,  school  district  and  in- 
corporated district,  in  this  Commonwealth,  to  deduct  the  said 
State  tax,  on  payment  of  any  interest,  or  dividend,  on  debts 
due  by  the  county,  city,  borough,  school  district,  or  incorporated 
district,  and  pay  the  same  over  to  the  State  Treasurer  within 
thirty  days  after  the  said  interest,  or  dividend,  has  fallen  due. 


195 


COLLECTION  OF  PERSONAL  PROPERTY  TAX. 

In  the  reports  of  all  tax  commissions  and  in  the  discus- 
sion of  all  tax  reform  associations,  the  most  popular  sub- 
ject, and  the  one  upon  which  there  is  the  most  universal 
agreement,  is  the  difficulty  of  collecting  the  personal  prop- 
erty tax.  This  tax  has  existed  in  most  States  (unlike 
Pennsylvania),  in  the  form  of  a  constitutional  require- 
ment of  a  uniform  tax  on  all  personal  property  according 
to  value.  The  exemption  of  property  difficult  to  reach  was 
therefore  impossible,  and  theoretically  every  chattel  and 
every  credit  was  taxed.  Owing  to  the  possibility  of  con- 
cealing personal  property  human  nature  has  not  resisted 
the  temptation  to  do  so,  and  the  collection  of  the  tax  has 
in  these  other  States  been  an  utter  failure  not  yielding  a 
tithe  as  much  as  is  yielded  by  the  tax  on  real  estate, 
although  the  known  value  of  personal  property  is  much 
greater.  The  success  of  Pennsylvania  is  largely  owing 
to  the  wisdom  of  that  constitutional  provision  which  per- 
mits the  Legislature  to  single  out  for  taxation  such  classes 
of  personal  property  as  it  desires.  For  many  years  a  tax 
has  been  more  or  less  successfully  collected  in  Pennsyl- 
vania directly  from  the  taxpayer  on  what  might  be  de- 
scribed generally  as  moneyed  investments,  these  being 
specified  by  the  statute  as  mortgages,  notes,  bonds,  judg- 
ments, public  loans,  corporate  bonds,  accounts  bearing 
interest  and  the  like.  By  reason  of  a  system  whereby 
the  Recorder  of  Deeds  reports  to  the  local  assessors  all 
mortgages  recorded,  and  the  Prothonotary  all  judgments, 
this  class  of  securities  is  generally  reached  by  the  assessors 
and  taxed.  Real  estate  is  successfully  taxed  because  it 
is  visible. 

But  a  large  part  of  the  money  at  interest  intended  to 
be  taxed  is  not  reached,  because  there  is  no  source  of  in- 
formation except  the  honesty  of  the  person  making  the 
return;  and  this  universal  experience  proves  to  be  in- 


196 

sufficient.  Stocks  and  loans  of  foreign  corporations  held 
by  residents,  and  money  invested  abroad,  on  mortgage,  for 
example,  come  within  this  class,  and  your  Committee  does 
not  present  any  method  for  checking  the  returns  in  this 
regard,  except  by  an  increase  of  the  investigating  powers 
of  the  Auditor  General  as  hereinafter  discussed. 

The  class  of  investment  represented  by  deposits  in  our 
banking  institutions  of  all  kinds  which  bear  interest  can 
be  reached  in  the  same  way  as  corporate  loans  to  residents 
of  Pennsylvania,  to  wit,  by  compelling  the  bank,  trust 
company,  savings  institution  or  other  depository  to  assess 
and  pay  the  tax,  deducting  it  from  the  interest  credited 
to  the  deposit ;  and  this  method  has  been  strongly  urged. 
It  is  the  intention  of  the  present  laws  that  these  moneys 
should  be  taxed  so  that  no  greater  hardship  will  be  ex- 
perienced by  the  taxpayer,  and  a  more  efficient  collection 
insured.  The  amount  of  deposits  in  State  banking  institu- 
tions on  November  6,  1909,  was  as  follows : 

Saving  institutions : 

Deposits  subject  to  check $     1,531,616.07 

Deposits  on  time 165,536,528.65 

State  banks : 

Deposits  subject  to  check  40,170,050.96 

Deposits  on  time 74,029,894.92 

Demand  certificates  of  deposit 634,601.3P 

Time  certificates  of  deposit  8,374,210.64 

Saving  fund  deposit  3,055,517.56 

Trust  companies : 

Deposits  subject  to  check 268,611,490.03 

Demand  certificates  of  deposit 4,363,031.11 

Deposits,  special  time  29,445,720.86 

Time  certificates  of  deposit  29,754,707.11 

Deposits,  saving  fund 73,266,543.83 


Total  ^ „ _ $698,773,913.13 


197 

As  all  of  these,  except  some  of  the  check  accounts  in 
banks  outside  of  the  large  cities,  draw  interest,  a  tax  of 
four  mills  would  realize  a  sum  approaching  $2,795,095.65 

The  best  information  to  your  Committee  is  that  there 
is  reported  for  taxation  less  than  one-tenth  of  the  moneys 
on  deposit  in  the  institutions  above  mentioned.  The  fact 
is  that  taxables  have  been  informed  by  the  taxing  officials 
that  such  moneys  are  not  within  the  law. 

Such  a  system  was  actually  provided  by  the  old  Act  of 
April  30,  1864,  P.  L.  218,  which  first  extended  to  corpora- 
tions the  method  of  tax  collection  theretofore  employed 
with  regard  to  municipal  loans.  It  mentioned  specifically 
interest  paid  to  depositors  as  well  as  to  bond-holders. 

There  are  also  to  be  considered  deposits  in  National 
Banks  in  Pennsylvania  which  amounted,  on  September  }, 
1910,  to  $675,173,053.00,  but  not  much  of  which  bears  in- 
terest, and  the  Postal  Savings  Banks  recently  authorized 
by  Congress. 

The  applicability  of  the  law  to  these  institutions  created 
by  the  United  States  must  be  very  doubtful.  An  Act  of 
Congress  (Revised  Statutes,  Section  5219),  permits  State 
taxation  of  the  shares  of  National  Bank  stock  in  the  names 
of  the  share-holders.  Without  permission  it  could  not  be 
done.  The  permission  is  so  worded  that  it  would  probably 
not  extend  to  deposits,  and  while  the  tax  on  deposits  is 
not  a  tax  on  the  bank,  the  imposition  of  the  duty  of  assess- 
ing and  collecting  would  be  a  burden  which  would 
interfere  to  some  extent  with  its  operations  and  with  its 
attractiveness  to  customers.  The  Postal  Savings  Bank 
accounts  are  to  draw  2  per  cent,  interest.  As  they  would 
easily  escape  taxation  by  the  failure  of  the  depositor  to 
return  them  they  would  have  a  great  advantage  over  State 
institutions  paying  nominally  2  per  cent.,  but  really  1  6/10 
per  cent,  because  as  to  their  depositors  the  tax  would  be 
enforced.  The  result,  therefore,  would  bear  hard  upon 
the  State  institutions. 
The  principal  reason  moving  your  Committee  to  reject 


198 

the  proposition  in  its  present  form  is  the  real  injustice 
of  the  tax  as  now  laid  as  applied  to  moneys  on  deposit. 
The  tax  is  one  of  four  mills  on  the  property  of  the  de- 
positor. This  is  not  burdensome  as  to  securities  where  the 
rate  is  5  per  cent,  or  even  4  per  cent.,  but  where  it  is 
below  that,  especially  where  it  is  as  low  as  2  per  cent., 
the  tax  lops  off  a  great  part  of  the  income  derived.  In 
fact,  it  operates  unequally  in  that  respect,  although  it 
seems  never  to  have  been  attacked  on  that  ground. 
Doubtless  for  this  reason  there  has  been  such  general 
acquiescence  in  the  loose  construction  of  the  law  which 
permits  taxpayers  to  neglect  to  return  these  deposits  for 
personal  property  tax.  The  same  result  has  been  reached 
in  other  States  where  all  property  is  required  to  be  taxed 
at  the  same  rate  and  where  the  tax,  if  actually  enforced, 
would  eat  up  all  the  income.  The  fair  method  would  be  to 
impose  a  percentage  tax  upon  the  interest.  Then  the 
burden  would  be  borne  equally  by  all  moneyed  invest- 
ments. The  tax  payer  would  not  have  the  same  excuse  for 
evasion  and  an  efficient  method  of  administering  the  law 
would  not  cause  such  practical  injustice.  The  adjustment 
of  a  proper  percentage,  however,  depends  upon  accurate 
information  as  to  the  various  classes  of  securities  now 
making  up  the  property  on  which  the  personal  properry 
tax  is  levied,  the  amount  of  each  and  the  rate  of  interest 
of  each  class.  This  detailed  information  is  not  within  the 
possession  of  the  State's  Departments  and  could  only  be 
got  at  by  a  prolonged  research  and  tabulation  in  each  of 
the  counties.  Returns  are  made  to  the  Auditor  General 
in  a  lump  sum  and  even  in  the  county  the  tax  is  assessed 
to  each  individual  in  the  same  way.  The  rates  of  interest 
likewise  could  only  be  ascertained  by  investigating  the 
market.  Your  Committee  has  endeavored  to  obtain  suffi- 
cient data  upon  which  to  base  a  recommendation  as  to  the 
fair,  proper  percentage  of  interest  to  be  charged.  Each 
trust  company,  savings  institution,  bank  or  other  deposi- 
tory in  the  State,  upwards  of  twenty-three  hundred  in 


199 

number,  was  requested  to  furnish  the  requisite  informa- 
tion and  many  did,  others  did  not.  It  was  impossible  from 
the  information  received  to  form  a  proper  conclusion.  In 
this  and  similar  efforts  your  Committee  has  been  hampered 
by  lack  of  appropriation  and  hence  is  unable  to  suggest 
the  proper  rate  for  this  tax  so  as  not  to  lessen  the  present 
revenue  derived.  They  propose,  however,  if  continued  in 
their  duties  to  make  this  a  subject  of  investigation  in  the 
expectation  that  a  satisfactory  result  can  be  attained. 

The  Pennsylvania  State  Grange  made  earnest  represen- 
tations to  your  Committee  upon  the  difference  between  the 
amount  of  tax  paid  by  real  estate  and  that  paid  by  personal 
estate  and  corporate  property  in  proportion  to  the  esti- 
mated value  of  each  class  of  property.  But  they  advisedly 
did  not  recommend  the  adoption  of  the  discredited  system 
that  all  classes  of  personal  property  be  taxed,  or  that  both 
real  and  personal  property  be  taxed  at    the  same    rate. 
Such  a  system,  or  lack  of  system,  results  in  even  greater 
injustice  to  real  estate  because  by  reason  of  the  escape 
of  personal  property,  the  real  estate  bears  the  burden  in 
fact,  though  it  is  not  intended  to  do  so  in  theory.     The 
best  system  of  taxation  is  that  where  fact  and  theory  most 
closely    coincide,    because    property   values   then   adjust 
themselves  to  a  known  rate  of  taxation  which  is  actually 
collected.    But  where  the  tax  on  one  class  is  not  actually 
collected,  the  avoiding  of  taxes  discriminates  against  the 
honest  taxpayer  and  produces  an  uncertain  effect  with  re- 
spect to  the  ultimate  burden  of  the  tax.    It  was  testified 
by  many  of  the  witnesses  before  your  Committee  that  resi- 
dents of  Philadelphia,  for  example,  avoid  personal  prop- 
erty tax  by  claiming  in  Philadelphia  that  they  reside  in  one 
of  the  counties  in  which  her  suburbs  are  located,  and  in 
that  locality  claiming  that  they  live  in  Philadelphia,  or  by 
some  influence  or  other  entirely  avoiding  the  visit  or  action 
of  the  local  assessor.    Your  Committee  is  of  opinion  that 
the  greater  centralization  of  the  assessment  of  this  tax 
would  result  in  its  more  efficient  collection  according  to 
law,  and  that  this  is  the  result  to  be  sought. 


200 

This  subject  is  one  which  your  Committee  thinks  should 
receive  its  principal  attention  if  continued  as  hereinafter 
recommended. 

The  State  Grange  presented  a  suggestion  that  the  State 
should  "give  the  local  Governments  authority  to  tax  per- 
sonal and  corporate  property  in  each  unit  of  Government." 

To  give  local  Governments  authority  to  tax  personal 
property  would  again  be  a  reversal  of  the  settled  policy 
of  the  State  which  has  worked  so  satisfactorily.  Most  of 
the  States  suffer  severely  as  to  matters  of  administration 
from  the  attempt  to  give  local  assessors  and  authorities  the 
valuation  of  corporate  franchises  and  other  intangible 
property.  This  results  either  in  gross  injustice  to  the 
corporations,  necessitating  an  elaborate  system  of  adjust- 
ment by  a  State  Board  of  Equalization ;  or  more  often  an 
under-valuation  through  the  influence  they  may  exert  on 
an  irresponsible  local  assessor.  California,  for  example, 
after  investigation  by  a  special  and  later  by  a  permanent 
tax  commission,  has  proposed  an  elaborate  constitutional 
amendment  to  accomplish  just  what  Pennsylvania  has  al- 
ways done,  to  wit,  commit  the  valuation  of  the  State-wide 
property  of  the  large  public  service  corporations  to  officials 
with  State-wide  knowledge  and  power.  So  with  regard 
to  personal  property  in  general.  It  has  been  the  experi- 
ence of  all  communities  that  this  can  best  be  done  by  State 
officials  free  from  local  influence  and  possessed  of  the  ut- 
most powers  of  investigation,  and  so  far  as  it  is  now  done 
by  local  assessors  it  is  not  done  so  thoroughly  as  it  might 
be.  This  was  practically  the  unanimous  opinion  of  the 
county  officials  who  appeared  before  the  Committee.  The 
under-paid,  untrained  local  assessor  depending  for  re- 
election on  the  votes  of  those  whom  he  assesses  has  only 
the  supposed  advantage  of  greater  knowledge  of  local  con- 
ditions. Under  the  circumstances  of  modern  life  he  will 
know  comparatively  little  of  his  neighbors'  affairs  and  will 
assess  for  the  most  part  those  with  whom  he  has  little  if 
any  acquaintance. 


201 

The  Legislature  of  1905  (P.  L.  186),  passed  an  Act  giv- 
ing the  Auditor  General  large  supervisory  powers  over 
local  assessors  with  regard  to  the  return  of  the  personal 
property  tax.  This  Act  authorized  the  Auditor  General 
to  make  a  revised  return  of  personal  property  tax  for  any 
taxable,  when  the  local  assessors,  County  Commissioners, 
or  Board  of  Revision  failed  to  do  so.  For  this  purpose  he 
may  examine  the  returns  of  mortgages  recorded  made  by 
the  Recorders  of  Deeds  and  of  judgments  made  by  the  Pro- 
thonotary  (which  they  are  required  to  make  to  him  also), 
and  examine  witnesses,  etc.  The  County  Commissioners 
and  Boards  of  Revision  are  required  to  file  with  him  dupli- 
cate returns  of  personal  property  tax  made  by  them.  The 
Auditor  General  may  then  enforce  the  collection  and  em- 
ploy counsel  if  necessary. 

With  regard  to  the  practical  enforcement  of  this  Act, 
the  Auditor  General  found  that  his  clerical  force  and  ap- 
propriation were  not  sufficient  to  do  the  work,  and  the  At- 
torney General  advised  him  (see  31  Pa.  County  Court 
Rep.  249),  that  no  attempt  could  be  made  to  enforce  it 
until  an  appropriation  was  made.  In  fact,  the  Auditor 
General  advises  your  Committee  that  the  present  force  of 
his  office  is  inadequate  for  the  work  committed  to  it  in- 
dependent of  that  Act.  One  corporation  tax  clerk  with 
the  assistance  of  the  Chief  Clerk,  is  required  to  handle  the 
whole  matter  of  settling  corporation  taxes,  which  for  the 
year  ending  November  30,  1909,  amounted  to 
$17,256,332.25.  This  necessarily  results  in  the  uninten- 
tional evasion  of  taxes  from  mere  lack  of  time  for  critical 
examination.  It  is  quite  impractical,  for  example,  to 
make  any  investigation  outside  of  the  office,  though  the 
law  authorizes  it.  A  proper  equipment  would  result  in 
increased  revenue  many  times  its  cost. 

Your  Committee  accordingly  recommends  that  the 
Auditor  General  be  supplied  with  five  additional  clerks 
to  attend  to  tax  matters  at  salaries  adequate  to  secure 
capable  men,  and  a  draft  of  an  Act  is  submitted  herewith. 
(See  page  209). 


202 

The  draft  of  another  Act  submitted  below  (see  page  206) 
provides  additional  machinery  by  which  the  Auditor  Gen- 
eral, through  expert  accountants  and  counsel,  as  well  j,s 
through  the  clerks  regularly  attached  to  his  office,  may 
investigate  and  supervise  the  return  of  the  personal  prop- 
erty tax  along  with  property  which  should  escheat  and 
the  like. 

Quite  as  important  is  the  investigation  of  corporations 
outside  of  the  Auditor  General's  office  in  the  field.  This 
would  include  the  searching  out  of  corporations  which 
make  no  report,  and  the  investigation  of  the  facts  of  re- 
ports. 

These  investigations  would  result  in  a  very  large  amount 
of    increased    revenue,    which    has    been    estimated    at 
$5,000,000.      A  specific  instance  of  failure  by  corpora- 
tions to  report  their   assets  properly  for  capital   stock 
tax,  or  at  least  to  report  it  uniformly,  was  brought  to 
the  attention  of  your  Committee  in  the  matter  of  valua- 
tion of  real   estate.     Some  companies  report  their  real 
estate  at  the  value  of  the  local  assessment;  some  at  the 
value  at  which  they  carry  it  upon  their  books ;  some  which 
have  buildings  which  are  theoretically  subject  to  deprecia- 
tion, have  charged  off  upon  their  books  an  arbitrary  sum 
each  year,  so  that  the  book  value  shows  a  very  large  loss, 
when  the  actual  value  may  have  appreciated.    A  notable 
instance  is  the  new  building  of  the  Girard  Trust  Company 
in  Philadelphia.    This  cost  millions  of  dollars,  and  yet  it 
has  all  been  charged  to  profit  and  loss,  and  is  in  a  way 
treated  by  the  company  as  advertising.     The  structure, 
however,  has  an  actual  value,  even  though  it  be  only  the 
capitalized  value  of  the  advertising  which  accrues  and 
should  be  included  in  any  valuation  of  its  assets.     Yet 
the  Auditor  General  for  lack  of  facilities  has  no  means  of 
investigating  all  these  innumerable  cases  and  is  forced 
to  rely  upon  the  face  of  the  reports  made  to  him  by  the 
corporations  themselves. 
There  are  now  only;  four  traveling  auditors,  whose  time 


203 

is  entirely  taken  up  with  investigating  appropriations  to 
charitable  institutions  and  the  accounts  of  county  officers 
reporting  to  the  Auditor  General.  This  force  should  be 
largely  increased. 

Another  Act  forming  part  of  the  policy  concentrating 
in  the  hands  of  the  Auditor  General  the  control  of  tax 
assessments  is  one  submitted  below  (see  page  209)  which 
puts  under  the  supervision  of  the  Auditor  General  the 
bringing  of  suit  for  the  personal  property  tax  and  giving 
a  right  to  assess  it  in  another  year  than  that  for  which 
it  is  payable.  The  circumstances  which  make  this  Act  ad- 
visable are  more  fully  explained  in  a  note  appended  to  the 
Act,  and  it  will  correct  what  has  been  a  very  grave  abuse 
in  many  cases  which  have  not  appeared  in  the  reports. 
It  was  testified  before  your  Committee  by  the  Chairman 
of  the  Board  of  Revision  of  Taxes  in  Philadelphia  that  at 
least  one  case  had  occurred  where  a  citizen  had  for  years 
made  a  false  return.  It  only  appeared  when  his  estate  was 
inventoried  at  his  death.  On  his  heirs  being  confronted 
with  the  false  statements  which  he  had  made  they  volun- 
tarily paid  hundreds  of  thousands  of  dollars  in  taxes  rather 
than  have  this  conduct  brought  to  light. 

Although  there  are  severe  penalties  for  the  taxable  who 
makes  a  false  return  and  for  the  assessor  who  connives 
at  it,  it  is  remarkable  that  there  has  never  been  a  prose- 
cution for  either  of  these  offenses.  There  can  be  no 
doubt  that  false  returns  are  made,  known  to  be  such  by 
the  assessor.  If  the  officials  would  prosecute  the  offen- 
ders a  substantial  increase  of  revenue  would  result,  and 
those  who  honestly  bear  the  burden  would  be  better 
satisfied.  In  all  of  the  discussions  before  your  Committee 
the  principal  objection  to  any  of  our  tax  laws  was  in- 
equality in  enforcement.  President  Hadley  is  quoted 
as  saying,  (and  it  expresses  a  great  deal  of  sound  tax 
economics)  : 

"A  tax  which  aims  to  be  equal,  but  is  ineffectual,  produces 
a  kind  of  inequality,  tending  to  increase  as  time  goes  on,  and 


204 

worse  than  all  other  kinds ;  but  a  tax  which  aims  to  be 
effective,  even  in  apparent  disregard  of  equality,  tends  by  a 
constant  process  of  economic  adjustment  to  be  more  and  more 
equal." 

Your  Committee  were  deeply  impressed  with  the  broad 
views  expressed  by  the  citizens  who  appeared  before 
them.  All  are  willing  to  bear  their  share  provided  others 
similarly  situated  do  likewise,  and  such  a  result  should 
be  the  earnest  effort  of  all  officials. 

Your  Committee  believes  that  the  centralization  of  the 
control  of  tax  assessments  is  the  principal  remedy  for  the 
evils  mentioned.  Philadelphia  and  Allegheny  counties 
have  a  step  in  the  right  direction  in  the  system  of  appoint- 
ment of  assessors  by  the  Board  of  Revision  of  the  County. 
This  exists  in  Philadelphia  by  virtue  of  special  Acts  of 
1865  and  1867  and  in  Allegheny  by  an  Act  of  1905.  After 
a  general  investigation  of  the  subject  and  conclusions  of 
Tax  Commissions  of  other  States,  your  Committee  agrees 
with  the  conclusion  of  the  Minnesota  Legislative  Refer- 
ence Department  in  its  Comparative  Digest  of  State  Legis- 
lation relating  to  Permanent  Tax  Commissions.  "The 
tendency  of  recent  legislation  is  apparently  toward  an 
increased  concentration  in  the  hands  of  the  State  Tax 
Commission  of  authority  over  local  tax  officers." 

Greater  intelligence,  experience  and  fairness  in  adminis- 
tration as  a  result  of  this  high-class  work  not  exposed  to 
local  influence  would  prevent  "tax  dodging"  and  unequal 
valuation.  The  work  should  be  centered  in  the  hands  of 
the  Auditor  General,  who  should  have  control  of  his  agents 
in  the  various  localities.  Owing  to  the  vast  nature  of  the 
questions  of  policy  involved  and  the  innumerable  details 
necessary  to  consider  in  adjusting  the  old  system  to  the 
new,  it  has  not  been  possible  for  your  Committee  to  present 
a  complete  scheme  for  that  purpose.  They  recommend, 
however,  most  earnestly,  that  authority  be  given  to  con- 
tinue their  labors  with  an  adequate  appropriation  for 
clerical  assistance  and  the  advice  of  counsel,  and  if  the 


205 

authority  be  given  they  propose  to  make  this  one  of  their 
principal  objects  during  the  two  years  until  the  next 
meeting  of  the  Legislature,  giving  it  with  this  added  as- 
sistance the  same  expenditure  of  time  which  they  have 
gladly  given  during  the  past  two  years.  At  the  same 
time  your  Committee  can  consider  the  other  matters  re- 
ferred to  at  various  places  in  this  report  which  they  have 
necessarily  left  unfinished  for  the  reasons  given. 

It  is  therefore  recommended  that  the  Joint  Resolution 
under  which  your  Committee  has  acted  be  again  adopted. 

It  has  been  suggested  to  your  Committee  that  the 
City  of  Philadelphia  furnishes  a  community  in  which  the 
system  of  State  supervision  of  tax  collection  might  well 
be  put  in  operation  as  a  test.  The  system  exists  there 
in  part  by  reason  of  the  fact  that  the  Board  of  Revision 
of  Taxes,  existing  under  special  Acts,  appoints  the  as- 
sessors, who  are  salaried  officers  who  should,  because  of 
the  method  of  selection,  be  of  a  grade  superior  to  the 
elected  assessors  throughout  the  State.  The  Board  of 
Revision  is  appointed  by  the  Judges  of  the  county.  If 
this  appointment  was  entrusted  to  the  Auditor-General, 
so  that  its  members  were  responsible  to  him,  and  he  could 
thus  have  their  hearty  co-operation  in  employing  the 
supervisory  powers  over  assessments  given  by  the  Act  of 
1905,  and  the  powers  of  investigation  and  employment 
of  assistants  given  him  by  other  statutes  suggested  here- 
with, the  proposed  system  would  be  in  full  force  and 
could  be  there  given  a  fair  trial.  Your  Committee  submits 
this  to  the  Legislature  for  its  consideration  in  case  it 
should  be  deemed  advisable  to  try  it,  but  makes  no  recom- 
mendation upon  the  subject.  In  case  the  trial  is  to  be 
made,  a  draft  of  an  Act  to  that  end  is  submitted  herewith 
(see  page  206). 


206 


AN  ACT  CREATING  IN  COUNTIES  CONTAINING  MORE  THAN  1,250,000 
INHABITANTS  A  BOARD  OF  REVISION  OF  TAXES  FOB  STATE  AND 
COUNTY  PURPOSES,  AND  PRESCRIBING  THE  POWERS  AND  DUTIES 
THEREOF. 

SECT.  1.  Be  it  enacted,  etc.,  That  in  counties  of  this  Common- 
wealth containing-  a  population  of  more  than  1,250,000  there  is 
hereby  created  a  Board  of  Revision  of  Taxes  consisting  of  three 
persons.  The  members  of  the  said  Board  shall  be  appointed  by 
the  Auditor  General,  and  not  more  than  two  members  of  the 
Board  shall  be  members  of  the  same  political  party.  Each  mem- 
ber shall  hold  office  for  the  term  of  three  years,  and  the  first 
members  of  the  Board  shall  be  appointed  for  the  terms  of  one, 
two  and  three  years  respectively.  The  member  whose  term 
first  expires  shall  be  Chairman  of  the  Board,  and  the  member 
whose  term  last  expires  shall  be  Secretary  of  the  Board.  A 
majority  of  the  Board  shall  constitute  a  quorum. 

The  salary  of  each  member  of  the  Board  shall  be  $6,000  per 
annum  payable  by  the  county. 

SECT.  2.  The  said  Board  of  Revision  of  Taxes  shall  make  all 
assessments  and  valuation  of  property,  both  real  and  personal, 
taxable  for  State  and  county  purposes.  They  shall  divide  the 
county  into  convenient  districts  not  exceeding  the  number  of 
townships,  or  wards  in  cities  which  they  may  rearrange 
from  time  to  time,  and  shall  appoint  for  each  district  two  as- 
sessors at  a  salary  of  $3,000  each  per  annum  to  be  paid  by  the 
county,  whom  they  may  remove  for  incompetency  or  neglect  of 
duty,  and  in  each  district  one  assessor  shall  be  appointed  from 
the  political  party  polling  the  majority  of  votes  in  the  county, 
and  the  other  shall  be  appointed  from  among  the  other  parties. 

SECT.  3.  The  said  Board  of  Revision  shall  issue  their  precept 
to  the  several  assessors  of  the  county  in  each  year,  requiring  the 
assessors  to  return  the  names  of  all  persons  in  their  respective 
districts,  and  all  property  taxable  by  law  for  State  or  county 
purposes,  together  with  a  just  valuation  of  the  same  in  the 
manner  prescribed  by  law,  for  the  triennial  assessment,  and 
they  shall  receive  the  returns  of  the  assessors. 

SECT.  4.  The  Board  shall  have  power  to  revise  and  equalize 
the  assessments,  by  raising  or  lowering  the  valuations,  either 
in  individual  cases,  or  by  townships,  cities,  boroughs,  or  other 
political  divisions  of  the  county,  to  rectify  all  errors,  to  make 
valuations  where  they  have  been  omitted,  and  to  require  the 
attendance  of  the  assessors,  or  other  citizens,  before  them  for 
examination,  on  oath  or  affirmation,  either  singly  or  together, 


207 

with  power  to  forfeit  the  pay  of  assessors  ratably  to  their  an- 
nual  compensation,  for  each  day's  absence,  when  their  attend- 
ance is  required,  and  the  said  Board  of  Revision  shall  hear  all 
the  appeals  and  applications  of  the  taxpayers,  subject  to  an 
appeal  from  their  decision  to  the  Court  of  Common  Pleas  of  the 
county,  whose  decision  shall  be  final,  and  if  the  appeal  to  the 
Court  shall  be  groundless,  the  appellant  shall  pay  all  the  costs 
of  Court;  the  County  Commissioners  shall  have  no  power  to 
correct  or  revise  the  taxes ;  the  Board  of  Revision  shall  hear 
the  taxpayers  of  the  respective  townships,  cities,  boroughs,  or- 
other  political  divisions  of  the  county  in  succession,  of  which 
notice  shall  be  given,  as  required  by  law,  and  the  said  Board 
of  Revision  shall,  alone  by  a  majority  of  them,  exercise  all  the 
powers  heretofore  vested  in  the  County  Board  of  Revision  in 
each  of  such  counties;  they  shall  meet  as  often  as  is  necessary 
to  despatch  the  business  which  their  duties  require  of  them, 
and  shall  hold  stated  meetings  on  the  first  Saturday  of  each 
month. 

SECT.  5.  The  said  Board  of  Revision  of  Taxes  shall  have  geri- 
eral  supervision  of  assessments  and  assessors  in  said  counties 
and  the  collection  of  taxes  therein,  and  the  correction  of  all 
valuation  and  return  therefor ;  and  they  shall  issue  the  pre- 
cepts to,  and  receive  the  returns  of,  the  assessors,  procure  the 
assessment  books,  and  cause  the  duplicates  to  be  made  out  and 
issued  to  the  officer  or  officers  charged  by  law  with  the  receipt 
of  taxes,  make  the  returns  required  by  law  to  the  State  Revenue 
Board  and  have  the  exclusive  custody  and  control  of  all  books 
relating  to  the  assessment  of  taxes,  and  keep  them  arranged  ac- 
cording to  townships,  cities,  boroughs,  or  other  political  sub- 
divisions of  the  county  and  dates ;  and  also  have  the  custody 
and  control  of  the  duplicates  of  surveys,  when  the  same  shall 
have  been  made  by  the  Department  of  Surveys  which  may  ex- 
ist in  said  counties;  they  may  issue  certificates  to  show  how 
property  has  been  assessed,  to  be  used  with  the  same  effect  as 
the  original  books  of  assessment,  as  evidence  in  relation  to  the 
title  of  property ;  they  shall  report  to  the  Councils  of  all  cities 
in  said  counties,  through  the  Mayor,  the  aggregate  of  the  as- 
sessments, on  or  before  the  first  day  of  November  in  each  year. 

SECT.  6.  It  shall  be  the  duty  of  the  Board  of  Revision  immedi- 
ately after  the  annual  assessment  in  each  year  to  classify  the 
real  estate  so  assessed  in  such  a  manner  and  upon  testimony 
adduced  before  them,  as  to  discriminate  between  the  rural  and 
built-up  portions  of  said  county,  and  they  are  hereby  required 
to  certify  to  the  Councils  of  all  said  cities  on  or  before  the 


208 

first  day  of  November  in  each  year,  the  valuation  of  the  built-up 
portions,  the  valuation  of  the  rural  or  suburban  property,  and 
the  valuation  of  lands  exclusively  used  for  agricultural  and 
farming  purposes  respectively. 

SECT.  7.  This  Act  shall  go  into  effect  the  first  Monday  of 
January,  1912. 

SECT.  8.  All  Acts  and  parts  of  Acts,  general,  local  and  special, 
inconsistent  with  or  supplied  by  the  provisions  of  this  Act  be, 
and  the  same  are  hereby  repealed. 


NOTE. 

The  Legislature  of  1901  attempted  to  alter  the  mode  of 
appointment  of  the  Board  of  Revision  of  Taxes  in  Philadel- 
phia by  making  them  elective  in  counties  co-extensive  with 
the  boundaries  of  cities  of  the  first  class.  This  was  held  un- 
constitutional. Blankenburg  vs.  Black,  200  Pa.  629.  But  coun- 
ties may  be  classified  by  population  for  purposes  of  providing 
governmental  machinery.  Lloyd  vs.  Smith,  176  Pa.  213.  It  was 
decided  in  the  case  of  Commonwealth  vs.  Collier,  213  Pa.  138, 
that  the  Act  of  1905,  P.  L.  47,  providing  a  special  Board  of  Re- 
vision of  Taxes  for  Allegheny  County  under  a  classification  of 
counties  between  three  hundred  thousand  and  one  million  was 
constitutional,  because  the  duties  of  the  Board  extended  to  State 
as  well  as  county  taxation,  and  the  members  were  not  county 
officers  within  the  meaning  of  Article  XIV,  Section  4,  of  the  Con- 
stitution, which  provides  "County  officers  shall  be  elected  at 
the  general  elections." 

In  this  proposed  Act  the  phraseology  of  previous  Acts  has  been 
substantially  retained. 


Tour  Committee  believes  that  a  State  conference  on 
taxation,  to  be  participated  in  by  public  officials  and  repre 
sentative  citizens  from  all  parts  of  the  State,  together  with 
your  Committee,  would  be  of  great  value.  It  would  be  an 
extension  of  the  public  hearings  already  held.  Your  Com- 
mittee, if  continued  in  its  duties,  proposes  to  call  such  a 
conference,  requesting  the  participation  of  the  Auditor 
General,  Attorney  General  and  Secretary  of  Internal  Af- 
fairs, the  Mayor  of  each  City,  a  representative  of  each 
Board  of  County  Commissioners  and  Board  of  Revision  of 
Taxes,  all  County  Controllers,  a  representative  of  each 


209 

Board  of  Trade  in  the  several  Cities  of  the  State,  a  repre- 
sentative of  each  University  or  College  in  the  State  having 
a  course  in  Economics  or  Finance,  and  others  specially  in- 
terested in  such  subjects. 

The  International  Tax  Association  holds  each  year  a 
conference  similar  to  the  one  held  this  year  at  Milwaukee 
and  attended  by  counsel  for  your  Committee.  The  next 
one  will  be  held  at  Richmond,  Va.,  September  5,  1911. 
\  our  Committee,  if  continued,  proposes  to  make  provision 
for  taking  part  in  this  conference  and  the  one  which  may 
be  expected  to  follow  in  1912. 

Uniformity  of  taxation  is  also  one  of  the  principal 
topics  of  investigation  by  the  National  Civic  Federation 
which  has  in  the  last  month  organized  a  Pennsylvania 
Council.  The  co-operation  of  this  Council  with  your  Com- 
mittee will  be  earnestly  desired. 


AN  ACT  AUTHORIZING  THE  AUDITOR  GENERAL  TO  EMPLOY  FIVE  CLERKS, 
AND    MAKING    AN    APPROPRIATION    THEREFOR. 

SECT.  1.  Be  it  enacted,  etc.,  that  the  Auditor  General  is  hereby 
authorized  and  directed  to  employ  five  clerks  to  be  known  as 
Tax  Clerks  at  an  annual  salary  of  Five  thousand  dollars  each, 
whose  duty  it  shall  be  to  do  such  work  in  connection  with  any 
and  all  matters  in  any  wise  pertaining  to  State  taxation  and 
such  other  work  of  his  office  as  the  Auditor  General  may  direct 
and  for  the  payment  of  the  salaries  of  the  said  tax  clerks,  two 
years,  the  sum  of  Fifty  thousand  dollars  is  hereby  appropriated 
to  be  paid  out  of  any  moneys  in  the  Treasury  not  otherwise 
appropriated. 


AN  ACT  TO  PROVIDE  FOR  THE  BETTER  COLLECTION  OF  MONEY  AND 
TAXES  DUE  THE  COMMONWEALTH  AND  PROPERTY  BELONGING  TO 
OR  LIABLE  TO  ESCHEAT  TO  THE  SAME. 

SECT.  1.  Be  it  enacted,  etc.,  That  the  Auditor  General  at  his 
discretion  shall  have  authority  to  cause  to  be  commenced  in 
the  name  of  the  Commonwealth  in  any  Court  of  the  Common- 
wealth having  jurisdiction  any  appropriate  suit  at  law  or  in 


210 

equity  for  any  money  or  taxes  due  the  Commonwealth,  or  prop- 
erty belonging-  to  or  liable  to  escheat  to  the  same,  and  a  remedy 
by  means  of  such  suit  is  hereby  provided  whether  it  be  now  au- 
thorized by  law  or  not.  and  any  action  at  law  or  in  equity,  both 
by  bill  in  the  nature  of  a  bill  of  discovery  in  equity  or  otherwise, 
which  may  be  necessary  for  the  ascertainment  of  the  fact  as  to 
whether  such  money,  taxes  or  property  exists  and  is  due  the 
Commonwealth,  whether  the  defendant  or  defendants  therein 
have  or  have  not  made  any  or  all  reports  thereof  required  by 
law. 

SECT.  2.  For  the  purpose  of  investigating-  the  books,  accounts, 
documents  or  papers  of  any  person  or  corporation  liable  by 
law  to  make  report  to  the  Auditor  General  for  the  purposes  of 
taxation  or  payment  of  bonus,  the  Auditor  General  may  employ 
from  time  to  time  one  or  more  expert  accountants  who  shall 
have  power  to  inspect  the  same  and  report  thereon,  and  shall 
receive  a  reasonable  compensation  to  be  fixed  by  the  Auditor 
General. 

SECT.  3.  For  the  purposes  of  prosecuting  the  actions  hereby 
authorized,  and  aiding  in  the  investigation  of  the  facts  con- 
nected therewith,  the  Auditor  General  may  from  time  to  time 
employ  one  or  more  counsel  learned  in  the  law  who  shall  re- 
ceive a  reasonable  compensation  to  be  fixed  by  the  Auditor 
General. 

SECT.  4.  If  any  person  or  corporation  shall  fail  to  comply 
with  any  summons  of  the  Auditor  General  for  the  attendance 
of  persons  or  for  the  production  of  books,  accounts,  documents 
or  papers,  or  shall  refuse  to  be  sworn  as  a  witness,  or  refuse 
to  testify  fully  as  such,  or  if  any  person  or  corporation  shall 
refuse  to  permit  any  person  designated  by  the  Auditor  General 
to  inspect  books,  accounts,  documents  or  papers  as  required  by 
law,  the  Auditor  General  may  apply  by  petition  in  the  name  of 
the  Commonwealth  to  the  Court  of  Common  Pleas  having 
jurisdiction,  and  the  Court  shall  make  such  order  on  reasonable 
notice  to  such  person  or  corporation  as  shall  compel  compliance 
with  the  law,  and  the  violation  of  such  order  shall  be  a  con- 
tempt of  such  Court  and  punishable  as  such.  The  remedy 
herein  provided  shall  be  in  addition  to  other  remedies  and 
penalties  provided  by  law. 


NOTE. 

The  existing  powers  of  the  Auditor  General  with  regard  to 
the  investigation  of  facts  and  the  employment  of  counsel  are 
as  follows: 


211 

Act  of  March  30,  1811,  5  Sin.,  228,  Stewart's  Dig.  3676,  (the 
fundamental  law  giving  the  Auditor  General  settlement  of  ac- 
counts, under  which  all  tax  accounts  are  settled)  which  pro- 
vides that  he  may  "compel  all  persons  in  the  receipt  or 
possession  of  public  moneys  to  render  to  him  their  accounts," 
and  for  that  purpose  he  may  force  the  attendance  of  wit- 
nesses and  administer  oaths  and  compel  the  exhibition  of  "all 
official  or  public  books,  accounts,  documents,  or  papers,  which 
have  any  relation  to  or  connection  with  any  public  account." 
He  may  also  proceed  by  commission  with  interrogatories. 

According  to  the  first  part  of  the  section  this  would  include 
"all  accounts  between  the  Commonwealth  and  any  person  or 
persons,  body  politic  or  corporate,  as  well  as  those  with  the 
officers  of  the  revenue,"  and  other  persons  receiving  public 
money. 

By  the  fourth  section  any  person  attending  and  refusing  to 
answer  may  be  committed  by  the  Auditor  General.  This  may 
not  be  valid  for  lack  of  judicial  power  in  the  Auditor  General. 

By  the  thirty-first  section,  in  order  to  secure  the  attendance 
of  witnesses  in  relation  to  any  public  account  already  fur- 
nished or  to  be  furnished,  the  Auditor  General  may  issue  a 
writ  to  the  sheriff  to  summon  the  persons,  and  upon  failure 
after  thirty  days  to  appear,  may  issue  a  writ  of  attachment 
commanding  the  sheriff  to  commit  the  person.  The  same  ob- 
jection applies  to  this. 

Section  thirty-two  provides  the  same  procedure  for  the  pro- 
duction of  books,  etc.,  and  there  is  a  penalty  on  the  sheriff 
and  jailer  for  failing  to  obey  the  Auditor  General's  writs. 

Commonwealth  vs.  Edgerton  Coal  Co.,  164  Pa.  284,  on  page 
303,  refers  to  these  powers  of  the  Auditor  General  as  very 
searching  without  any  particular  comment  on  the  validity  of 
the  provisions  or  otherwise. 

Act  of  April  26,  1855,  Section  14,  P.  L.  332,  Stewart's  Dig., 
389.  When  the  Auditor  General  shall  believe  "that  any  prop- 
erty shall  be  defeasibly  held  *  *  *  *  or  that  the  income 
of  any  corporation  or  Association  as  aforesaid  shall  exceed  the 
limit  allowed  by  law,"  he  may  call  for  a  return,  and  if  it  be 
not  made  he  may  file  a  bill  of  discovery.  This  is  the  Act  for- 
bidding the  holding  of  real  estate  by  foreign  corporations  and 
would  not  apply  to  other  cases  of  escheat. 

Counsel  to  aid  the  Auditor  General  in  the  performance  of  his 
duties  may  be  employed  under  the 

Act  of  April  17,  1861,  P.  L.  371,  Stewart's  Dig.,  3682,  author- 
izing the  Auditor  General  or  Attorney  General  to  employ  resi- 
dent attorneys  to  assist  at  the  trial  of  cases  and  prosecution 
of  claims,  for  a  "reasonable  compensation  as  the  circumstances 
would  justify,  or  as  may  have  been  agreed  upon"  and  shall  be 
allowed  by  the  Auditor  General. 

Act  of  April  7,  1870,  Section  1,  P.  L.  57,  Stewart's  Dig., 
3G85,  providing  that  where  a  debtor  to  the  Commonwealth  shall 
suffer  a  claim  to  be  unpaid  for  60  days,  he  shall  pay  a  com- 
mission of  5  per  cent,  to  counsel  or  attorney  of  the  Common- 
wealth, in  addition  to  other  penalties,  provided  that  no  more 
than  $7,000  be  paid  for  professional  services  in  any  year  and 
that  the  surplus  be  paid  into  the  State  Treasury. 

Act   of  April   28,    1840,   Section   23,  P.   L.   473,   Stewart's  Dig., 


212 

388,  authorising-  the  Auditor  General  to  take  all  such  legal 
measures  as  may  be  by  him  deemed  expedient,  to  recover  all 
moneys  due  to  the  Commonwealth  from  any  and  every  person  or 
persons  upon  settlement  of  their  accounts ;  and  for  this  purpose 
he  may  employ  "any  attorney  or  counsel  which  he  may 
deem  necessary,"  who  shall  receive  reasonable  and  just  com- 
pensation. 

This  provision  only  applies  after  the  settlement  of  accounts, 
and  it  does  not  permit  expressly  proceedings  to  get  informa- 
tion on  which  to  settle  accounts,  nor  does  the  Act  of  1861. 

Act  of  April  21,  1857,  Section  2,  P.  L.  266,  Stewart's  Dig., 
371,  requires  the  Auditor  General  and  State  Treasurer  to  place 
in  the  hands  of  the  Attorney  General  for  collection  debts 
due  the  Commonwealth  from  all  sources,  unpaid  for  ten  days, 
and  he  shall  proceed  by  suit  to  collect  the  same.  The  fifth 
section  makes  it  the  duty  of  the  Attorney  General  to  cause  to 
be  collected  by  law,  all  moneys  appearing  by  the  records  of 
the  Auditor  General  and  State  Treasurer. 

By  the  Act  of  July  15,  1897,  Section  2;  P.  L.  291,  the  Auditor 
General  may  employ  expert  accountants  "to  examine  the  ac- 
counts of  county  officers  and  all  institutions  receiving  State 
aid  in  whole  or  in  part,"  the  compensation  and  expenses  to  be 
fixed  by  the  Auditor  General.  He  has  no  authority  to  appoint 
expert  accountants  for  any  purpose  beyond  this. 

The  Act  of  April  17,  1905,  Section  1  (P.  L.,  186),  gave  the  Audi- 
tor General  exclusive  power  in  the  making  of  returns  of  per- 
sonal property  tax  where  no  return  was  made  by  the  taxable,  or 
where  the  assessors  or  Board  of  Eevision  or  County  Commis- 
sioners made  what  he  considered  to  be  an  improper  return. 
The  work  was  so  vast,  however,  that  it  required  an  additional 
force  of  clerks  and  appropriation  which  were  not  then  given 
and  have  not  since  been  given,  and  the  Act  has  therefore  been  a 
dead  letter.  This  has  been  elsewhere  referred  to. 


AN   ACT  TO  PROVIDE  FOR  THE  ASSESSMENT   AND   COLLECTION   OF  TAXES 
ON    PERSONAL    PROPERTY. 

SECT.  1.  Be  it  enacted,  etc.,  That  all  taxes  on  personal  property 
for  the  year  1911  and  every  year  thereafter  may  be  recovered 
by  the  Commonwealth  by  an  action  of  assumpsit  in  any  Court 
having  jurisdiction,  in  addition  to  any  other  manner  provided 
by  law\ 

SECT.  2.  Such  actions  shall  be  condiicted  under  the  direction 
of  the  Auditor  General,  and  for  that  purpose  he  may  employ  one 
or  more  counsel  at  a  reasonable  compensation  to  be  fixed  by  him. 

SECT.  3.  In  all  cases  where  no  assessment  for  personal  prop- 
erty tax  shall  have  been  made  against  a  person  or  persons,  cor- 
poration, limited  partnership  or  joint  stock  association,  liable 
therefor  for  any  year,  and  in  all  cases  where  any  false  return 


218 

or  returns  of  such  taxes  shall  have  been  made  by  any  persons  or 
persons,  corporation,  limited  partnership  or  joint  stock  associa- 
tion liable  therefor,  and  no  revision  of  such  return  shall  have 
been  made  by  any  officer  charged  by  law  with  such  revision, 
the  Auditor  General  may  at  any  time  within  twenty-one  years 
thereafter,  make  a  return  or  revised  and  corrected  estimated 
return  thereof  and  proceed  to  the  collection  of  the  taxes  as 
required  by  law. 


NOTE. 

This  is  designed  to  meet  such  glaring  cases  as  those  of 
which  one  came  to  light  in  the  case  of  Schmuck  vs.  Hart- 
man,  222  Pa.  190.  In  that  case  a  taxable  for  the  years  from 
1876  to  1884  made  no  return  of  personal  property  for  taxation 
and  from  1885  to  1907  returned  amounts  increasing  from  $4,080 
to  $6,000.  At  his  death,  by  reason  of  the  information  disclosed 
by  the  inventory  of  his  estate,  the  County  Commissioners  assessed 
taxes  against  him  upon  money  at  interest  on  mortgage  in  the 
State  of  Ohio,  increasing  from  $30,000  in  1876  to  $727,020  in 
1907.  The  Court  held  that  there  was  no  authority  of  law  to 
make  an  assessment  for  personal  property  tax  in  any  year  ex- 
cept that  in  which  the  liability  arose,  and  that  as  liability  to 
pay  taxes  does  not  arise  from  a  contractual  obligation  there 
could  be  no  action  at  law  for  them  unless  specially  allowed. 
This  reaffirmed  the  decision  in  Williamson's  Estate,  153  Pa.  508, 
where  a  taxable  made  no  return  and  was  assessed  a  tax  and 
penalty  upon  $67,500.  The  inventory  of  his  estate  at  his  death 
showed  $2,500,000. 

Obeying  the  principle  of  law  that  there  should  be  an  end  to 
litigation,  however,  it  is  provided  that  where  the  taxing  officers 
do  make  a  revision  of  the  return — presumably  after  investiga- 
tion— the  matter  shall  not  be  again  reopened.  The  remedy  in 
such  cases  lies  only  with  the  fidelity  of  the  taxing  officers. 


214 


AUDITOR  GENERAL'S  DEPARTMENT 

In  investigating  the  work  of  the  Auditor  General's  De- 
partment in  the  collection  of  taxes  your  Committee  finds 
that  it  is  hampered  both  by  insufficient  equipment  for  the 
work  entrusted  to  it  (as  hereinbefore  pointed  out)  and  by 
inconveniences  and  abuses  which  have  arisen  through 
the  attempt  to  apply  old  methods  to  new  circumstances. 
The  fundamental  Act  governing  tax  settlements  and  ap- 
peals is  still  the  Act  of  1811.  Under  it  appeals  to  the 
courts  may  be  made  without  many  of  the  safeguards  sur- 
rounding other  litigation,  and  they  are  made  with  the 
greatest  freedom.  No  affidavit  is  required  (as  is  universal 
in  other  branches  of  legal  procedure,  even  in  the  smallest 
cases)  that  the  appeal  is  not  intended  for  delay.  A  graver 
matter  is  that  the  reports  to  the  Auditor  General  are  not 
required  to  state  details  but  only  conclusions,  and  a  lump- 
ing figure  in  the  report  may  conceal  a  claim  for  exemption 
from  taxation  which  is  not  known  to  and  not  passed  upon 
by  the  tax  officials.  Upon  appeal  the  proceedings  are  de 
novo  with  the  burden  on  the  corporation  or  other  appellant, 
and  new  questions  are  and  may  be  raised  which  no  op- 
portunity was  given  to  the  Auditor  General  to  consider. 
Freedom  of  appeal  to  our  courts  should  be  coupled  with 
fairness  and  expedition,  and  the  appeal  should  be  a  genuine 
reconsideration  of  the  Auditor  General's  conclusion,  and 
not  itself  an  original  proceeding  as  to  the  matters  at  issue. 
With  proper  information  before  him  that  officer  can  arrive 
at  the  proper  result  and  the  collection  of  taxes  be 
facilitated.  Drafts  of  Acts  to  these  ends  are  submitted 
herewith  (see  page  216). 

Corporate  bonds  held  by  non-residents  are  not  subject  to 
taxation  in  Pennsylvania.  In  the  case  of  negotiable  bonds 
which  are  somewhat  difficult  at  times  to  trace  it  is  an 
easy  matter  for  the  corporation  treasurer  to  include  only 
those  which  he  is  quite  certain  without  too  much  effort 


216 

are  held  by  residents,  crediting  them  to  non-residents  when 
their  whereabouts  are  not  absolutely  known.  Nevertheless, 
the  burden  is  on  him  under  the  law  to  make  adequate  ef- 
forts to  ascertain  the  whereabouts  of  all  bonds,  and  in 
order  to  enable  the  Auditor  General  to  judge  of  the 
adequacy  of  those  efforts  he  should  be  required  to  give 
them  in  detail.  A  draft  of  an  Act  to  compel  this  is  sub- 
mitted herewith  (see  page  217). 

It  appears  that  an  existing  law  requires  certain  officials 
having  the  distribution  of  funds  derived  from  the  sale  of 
corporate  property  to  make  certain  that  its  State  taxes 
are  paid  by  receiving  a  certificate  that  the  Auditor  General 
has  had  notice  thereof.  This  law  is  not  generally  observed 
for  lack  of  a  penalty  on  non-compliance,  and  because  no 
question  of  title  is  involved.  A  compulsion  of  such  com- 
pliance would  result  from  the  imposing  of  personal 
liability  on  such  non-judicial  officials  as  are  charged  with 
this  duty,  and  a  draft  of  an  Act  for  this  purpose  is  sub- 
mitted herewith  (see  page  217). 

A  relatively  small  matter,  yet  one  causing  a  good  deal 
of  difficulty  to  small  corporation  taxpayers  who  try  to 
report  their  taxes  without  the  aid  of  a  lawyer  (as  they 
should  be  able  to  do),  is  the  awkward  wording  of  the  Act 
of  1885  with  regard  to  corporation  loan  taxes.  The  Act 
directs  the  Treasurer  to  deduct  a  tax  of  three  (changed  to 
four)  mills  "on  every  dollar  of  the  interest  paid.'*  But 
it  has  been  decided  that  the  tax  referred  to  is  the  tax  of 
four  mills  annually  on  each  dollar  of  the  principal  of 
the  bond,  and  that  the  sum  so  calculated  should  be  de- 
ducted from  the  interest  (Delaware  Division  Canal  Co. 
vs.  Com.,  123  Pa.,  594 ;  Com.  vs.  Wilkes  Barre,  8,  Scranton 
Ry.  Co.,  162  Pa.,  614),  and  not,  as  the  language  literally 
means,  four  mills  on  each  dollar  of  the  interest,  the  word 
* '  of  "  being  properly  read  *  *  off . ' '  The  blanks  used  by  the 
Auditor  General  print  the  Act  only.  They  should  also  con- 
tain the  explanation  and  thus  avoid  misunderstanding. 


216 


AN     ACT     BEGULATING     APPEALS     FROM     TAX     SETTLEMENTS     OF     THE 
FISCAL    OFFICERS    OF    THE    COMMONWEALTH. 

SECT.  1.  Be  it  enacted,  etc.,  In  every  appeal  from  a  tax  set- 
tlement of  the  fiscal  officers  of  the  Commonwealth  an  affidavit 
of  the  parties  appellant,  or  some  one  of  them,  or  one  of  their  chief 
officers  or  of  their  agent  or  attorney,  shall  be  filed  that  said 
appeal  is  not  taken  for  the  purpose  of  delay,  but  because  ap- 
pellants believe  they  have  suffered  injustice  by  the  settlement 
from  which  they  appeal.  Said  affidavit  may  be  made  before  any- 
one authorized  to  administer  oaths. 

SECT.  2.  On  any  appeal  from  a  tax  settlement  of  the  fiscal 
officers  of  the  Commonwealth  no  matter  shall  be  subject  to 
review  or  correction  that  was  not  brought  to  the  attention  of 
said  officers  in  the  reports  or  affidavits  relating-  thereto,  filed 
with  said  fiscal  officers  by  said  parties  appellant. 


AN  ACT  REGULATING  REPORTS  FOR  THE  PURPOSES  OF  TAXATION  BY 
CORPORATIONS,  JOINT  STOCK  ASSOCIATIONS  AND  LIMITED  PART- 
NERSHIPS, ANY  PART  OF  THE  CAPITAL  STOCK  OR  INDEBTEDNESS 
OF  WHICH  IS  NOT  TAXABLE  UNDER  THE  LAWS  OF  THIS  COM- 
MONWEALTH. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  it  shall  be  the 
duty  of  the  President,  Chairman  or  Treasurer  of  any  corpo- 
ration, joint  stock  association  or  limited  partnership  required 
by  law  to  make  a  report  in  writing-  to  the  Auditor  General,  and 
any  part  of  the  capital  stock  or  indebtedness  of  which  is  not 
taxable  under  the  laws  of  this  Commonwealth,  to  add  to  said 
reports  statements,  under  oath,  setting  forth  in  full  the  data 
on  which  exemptions  from  taxation  under  the  laws  of  this 
Commonwealth  are  claimed,  and  otherwise  to  state  specifically, 
under  oath,  all  information  necessary  to  determine  the  amount 
of  exemption  to  which  such  corporation,  joint  stock  associ- 
ation and  limited  partnership  is  entitled,  and,  in  the  case  of 
companies  operating  partly  in  other  States,  and  taxed  on  a 
mileage  basis,  to  so  state  specifically  the  total  mileage  of 
said  companies,  as  well  as  the  mileage  wholly  within  Pennsyl- 
vania, in  order  that  the  tax  may  be  prorated  according  to  such 
mileage. 

SECT.  2.  No  report  of  any  such  corporation,  joint  stock 
association  or  limited  partnership  not  containing  such  infor- 
mation as  is  herein  provided  shall  be  received  or  filed  by  the 
Auditor  General. 


217 


AN  ACT  BEGULATING  REPORTS  FOR  THE  PURPOSES  OF  TAXATION  BY 
CORPORATIONS,  ANY  OF  THE  SCRIP,  BONDS,  CERTIFICATES  OR  OTHER 
EVIDENCES  OF  INDEBTEDNESS  OF  WHICH  ARE  HELD  BY  RESIDENTS 

OF  THIS  COMMONWEALTH. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  it  shall  be  the 
duty  of  each  Treasurer  of  any  corporation  required  by  law  to 
make  a  return  for  tax  on  loans  to  the  Auditor  General  of  this 
Commonwealth,  to  report  on  oath  specifically  and  in  detail  the 
facts  showing  the  kind  and  degree  of  his  efforts  to  ascertain 
the  residence  of  the  holders  of  the  scrip,  bonds,  certificates  or 
other  evidences  of  indebtedness  issued  by  said  corporation  in 
order  that  it  may  affirmatively  appear  in  his  return  that  he 
has  used  the  utmost  diligence  to .  ascertain  said  residence,  and 
that  the  manner  in  which  he  has  discharged  the  duty  imposed 
by  law  to  ascertain  the  amout  of  the  indebtedness  of  such 
corporation  owned  by  residents  of  this  Commonwealth  shall 
affirmatively  appear  in  his  return. 

SECT.  2.  No  report  of  any  such  corporation  not  containing 
such  information  as  is  herein  provided  shall  be  received  or  filed 
t>v  the  Auditor  General. 


AN  ACT  TO  AMEND  AN  ACT  ENTITLED  "AN  ACT  TO  AID  THE  AUDITOR 
GENERAL  IN  THE  COLLECTION  OF  TAXES  DUE  THE  COMMON- 
WEALTH FROM  CORPORATIONS,  LIMITED  PARTNERSHIPS,  AND  JOINT 
STOCK  ASSOCIATIONS,"  APPROVED  MAY  25,  1907. 

SECT.  1.  Be  it  enacted,  e,tc.,  That  Section  3  of  an  Act  entitled 
"An  Act  to  aid  the  Auditor  General  in  the  collection  of  taxes 
due  the  Commonwealth  from  corporations,  limited  partnerships, 
and  joint  stock  associations,"  approved  May  25,  1907,  which 
reads  as  follows : 

"SECT.  3.  No  distribution  of  the  proceeds  arising  from  the 
sale  of  property  of  a  corporation,  limited  partnership,  or  joint 
stock  association,  by  a  trustee,  assignee,  receiver,  master  or 
other  official,  shall  be  approved  or  authorized  by  the  Court  hav- 
ing  jurisdiction  unless  there  be  filed  therein  a  certificate  from 
the  Auditor  General,  under  his  hand  and  the  seal  of  the  De- 
partment, showing  that  notice  of  such  sale  was  filed  with  him 
in  accordance  with  the  provisions  of  this  Act,"  be,  and  the  same 
is  hereby  amended  to  read  as  follows : 


218 

SECT.  3.  No  distribution  of  the  proceeds  arising  from  the  sale 
of  property  of  a  corporation,  limited  partnership,  or  joint  stock 
association,  by  a  trustee,  assignee,  receiver,  master  or  other 
official,  shall  be  approved  or  authorized  by  the  Court  having 
jurisdiction  unless  there  be  filed  therein  a  certificate  from  the 
Auditor  General,  under  his  hand  and  the  seal  of  the  Department, 
showing  that  notice  of  such  sale  was  filed  with  him  in  accordance 
with  the  provisions  of  this  Act,  and  in  case  distribution  is  made 
without  the  filing  of  such  certificate  the  trustee,  assignee,  re- 
ceiver or  other  non-judicial  officer  shall  be  personally  liable  to 
the  Commonwealth  for  the  sums  due  to  it. 


UNIFORMITY  OF  REPORTS. 

Complaints  were  made  to  your  Committee  with  regard  to 
the  variation  in  the  reckoning  of  the  year,  or  division 
thereof,  for  which  reports  for  purposes  of  taxation  are 
required  to  be  made  to  the  Auditor  General  by  various 
corporations  and  others.  An  outline  of  the  existing  law 
and  the  contrariety  of  provision  on  the  subject  will  be 
found  in  a  note  to  the  Act  submitted  with  this  report  (see 
page  219).  The  Auditor  General's  office  has  strongly 
recommended  that  all  such  reports  be  made  for  the  same 
year.  The  calendar  year  recommends  itself  to  your  Com- 
mittee as  the  most  convenient  natural  division.  It  is  the 
year  provided  by  the  Federal  Corporation  Tax  Law,  and 
it  was  testified  before  your  Committee  that  the  Interstate 
Commerce  Commission,  whose  year  now  ends  June  30,  is 
likely  to  change  its  year  to  conform  with  the  Federal  tax 
year.  The  convenience  and  accuracy  of  such  uniformity  is 
so  obvious  that  your  Committee  has  no  hesitation  in  fol- 
lowing the  suggestion  and  in  recommending  the  enact- 
ment of  the  law  to  secure  this  end,  of  which  a  draft  is 
submitted  herewith  (see  page  219). 

Of  course,  the  alteration  of  the  time  of  making  report 
will  result  in  the  payment  of  all  State  taxes  at  the  same 
time,  and  this  will  doubtless  be  a  great  convenience  to  the 
taxpayers  and  those  having  to  deal  with  the  Auditor  Gen- 
eral's Department. 


219 


AN    ACT    REGULATING    THE    MAKING    OF    CERTAIN    REPORTS    AND    STATE- 
MENTS   TO    THE    AUDITOR    GENERAL    FOR    PURPOSES    OF    STATE 

TAXATION. 

SECT.  1.  Be  it  enacted,  etc.,  That  all  reports  and  statements 
required  to  be  made  by  law  to  the  Auditor  General  for  purposes 
of  State  taxation  by  any  person,  persons,  corporation,  limited 
partnership  or  joint  stock  associations,  shall  be  made  in  the 
month  of  January  of  each  year,  and  shall  cover  the  next  pre- 
ceding calendar  year,  and  payment  of  all  such  taxes  shall  be 
made  in  the  month  of  February  then  following- :  Provided,  That 
the  time  of  making  such  reports  and  statements  by  public  offi- 
cers shall  remain  as  now  provided  by  law. 


NOTE. 

The  variety  of  the  times  at  which  reports  are  now  required 
is  shown  by  the  following: 

Premiums  of  insurance  companies — Semi-annually  on  the  first 
days  of  July  and  January.  Act  of  June  28,  1895,  P.  L.  408. 

Stock  of  trust  companies — Annually  on  or  before  June  20. 
Act  of  June  13,  1907,  P.  L.  640. 

Gross  receipts  of  transportation  and  other  companies — 
Semi-annually  before  July  31  and  January  31.  Act  of  June  1, 
1889,  P.  L.  420,  Sec.  23. 

Bank  stock — Annually  on  or  before  June  20.  Act  of  July 
15,  1897,  P.  L.  292.  If  "lO  mills  on  the  par  value  of  the  stock 
be  paid  before  March  1,  certain  exemptions  from  taxation  are 
secured.  This  will  not  be  altered  by  the  present  act. 

Capital  stock — Annually  in  the  month  of  November  for  the 
calendar  year.  Act  of  June  8,  1891,  P.  L.  229. 

Corporate  loans — Annually  on  the  first  Monday  of  November 
for  the  calendar  year.  Acts  of  June  30,  1885,  P.  L.  193,  and 
June  8,  1891,  P.  L.  229. 

Net  earnings  of  certain  corporations  (applicable  only  to  cor- 
porations without  capital  stock) — Annually  on  first  Monday 
of  November.  Act  of  June  1,  1889,  P.  L.  420. 

Matured  stock  of  building  associations — The  law  is  indefi- 
nite, and  they  are  therefore  made  for  the  calendar  year  as  soon 
after  its  close  as  convenient.  Act  of  June  22,  1897,  P.  L.  178. 

Gross  receipts  of  private  bankers — Annually  on  the  first 
Monday  of  December,  for  year  ending  November  30.  Act  of 
June  27,  1895,  P.  L.  396. 

Notaries  Public — Annually  on  or  before  December  31.  Act 
of  May  20,  1865,  P.  L.  846. 

Orders  for  wages — Annually  on  the  first  day  of  November. 
Act  of  June  24,  1901,  P.  L.  596.  Sec.  1. 

The  times  of  payment  directed  by  these  Acts  vary  consider- 
aby  with  relation  to  the  time  of  report.  But  the  practice  is 
common  to  await  a  settlement  by  the  Auditor  General  and  State 


220 

Treasurer,  and  notice  thereof,  as  interest  does  not  begin  to  run 
until  that  time.     This  will  doubtless  continue  to  be  done. 

The  proviso  excepts  the  returns  of  public  officers.  The  princi- 
pal retiirn  is  that  of  municipal  loans,  and  these  are  now 
requird  to  be  made  for  the  calendar  year.  The  numerous 
other  requirements  for  the  return  of  petty  taxes  and  license 
fees  are  too  many  and  complicated  to  be  changed  by  a  general 
Act  and  they  are  therefore  left  untouched. 


ESCHEATS. 

Existing  legislation  in  regard  to  escheats  is  only  efficient 
after  full  information  is  given  to  the  Auditor  General. 
There  is  a  large  class  of  property,  however,  which  is  not 
reached  and  yet  is  particularly  liable  to  escheat  by  reason 
of  being  overlooked  by  those  settling  estates.  This  is 
moneys  deposited  in  bank,  securities  in  safe  deposit  vaults 
and  corporate  stock  and  bonds.  If  this  has  no  known 
owner — which  is  presumed  from  its  lying  unclaimed  for 
a  sufficient  length  of  time — the  benefit  of  it  should  go  to 
the  State  and  not  to  the  institution  into  whose  lap  it  thus 
falls  by  reason  of  the  ineffectiveness  of  present  laws.  At 
the  same  time  abundant  opportunity  and  time  should  be 
offered  to  the  real  owner  to  reclaim  it  from  the  State  if 
he  appears.  There  are  existing  laws  providing  for  the 
report  to  the  State  officials  and  the  payment  into  the  State 
Treasury  of  unclaimed  bank  deposits,  but  owing  to  the 
fact  that  there  is  no  adequate  penalty,  the  law  is  not  fully 
observed.  In  the  year  1909,  for  example,  only  $1,562.40, 
in  1908,  $1,625.55  and  in  1907,  $2,583.97  was  paid  into  the 
State  Treasury  by  Savings  Institutions,  under  the  Act  of 
1872,  with  regard  to  unclaimed  deposits.  There  must  be 
much  more  than  this. 

Accordingly  your  Committee  recommends  the  enact- 
ment of  a  bill,  of  which  a  draft  is  submitted  herewith 
(see  page  221). 

An  amendment  is  needed  to  the  General  Escheat  A  (ft  of 
1889  to  meet  the  defect  pointed  out  in  Bousquet's  Estate, 


221 

206  Pa.  534,  which  strictly  construed  the  description  of 
an  owner  of  property  who  has  "been  unknown  for  a  period 
of  seven  years."  The  owner  had  been  missing  for  many 
years,  and  the  Court  said  that  the  owner  of  the  fund  had 
never  been  unknown.  It  was  his  present  whereabouts  that 
were  unknown.  Such  an  amendment  is  accordingly  sub- 
mitted herewith  (see  page  225). 


AN  ACT  PROVIDING  FOR  THE  REPORT  TO  THE  AUDITOR  GENERAL  AND 
ESCHEAT  TO  THE  COMMONWEALTH  UNDER  CERTAIN  CONDITIONS 
OF  DEPOSITS  OF  MONEY;  DEPOSITS  OF  MONEY.  STOCKS,  BONDS, 
NOTES,  PAPERS  AND  OTHER  SECURITIES  AND  ALL  OTHER  VALUABLES 
OF  THE  SAME  OR  ANY  OTHER  KIND  FOE  SAFE  KEEPING;  AND 
STOCKS  AND  DIVIDENDS,  AND  THE  PRINCIPAL  AND  INTEREST  OF 
BONDS,  NOTES,  CERTIFICATES  AND  OF  ALL  AND  ANY  OTHER  KINDS 
OF  INDEBTEDNESS  OF  CORPORATIONS,  LIMITED  PARTNERSHIPS  AND 
PARTNERSHIP  ASSOCIATIONS/  AND  PROVIDING  FOR  THE  ENFORCE- 
MENT OF  THE  SAME. 

SECT.  1.  Be  it  enacted,  etc.,  That  every  bank,  savings  institu- 
tion, trust  company,  safe  deposit  company  and  every  person,  firm 
and  corporation  receiving  deposits  of  money,  shall  in  the  month 
of  January  in  every  year  hereafter  file  with  the  Auditor  General 
a  report  under  oath  of  air  deposits  of  money  with  the  interest 
and  profits  accrued  thereon  which  have  not  been  increased  or 
diminished  or  credited  with  interest  in  the  pass  book  at  the 
request  of  the  depositor  within  seven  years  last  preceding  such 
report.  Such  report  shall  show  the  amount  of  such  deposit  of 
money,  and  the  name  and  address  of  the  depositor. 

SECT.  2.  Every  person,  firm  and  corporation  in  this  Common- 
wealth receiving  deposits  of  money,  stocks,  bonds,  notes  pa- 
pers and  other  securities  or  other  valuables  of  the  same  or 
any  other  kind  for  safe  keeping,  shall  in  the  month  of  January 
in  every  year  hereafter  file  with  the  Auditor  General  a  report 
under  oath  of  all  such  deposits  to  which  access  has  not  been 
actually  had  by  the  owner  or  owners  thereof  within  seven  years 
last  preceding  such  report.  Sucn  report  shall  give  the  names 
and  addresses  of  the  depositors,  and  the  nature  and  amount  of 
the  deposit,  if  known.  , 

SECT.  3.  Every  corporation,  limited  partnership  and  partner- 
ship association  organized  under  the  laws  of  this  Commonwealth 


222 

shall  in  the  month  of  January  in  every  year  hereafter  file  with 
the  Auditor  General  a  report,  under  the  oath  of  one  of  its 
executive  officers  having  personal  knowledge  thereof,  of  the 
names  and  addresses  of  all  stockholders  to  whom  a  dividend  or 
dividends  shall  have  been  declared  and  who  have  not  claimed  the 
same  for  seven  years  next  preceding,  together  with  the  amount 
of  such  dividend  and  the  kind  and  number  of  shares  on  which 
the  same  shall  have  been  declared ;  and  also  the  names  and 
addresses  of  all  holders  of  bonds,  notes,  certificates  and  of  all 
and  any  other  kinds  of  indebtedness  of  said  corporations,  lim- 
ited partnerships  and  partnership  associations  who  shall  not 
have  claimed  for  seven  years  next  preceding  the  principal  or 
interest  due  on  the  same,  together  with  the  amount  of  such  in- 
terest and  of  the  principal  of  such  bonds,  notes,  certificates 
and  other  kinds  of  indebtedness.  Should  the  names  and  address- 
es of  said  stockholders,  holders  of  such  bonds,  notes,  certificates 
and  other  kinds  of  indebtedness  be  unknown  to  the  executive 
officers  of  any  such  corporation,  limited  partnership  or  partner- 
ship association  a  report  shall  nevertheless  be  filed  as  hereinbe- 
fore provided  setting  forth  the  amount  and  nature  thereof  and 
all  other  information  in  the  possession  of  such  corporation,  lim- 
ited partnership  or  partnership  association,  concerning  said 
stocks,  bonds,  notes,  certificates  and  other  kinds  of  indebtedness. 

SECT.  4.  Such  reports  shall  be  preserved  by  the  Auditor  General 
in  his  office  for  public  inspection,  and  he  shall  keep  for  public 
inspection  an  index  of  the  names  of  all  persons  so  reported  to 
him,  the  amount  and  nature  of  the  property  involved,  and  the 
person  or  corporation  reporting  it. 

SECT.  5.  When  any  sucn  deposit  of  money  or  unclaimed  divi- 
dend or  interest  or  principal  of  any  bonds,  notes,  certificates 
and  all  or  any  other  kinds  of  indebtedness  of  such  corporations, 
limited  partnerships  and  partnership  associations  shall  have 
been  so  reported  to  the  Auditor  General  for  seven  successive 
years,  it  shall,  upon  demand  by  him,  be  paid  to  the  State  Treas- 
urer for  the  use  of  the  State  together  with  the  interest  and 
profits  accrued  thereon  by  the  person,  firm  or  corporation 
making  such  report ;  and  a  report  of  such  payment  shall  be  made 
to  the  Auditor  General  and  be  entered  by  him  in  said  index. 

SECT.  6.  At  any  time  within  twenty-one  years  after  such  pay- 
ment of  a  deposit  of  money,  dividend,  or  interest  or  principal 
of  any  such  bonds,  notes,  certificates,  or  other  kinds  of  in- 
debtedness of  such  corporations,  limited  partnerships  and  part- 
nership associations  to  the  State  Treasurer,  the  persons  who 


223 

would  have  been  the  lawful  owners  of  such  deposit,  dividend, 
or  interest  or  principal  of  any  such  bonds,  notes,  certificates  or 
other  kinds  of  indebtedness,  had  it  not  been  so  paid,  or  their 
legal  representatives,  shall  receive  the  same  out  of  the  State 
Treasury  out  of  moneys  otherwise  unappropriated,  upon  the 
warrant  of  the  Auditor  General  on  the  State  Treasurer,  upon 
the  production  to  the  Auditor  General  of  satisfactory  proof  of 
such  ownership. 

SECT.  7.  When  any  such  unclaimed  stocks  of  said  corpora- 
tions, limited  partnerships  and  partnership  associations  or 
any  such  deposit  of  money,  stocks,  bonds,  notes,  papers,  other 
securities  or  other  valuables  of  the  same  or  any  other  kind  for 
safe  keeping,  shall  have  been  so  reported  to  the  Auditor  Gen- 
eral for  seven  successive  years,  the  Auditor  General  shall  there* 
upon  appoint  an  escheator  to  conduct  proceedings  for  the 
escheat  of  the  same  in  the  manner  provided  by  law. 

SECT.  8.  No  fee  shall  be  paid  to  any  informant  for  informa- 
tion leading  to  the  escheat  of  any  property  which  shall  have 
been  theretofore  reported  at  any  time  under  this  Act. 

SECT.  9.  The  failure  to  make  any  report  required  by  this  Act 
shall  subject  the  person,  firm,  corporation,  limited  partnership 
or  partnership  association  so  failing  to  a  penalty  of  fifty  dol- 
lars a  day,  for  each  day  such  failure  continues,  to  be  recov- 
ered by  the  Commonwealth.  The  failure  to  pay  to  the  State 
Treasurer  any  such  deposit  of  money  or  dividend  or  interest 
or  principal  of  any  bond,  note,  certificate,  or  all  or  any  other 
kind  of  indebtedness  of  such  corporation,  limited  partnership  or 
partnership  association  upon  demand  shall  render  the  person, 
firm,  corporation,  limited  partnership  or  partnership  associa- 
tion so  refusing  liable  to  an  action  by  the  Commonwealth  to 
recover  such  deposit  with  interest  at  12  per  centum  per  annum. 

SECT.  10.  Nothing  in  this  Act  shall  be  construed  to  prevent 
the  escheat  of  property  to  the  Commonwealth  in  the  way  other- 
wise provided  by  law  for  lack  of  next  of  kin  or  a  known  owner. 

SECT.  11.  All  the  Acts  or  parts  of  Acts  inconsistent  with  the 
provisions  of  this  Act  be,  and  the  same  are  hereby  repealed. 

SECT.  12.  The  following  Acts  and  parts  of  Acts  be,  and  the 
same  are  hereby  repealed. 

An  Act  entitled  "An  Act  requiring  banks  and  other  corpo- 
rations to  give  notice  of  unclaimed  dividends,  deposits  and  bal- 
ances in  certain  cases."  Approved  March  6,  1847.  (Pamphlet 
Laws  222.) 


224 

Section  52  of  an  Act  entitled  "An  Act  regulating  banks." 
Approved  April  16,  1850.  (Pamphlet  Laws  477.) 

Sections  2  and  3  of  an  Act  entitled  "An  Act  relating  to  un- 
claimed deposits  in  savings  banks,  and  transfer  of  stock/' 
Approved  April  17,  1872.  (Pamphlet  Laws  62.) 

An  Act  entitled  "An  Act  relating  to  the  return  of  moneys 
escheated  to  the  Commonwealth."  Approved  June  4,  1885. 
(Pamphlet  Laws  73.) 

An  Act  entitled  "An  Act  to  amend  the  first  section  of  an  act, 
entitled  'An  Act  relating  to  the  return  of  moneys  escheated  to 
the  Commonwealth,'  approved  the  fourth  day  of  June,  Anno 
Domini  one  thousand  eight  hundred  and  eighty-five,  extending 
the  same  to  certain  other  cases  of  escheat."  Approved  June 
25,  1895.  (Pamphlet  Laws  283.) 


NOTE. 

Existing  laws  practically  cover  only  bank  deposits.  They  are 
as  follows: 

Act  of  March  6,  1847  (P.  L.  222),  applying  to  banks,  savings 
institutions,  loan  companies  and  insurance  companies,  which 
declare  dividends  or  profits  among  the  stockholders  and  re- 
quiring publication  in  the  newspapers  of  dividends  unclaimed 
for  three  years,  and  not  increased  or  diminished  or  receiving 
interest  within  three  years.  The  penalty  is  personal  liability 
by  the  cashier  to  the  owner  with  12  per  cent,  interest.  Three 
years  after  the  first  publication  the  dividend  shall  escheat  to 
the  Commonwealth  and  the  owner  may  claim  it  at  any  time 
thereafter.  There  is  110  further  penalty  for  failure  to  publish 
and  no  penalty  at  all  for  failure  to  pay  to  the  Commonwealth. 

Act  of  April  16,  1850  (P.  L.  477),  requires  the  cashier  of 
every  bank  to  forward  to  the  Auditor  General  a  list  of  divi- 
dends and  deposits  unclaimed  and  not  increased  or  diminished 
for  three  years.  There  is  no  penalty. 

Act  of  April  17,  1872  (P.  L.  62),  requires  a  savings  fund, 
savings  institution  or  savings  bank  to  pay  to  the  State  Treas- 
urer deposits  not  demanded  for  thirty  years,  and  permits  the 
real  owner  to  recover  it  from  the  State  Treasury  after  that 
time  by  action  in  the  Courts.  There  is  no  penalty  for  failure 
to  make  report,  but  small  sums  are  paid. 

The  laws  of  other  States  are  not  very  complete  on  this  sub- 
ject. The  primary  object  seems  to  be  publicity  for  the  benefit 
of  the  owner  or  next  of  kin.  New  York,  for  example,  has 
elaborate  provisions  for  report  to  the  Banking  Commissioner 
and  the  indexing  of  reports  as  well  as  for  publication.  Maine 
and  New  Jersey,  as  well  as  New  York,  require  newspaper  ad- 
vertising. None  of  these  three  provide  for  escheat  to  the  State. 
Maine  and  Massachusetts  only  escheat  deposits  remaining  un- 
claimed in  the  hands  of  receivers  of  a  bank.  Ohio  has  much 


225 

the  most  complete  system,  providing-  for  annual  reports  to  the 
Probate  Judge,  which  are  recorded  for  public  inspection ;  and 
after  eight  years  the  deposits  are  paid  to  the  County  Treasurer 
and  may  be  reclaimed  at  any  time  on  proof  of  ownership. 

Sufficient  publicity  will  be  provided  by  the  public  reports  in 
the  office  of  the  Auditor  General  duly  indexed,  to  which  all  per- 
sons settling-  estates  •will  naturally  resort  to  look  for  un- 
claimed deposits.  This,  and  the  right  to  recover  with  a  long- 
period  of  limitation  on  the  right,  abundantly  protect  the  de- 
positors, and  the  State  should  have  the  benefit  of  money  not  so 
claimed. 


AN  ACT  TO  AMEND  SECTIONS  Two  AND  THREE  OF  AN  ACT  ENTITLED 

"AN  ACT  DEFINING  AND  REGULATING  ESCHEATS  IN  CASES  WHEBE 
PROPERTY  IS  WITHOUT  A  LAWFUL  OWNER.  AND  PROVIDING  FOR 
MORE  CONVENIENT  PROCEEDINGS  RELATIVE  TO  THE  SAME,"  APPROV- 
ED THE  SECOND  DAY  OF  MAY,  ONE  THOUSAND  EIGHT  HUNDRED 
AND  EIGHTY-NINE;  EXTENDING  THE  SAME  TO  OTHER  CASES  OF 

ESCHEAT. 

SECT.  1.  Be  it  enacted,  etc.,  Inat  the  second  section  of  an  Act 
entitled  "An  Act  defining  and  regulating  escheats  in  cases 
where  property  is  without  a  lawful  owner,  and  providing  for 
more  convenient  proceedings  relative  to  the  same,"  approved 
the  second  day  of  May,  one  thousand  eight  hundred  and  eighty- 
nine,  which  reads  as  follows : 

"Whensoever  any  money,  estate  or  effects,  shall  have  been 
or  shall  hereafter  be  paid  into  or  deposited  in  the  custody  of 
any  Court  of  this  Commonwealth,  or  shall  be  in  the  custody 
of  any  depository,  or  of  any  receiver  or  other  officer  of  said 
Court  and  the  rightful  owner  or  owners  thereof  shall  have  been 
or  shall  be  unknown  for  the  space  of  seven  years,  the  same  shall 
escheat  to  the  Commonwealth,  subject  to  all  legal  demands  on 
the  same." 

Be  and  the  same  is  hereby  amended  to  read  as  follows: 

Whensoever  any  money,  estate,  or  effects,  shall  have  been 
or  shall  hereafter  be  paid  into  or  deposited  in  the  custody  of 
any  Court  of  this  Commonwealth,  or  shall  be  in  the  custody  of 
any  depository  or  of  any  receiver  or  other  officer  of  said  Court, 
and  the  rightful  owner  or  owners  thereof  shall  have  been  or 
•hall  b«  unknown  for  the  space  of  •even  year*,  or  shall  have 
made  no  demand  therefor  for  the  space  of  seven  years,  the 
•ame  shall  escheat  to  the  Commonwealth,  subject  to  all  legal 
demands  on  the  same. 

12 


226 

SECT.  2.  That  the  third  section  of  the  said  Act  which  reads 
as  follows : 

"Whensoever  any  trustee  or  other  person  is  or  shall  be  seized 
of  any  property  or  estate,  real  or  personal,  in  a  fiduciary 
capacity,  and  shall  file  an  account  of  the  same  in  any  Court 
in  this  Commonwealth,  and  whensoever  it  shall  appear  that  the 
cestui  que  trust  or  beneficial  owner  of  said  property  or  effects, 
or  any  part  thereof,  has  been  unknown  for  a  period  of  seven 
years,  and  still  remains  nnkown,  then,  and  in  such  case,  so 
much  of  said  property  or  effects  as  belonged  to  said  unknown 
cestui  que  trust,  or  beneficial  owner,  shall  escheat  to  the  Com- 
monwealth, subject  to  all  legal  demands  on  the  same." 

Be  and  the  same  is  hereby  amended  to  read  as  follows : 

It  shall  be  the  duty  of  every  trustee,  guardian,  committee, 
executor,  administrator,  assignee,  or  other  person  acting  in  a 
fiduciary  capacity,  who  shall  be  seized  or  possessed  of  any 
property  or  estate,  real  or  personal,  of  which  the  cestui  que 
trust  or  beneficial  owner  shall  have  been  unknown  to  him  for 
a  period  of  seven  years,  and  still  remains  unknown,  or  has 
made  no  demand  for  said  property  or  effects  for  a  period  of 
seven  years,  to  file  an  account  thereof  in  the  proper  Court,  and 
so  much  of  said  property  or  effects  as  belonged  to  said  cestui 
que  trust  or  beneficial  owner,  and  is  not  claimed  at  the  audit 
of  said  account,  shall  escheat  to  the  Commonwealth,  subject 
to  all  legal  demands  on  the  same. 


STATE  EXPENSES. 

A  useless  item  of  State  expense  which  was  constantly 
brought  to  the  attention  in  examining  the  Appropria- 
tion Acts,  is  the  printing  thereof  in  full  in  the  pamphlet 
laws  for  public  distribution.  All  that  is  necessary  for 
public  information  is  the  name  of  the  Department  or 
institution  receiving  the  appropriation,  the  amount  re- 
ceived, the  purpose  in  brief  and  the  reduction  of  the  ap- 
propriation by  the  Governor,  if  any.  This  information 
could  easily  be  tabulated. 

The  result  will  also  save  bulk.  Of  the  volume  of  1909, 
containing  1,042  pages,  fully  one-third  is  taken  up  with 


227 

printing  and  indexing  these  Acts,  which  contain  1,228 
items. 

Your  Committee  therefore  proposes  an  Act  for  that 
purpose  (see  page  227). 


AN  ACT  IN  RELATION  TO  THE  PRINTING  OF  APPROPRIATION  BILLS  IN 
THE  PAMPHLET  LAWS. 

SECT.  1.  Be  it  enacted,  etc.,  That  hereafter  the  Secretary  of 

the  Commonwealth  shall  not  furnish  to  the  Public  Printer  for 

printing  in  the  Pamphlet  Laws  the  full  text  of  appropriation 

bills,   but  shall   furnish   instead  a  tabulated   list   of   said   bills 

!  giving  the  date,  the  purpose  of  the  appropriation,  the  amount 

!  thereof,   and  the  amount  approved  by  the   Governor,   and  this 

table  shall  be  printed  in  the  Pamphlet  Laws  instead  of  the  full 

text  of  such  Acts  as  heretofore. 


228 


INCOME    TAX    AMENDMENT    TO    FED- 
ERAL  CONSTITUTION. 


An  amendment  to  the  Constitution  of  the  United  States 
has  been  proposed  to  the  States  by  Congress  to  meet  the 
decisions  of  the  Supreme  Court  of  the  United  States  that 
the  income  tax  is  a  direct  tax  and  must  be  apportioned 
among  the  States  by  population.  The  proposed  amend- 
ment is : 

"The  Congress  shall  have  power  to  lay  and  collect 
•  taxes  on  income,  from  whatever  source  derived,  with- 
out apportionment  among  the  several  States,  and  with- 
out regard  to  any  census  or  enumeration. ' ' 

Arguments  against  the  approval  of  this  amendment  were 
made  before  your  Committee,  and  others  have  been 
brought  to  its  attention  by  the  public  prints. 

It  is  argued  that  this  is  a  source  of  revenue  which  should 
be  reserved  for  the  States.  It  is  also  argued  that  it  is  a 
direct  reversal  of  the  policy  of  the  Constitution  which  will 
produce  the  very  evil  intended  to  be  guarded  against,  to 
wit,  the  imposition  of  taxes  by  the  more  numerously  repre- 
sented States  upon  the  wealthier  States.  As  the  constitu- 
tional requirement  of  uniformity  would  not  apply  to  a  tax 
levied  under  this  amendment,  Congress  might  go  so  far 
under  the  control  of  partisans  as  to  direct  the  tax  only  at 
certain  of  the  wealthy  Eastern  States  by  name,  and  exempt 
the  others  entirely.  Under  our  system  of  equal  representa- 
tion by  States  in  the  United  States  Senate  it  is  quite  pos- 
sible, if  not  probable,  for  the  representatives  of  a  minority 
to  out-vote  the  representatives  of  the  majority  of  citizens, 


229 

and  still  more  so,  to  out-vote  a  preponderance  of  wealth. 
The  States  of  New  York,  Pennsylvania,  Ohio  and  Illinois 
contain  approximately  a  third  of  the  population  and  ap- 
proximately three-fifths  of  the  wealth.  When  the  income 
tax  was  levied  under  the  Act  of  Congress  of  1861  the  States 
of  New  York  and  Pennsylvania  paid  nearly  half  of  the 
tax.  It  is  argued  that  these  possibilities  are  not  merely 
speculative,  and  that  in  framing  a  constitution  possibil- 
ities should  be  considered. 

The  intention  of  the  Constitution  was  that  the  expend- 
itures of  the  States  should  be  met  by  direct  levies  of  taxes 
on  lands  and  accumulated  property,  and  those  of  the 
Federal  Government  for  the  most  part  by  indirect  taxes. 
This  in  principle  is  the  way  in  which  the  methods  of  raising 
revenue  are  divided  between  our  Commonwealth  and  its 
subdivisions.  There  was  reserved,  however,  to  the  Federal 
Government  the  power  to  lay  direct  taxes  in  case  of  need, 
but  in  order  that  it  might  not  be  exercised  except  on  neces^ 
sity,  and,  that  the  State  might  have  opportunity  to  pay 
its  quota  without  the  interference  of  the  Federal  tax 
gatherer,  it  was  directed  that  the  tax  be  apportioned 
among  the  States  according  to  population.  This  took  the 
place  historically  of  the  requisitions  on  the  States  which 
were  the  inefficient  means  of  raising  revenue  under  the 
Confederation. 

Such  a  need  has  never  arisen,  and  never  will.  The 
indirect  taxes  can  be  extended  sufficiently  to  meet  all  de- 
mands of  a  greatly  extended  Federal  power.  Internal 
revenue  alone  is  capable  of  supplying  it  all.  Forty-five 
years  ago,  when  the  wealth  of  the  country  was  much  less 
than  now,  it  yielded  $300,000,000  a  year  under  the  stress 
of  war  measures. 

The  wording  of  the  proposed  amendment,  which  per- 
mits the  laying  of  an  income  tax  on  incomes  "from  what- 
ever source  derived"  would  permit  the  laying  of  a  tax 
upon  incomes  from  State  securities,  and  thus  reverse  the 
wise  settled  policy  of  the  present  Constitution  that  the 


230 

United  States  should  not  tax  State  agencies,  and  that  the 
State  should  not  tax  agencies  of  the  United  States.  As 
"the  power  to  tax  is  the  power  to  destroy,"  and  as  there 
will  be  no  requirement  of  uniformity  or  apportionment 
among  the  States,  the  Federal  Government  might  coerce 
the  States  by  taxing  its  State  loans  or  the  loans  of  its 
constituent  municipal  bodies  out  of  existence,  as  has  been 
done  with  State  bank  notes. 

Unofficial  reports  disclose  in  addition  that  the  amend- 
ment has  been  ratified  by  five  States,  as  follows:  Ala- 
bama, Georgia,  Kentucky,  Mississippi  and  Oklahoma. 
Three  States,  to  wit,  Massachusetts,  New  York  and  Vir- 
ginia, failed  to  ratify  the  amendement,  and  in  Louisiana 
it  is  to  be  submitted  to  a  referendum  vote  in  the  year 
1912. 

Your  Committee  submits  these  observations  as  they  have 
been  given  to  it,  but  without  recommendations,  although 
it  is  not  amiss  to  say  that  no  representations  in  its  favor 
have  been  made. 


REQUESTS  OF  STATE  DEPARTMENTS. 

Your  Committee  requested  the  Attorney  General,  the 
Auditor  General,  the  Secretary  of  the  Commonwealth,  the 
Railroad  Commissioners,  the  Secretary  of  Internal  Af- 
fairs, the  Insurance  Commissioner,  the  Commissioner  of 
Banking,  the  Secretary  of  Agriculture,  the  Department 
of  Health,  the  State  Highway  Commissioner,  the  Com- 
missioner of  Forestry,  the  Commissioner  of  Fisheries, 
the  Factory  Inspector  and  the  Department  of  Mines,  to 
suggest  to  the  Committee  changes  of  the  laws  desired 
by  their  Departments. 

To  this  replies  have  been  received  as  follows : 
The  Attorney   General  recommended,  though  not   offi- 
cially, "that  the  entire  legal  business  of  the  Common- 
wealth should  be  in  charge  of  the  Attorney  General's  De- 


231 

partment. "  It  seems  to  your  Committee  that  it  insures 
promptness  and  avoids  circuity  of  communication  if  those 
having  charge  of  the  legal  work  of  each  department  should 
be  under  the  control  and  direction  of  the  State  officer 
having  charge  of  the  prosecution  of  the  work  and  in  direct 
touch  with  him.  The  Attorney  General  being  a  co-ordin- 
ate officer  of  the  government,  there  may  well  be  a  con- 
flict of  authority  on  matters  of  policy,  which  cannot  be 
overcome.  Your  Committee  assumes  that  in  all  matters 
of  Governmental  and  public  policy  the  Auditor  General 
and  the  heads  of  all  other  Departments  of  State  Govern- 
ment would,  of  course,  seek  the  co-operation  of  the  At- 
torney General  and  be  guided  by  his  advice. 

The  Attorney  General  also  recommended  that  corpora- 
tion taxes  should  have  preference  out  of  any  fund  arising 
through  judicial  sale,  and  that  such  sale  should  not  be 
valid  until  a  certificate  has  been  filed  that  there  were 
no  unpaid  taxes,  or  if  the  certificate  should  show  that 
there  were  such  taxes,  they  should  first  be  paid.  This 
seems  to  be  covered  by  the  Act  of  June  1,  1889,  Sec- 
tions 31  and  32,  P.  L.  437.  The  policy  is  the  same  as 
that  in  the  Act  of  May  25,  1907,  P.  L.  250,  referred  to 
elsewhere.  (See  page  217.) 

The  suggestion,  however,  unites  with  that  of  the  Audi- 
tor General  in  a  special  communication  to  your  Com- 
mittee recommending  that  liens  for  State  taxes  be  re- 
corded only  in  the  Department  of  the  Auditor  General. 
The  Act  of  1889,  above  referred  to,  says  that  State 
taxes  shall  be  first  paid  out  of  the  proceeds  of  judicial 
sale  prior  to  other  liens,  although  entered  after  the  taxes 
accrued.  This  is  the  present  system  as  to  local  real  es- 
tate tax.  But  the  Act  of  April  16,  1827,  P.  L.  471,  re- 
quiring the  Auditor  General  to  record  settlements  for 
the  purposes  of  lien  in  the  county  a»  soon  as  possible, 
is  still  in  force.  (William  Wilson,  etc.,  Go's.  Estate, 
150  Pa.  285;  Gladden  vs.  Chapman,  188  Pa.  586.) 
The  result  is  that  it  is  a  great  labor  to  file  these  liens  in  th« 


232 

proper  county  and  to  follow  them  up  and  beyond  the 
strength  of  the  Auditor  General's  force.  It  would  greatly 
facilitate  collection  if  the  liens  need  appear  of  record  only 
at  Harrisburg,  and  this  should  be  coupled  with  the  utmost 
facilities  for  making  and  obtaining  searches  Every  cor- 
poration which  mortgaged  its  property  would  be  under 
compulsion  from  the  mortgagee  to  keep  up  taxes,  and  the 
intent  of  the  law  would  not  be  defeated  by  the  provisions 
of  an  old  statute.  While  this  would  be  a  reversal  of  the 
present  system,  it  seems  to  your  Committee  that  it  would 
prove  of  great  value  and  not  inconvenient  to  those  having 
to  deal  with  corporations. 

They  therefore  present  a  draft  of  an  act  to  accomplish 
this  result.  (See  page  232.) 

The  Auditor  General,  in  addition  to  matters  elsewhere 
referred  to,  as  to  which  his  recommendations  have  in 
large  part  coincided  with  your  Committee's  own  con- 
clusions, has  suggested  that  each  assessor  get  a  small  fee, 
say  five  cents,  for  each  person  from  whom  he  procured  a 
return  of  personal  property  tax.  It  is  thought  that  this 
would  produce  great  diligence  on  his  part.  Your  Com- 
mittee feels  that  the  diligence  in  this  regard  might  be  ex- 
cessive and  assessors  tempted  to  secure  returns  from  great 
numbers  of  persons  who  were  known  not  to  be  taxable 
simply  to  claim  the  fee. 

The  Auditor  General  also  suggested  a  stock  transfer  tax 
like  that  of  New  York.  The  volume  of  stock  transfers  in 
this  State  is,  of  course,  not  nearly  so  great  as  that  of 
our  sister  State,  and  your  Committee  does  not  feel  that  the 
making  of  such  transactions  with  us  should  be  hampered 
in  this  way. 


Ajf  ACT   B1LATING  TO  TAXATION,   AND  BONUS  ON   CAPITAL    STOCK. 

SECT.  1.  Be  it  enacted,  etc.,  That  taxes  of  every  kind,  including- 
taxes  on  loans  and  bonus  on  capital  stock  with  interest  and 
penalties  thereon  due  from  any  corporation,  limited  partner- 
ship or  joint  stock  association  of  any  kind,  whether  foreign  or 


233 

domestic,  to  the  Commonwealth  shall  be  liens  upon  the  real 
estate  of  such  corporation,  limited  partnership,  or  joint  stock 
association  within  this  Commonwealth  from  the  time  of  the 
filing  of  a  settlement  thereof  in  the  office  of  the  Auditor  Gen- 
eral. Such  liens  may  be  sued  out  by  writ  of  scire  facias  and 
execution  in  the  usual  manner,  and  shall  be  first  paid  out  of  the 
proceeds  of  any  judicial  sale  of  such  real  estate  before  any 
taxes,  municipal  claims,  mortgages,  arrears  of  ground  rent, 
judgments  and  all  other  liens  and  estates  whatsoever  and 
whether  the  same  shall  accrue  before  or  after  the  filing  of  such 
settlement,  provided  such  settlement  shall  have  been  on  file  and 
indexed  in  the  Auditor  General's  office  one  week  before  such 
sale. 

SECT.  2.  Upon  the  judicial  sale  of  the  personal  estate  of  any 
such  corporation,  limited  partnership  or  joint  stock  association, 
such  taxes  and  bonus  shall  be  first  paid  out  of  the  proceeds 
thereof  before  an}'  and  all  other  taxes,  pledges,  chattel  mort- 
gages, judgments,  debts,  liens  and  estates  whatsoever  and 
whether  the  same  shall  accrue  before  or  after  the  filing  of 
such  settlement :  Provided,  That  such  settlement  shall  have 
been  on  file  and  indexed  in  the  Auditor  General's  office  one  week 
before  such  sale. 

SECT.  3.  The  Auditor  General  shall  keep  an  alphabetical  in- 
dex of  the  corporations,  limited  partnerships  and  joint  stock 
associations  against  which  such  settlements  shall  have  been 
filed,  which  shall  be  open  to  inspection  by  any  person ;  and  he 
shall,  upon  the  written  application  of  any  person  and  the  pay- 
ment of  a  fee  of  twenty-five  cents  for  the  use  of  the  State,  fur- 
nish to  such  person  a  certificate  showing  whether  any  such  set- 
tlements are  on  file  in  his  office  against  any  corporation,  lim- 
ited partnership  or  joint  stock  association,  and  if  so,  for 
what  taxes  or  bonus,  from  what  date  and  for  what  amount. 

SECT.  4.  Section  four  of  an  Act  entitled  "An  Act  relative  to 
the  distribution  of  money  arising  from  sheriffs'  and  coroners' 
sales;  and  relative  to  the  duties  of  the  Auditor  General  and 
County  Commissioners."  approved  April  16,  1827  (P.  L.  471), 
be  and  the  same  is  hereby  repealed. 


234 

The  Secretary  of  the  Commonwealth  recommended  that 
"the  present  laws  remain  as  they  are  so  far  as  they  affect 
this  Department. ' ' 

The  Pennsylvania  State  Railroad  Commission  informed 
your  Committee  that  it  had  not  formulated  any  amend- 
ments to  the  corporation  or  revenue  laws  of  the  Common- 
wealth. 

The  Insurance  Commissioner  recommended  that  in  place 
of  the  various  taxes  laid  upon  insurance  companies  and 
their  estates,  that  an  increased  tax  on  the  premiums  be 
laid,  and  that  this  be  extended  to  all  companies  except 
fraternal  orders.  This  matter  has  been  elsewhere  dis- 
cussed. 

The  Secretary  of  Agriculture  recommended  that  "all 
property  of  every  class,  whether  real  or  personal,  should 
be  made  to  bear  an  equal  proportion  of  the  burdens  of 
taxation  for  State  as  well  as  local  purposes. "  It  seems  to 
your  Committee  that  so  far  as  this  is  a  suggestion  that  it 
should  be  attempted  to  tax  all  personal  property  alike, 
it  is  a  step  away  from  Pennsylvania's  ancient  and  admir- 
able system  toward  the  system  of  which  other  States  are 
gradually  getting  rid.  As  elsewhere  noted  it  results  only 
in  real  estate  and  the  honest  owner  of  personal  property 
continuing  to  bear  the  burden,  while  the  tax  dodger 
escapes. 

The  Department  of  Forestry  has  no  recommendations. 

The  Department  of  Fisheries  recommended  the  imposi- 
tion of  a  small  license  fee  on  several  devices  not  covered  by 
the  present  fish  code.  These,  however,  were  stated  to  be 
trifling  and  the  Commissioner  proposed  to  submit  them 
to  the  Legislature  in  a  separate  communication. 

The  Factory  Inspector  recommends  that  all  steam  boil- 
ers in  the  State,  except  locomotives  and  boilers  in  private 
houses  which  carry  a  pressure  under  ten  pounds,  be  sub- 
jected to  State  inspection  and  a  charge  made  of  $5.00  for 
internal  examination  and  $3.00  for  external  examination, 


235 

no  boiler  to  be  inspected  more  than  once  a  year.  He  re- 
ports that  there  are  in  the  State  from  45,000  to  50,000 
boilers  and  that  the  number  is  rapidly  increasing;  that 
the  cost  of  inspection  can  be  kept  within  $50,000  a  year 
with  a  force  of  25  inspectors  to  be  made  a  part  of  his  de- 
partment without  creating  a  separate  department  and  the 
expense  incident  thereto.  This  would  mean  a  substantial 
revenue  to  the  State.  The  work  is  now  being  done  by 
casualty  companies,  97  per  cent,  of  whom  are  foreign  and 
the  fees  therefor  are  going  out  of  the  State.  He  has  pre- 
pared an  Act  to  accomplish  this  end.  If  the  work  now 
done  by  individuals  can  be  as  effectively  done  by 
State  officials  and  will  result  in  increase  of  the  State 
revenue  (of  which  the  Committee  is  not  informed,  but  as- 
sumes that  the  Factory  Inspector  believes  it  can)  the 
bill  should  commend  itself  to  your  Honorable  Bodies. 

The  Factory  Inspector  also  recommends  a  tax  on  coal 
and  oil.  This  matter  has  been  discussed  elsewhere. 

The  Department  of  Mines  recommended  that  the  coal 
industry  be  so  taxed  as  to  provide  a  fund  to  take  care 
of  the  employees  injured  while  at  work  and  those  depend- 
ent upon  them.  In  discussing  the  laying  of  a  tax  on  an- 
thracite coal  your  Committee  has  indicated  that  the  fund 
thus  derived  will  work  to  this  end  by  reason  of  the  in- 
creased aid  to  charities  which  can  be  given. 


STATE  CENSUS. 

Without  adequate  facilities  for  collecting  original 
statistical  information  upon  the  subjects  of  investigation, 
your  Committee  has  been  greatly  hampered  by  the  entire 
lack  of  such  data  as  were  needed  gathered  elsewhere.  The 
Census  of  the  United  States  was  ten  years  old  and  de- 
ductions from  such  figures  were  only  guesses.  Evem 
the  information  thus  given  was  not  at  all  of  the  character 
required.  The  Bureau  of  Industrial  Statistics,  admirable  as 


236 

its  work  is,  covers  only  a  small  part  of  the  field  and  is 
compelled  to  depend  on  information  voluntarily  given. 
Accurate  and  recent  figures  could  nowhere  be  obtained, 
for  example,  as  to  the  capitalization  of  manufacturing 
corporations  in  the  State,  the  amount  of  local  taxes  raised 
on  anthracite  coal,  the  amount  of  estates  which  would  be 
subject  to  direct  inheritance  tax,  and  dozens  of  other  sub- 
jects of  which  your  Committee  sought  to  treat.  Agricul- 
tural statistics  which  would  be  of  great  value  are  not 
obtainable. 

Massachusetts  takes  a  most  thorough  census  every  tenth 
year  midway  between  the  censuses  of  the  United  States  and 
it  has  proved  of  the  greatest  value  to  the  State.  The  ma- 
chinery of  her  Census  Bureau  is  made  use  of  by  the  United 
States  Census  Bureau,  and  a  compensation  for  it  paid  to 
the  State  which  goes  very  far  toward  reducing  the  net 
cost.  Your  Committee  believes  that  a  similar  census 
would  prove  of  the  greatest  value  to  this,  much  larger, 
wealthier,  but  surely  not  less  progressive  State,  and 
strongly  recommends  legislation  to  that  end. 


Owing  to  these  difficulties  your  Committee  is  unable  to 
present  a  comprehensive  summary  of  the  amount  of  taxa- 
tion which  it  is  believed  will  be  raised  as  a  result  of  the 
measures  hereby  recommended.  In  connection  with  some 
particular  items  an  estimate  is  given  but  this  is  as  far 
as  they  can  safely  go. 


Your  Committee  feels,  on  the  whole,  that  to  this  point 
their  work,  under  the  circumstances  which  they  have  had 
to  meet,  has  been  in  a  large  part  preliminary  only. 
Realizing  the  need,  as  stated,  for  more  State  revenue  and 
for  the  correction  of  some  abuses  long  complained  of  and 
very  patent,  they  have  submitted  measures  which  they 


237 

believe  are  conducive  to  those  ends.  Your  Committee  begs 
the  earnest  attention  of  the  Legislature  to  its  recommenda- 
tions and  confidently  believes  that  your  earnest  interest 
and  co-operation  in  the  consideration  of  the  subjects  en- 
trusted to  them  will  be  productive  of  results  beneficial  to 
the  Commonwealth  and  her  many  activities. 
Respectfully  submitted, 

JAS.  P.  McNICHOL, 
Chairman ; 

WM.  H.  KEYSER, 

WM.  C.  SPROUL, 

JAS.  F.  WOODWARD, 

D.  HUNTER,  JR., 

GABRIEL  H.  MOYER, 

Vice  Chairman  and  Secretary. 


239 


THE  JOINT  COMMITTEE  OF  THE  SENATE  AND 
HOUSE  OF  REPRESENTATIVES  OF  THE  COM- 
MONWEALTH OF  PENNSYLVANIA  TO  CONSIDER 
AND  REPORT  UPON  A  REVISION  OF  THE  COR- 
PORATION AND  REVENUE  LAWS  OF  THE 
COMMONWEALTH. 

Philadelphia,  Pa.,  January  28,  1910. 

Public  meeting  of  the  Committee  held  at  Room  496,  City 
Hall,  Philadelphia,  Friday,  January  28,  1910,  at  11.00 
o'clock  A.  M. 

Present : — Hon.  James  P.  McNichol,  Chairman ;  Gabriel 
H.  Moyer,  Vice  Chairman  and  Secretary ;  Wm.  C.  Sproul, 
William  H.  Keyser,  James  F.  Woodward,  David  Hunter, 
Jr.,  of  the  Committee ;  Francis  Shunk  Brown,  Esq.,  Coun- 
sel. 

Mr.  McNichol :  This  Committee  was  appointed  by  the 
State  Legislature  for  the  purpose  of  investigating  the 
taxation  laws  and  revenue  laws  and  the  expenditures  of 
funds  paid  into  the  State  Treasury.  We  have  selected 
Francis  Shunk  Brown  as  the  attorney  representing  this 
Committee.  He  has  gone  into  this  matter  very  thorough- 
ly for  the  last  three  months,  and  he  will  detail  to  the  la- 
dies and  gentlemen  present  the  purposes  and  the  program 
that  has  been  arranged  for  the  conduct  of  these  meetings. 

Mr.  Brown :  Mr.  Chairman  and  Gentlemen  of  the  Com- 
mittee, Ladies  and  Gentlemen :  It  is  hardly  necessary  to 
tell  an  audience  such  as  this  of  the  causes  which  prompted 
the  Legislature  of  Pennsylvania  to  provide  for  the  ap- 
pointment of  the  Committee  which  is  sitting  here  today. 
The  subject  of  taxation  has  been  agitating  not  only  all 
of  the  States  of  this  Union,  but  all  countries  of  the  earth, 


240 

and  as  many  other  States  have  been  making  a  move 
towards  the  investigation  of  this  subject,  it  was  emi- 
nently fitting  that  the  State  of  Pennsylvania  should  make 
a  similar  effort. 

Mr.  Chairman,  I  think  it  would  be  well  to  read  the  Act 
of  Assembly  at  this  point,  so  that  everyone  present  may 
know  the  scope  of  this  Committee's  work. 

"A  concurrent  resolution  providing  for  the  appoint- 
ment of  a  joint  Committee  of  the  Senate  and  House  of 
Representatives  to  consider  and  report  upon  a  revision 
of  the  Laws  of  this  Commonwealth  relating  to  corpora- 
tions and  to  revenue ;  for  the  employment  of  counsel  and 
other  necessary  officers  and  employes,  and  giving  it  au- 
thority to  compel  the  attendance  of  persons  and  the  pro- 
duction of  books  and  papers. 

"Resolved,  That  the  President  pro-tempore  of  the  Sen- 
ate shall  appoint  three  Senators,  and  the  Speaker  of  the 
House  of  Representatives  shall  appoint  three  of  its  mem- 
bers, which  shall  constitute  a  joint  committee  whose  duty 
it  shall  be  to  consider  the  laws  of  the  Commonwealth 
relating  to  corporations  and  to  revenue  and  the  practical 
working  thereof,  and  to  report  to  the  next  Legislature 
whatever  changes  may  be  deemed  necessary  therein,  to- 
gether with  the  draft  of  an  Act  or  Acts  of  Assembly  to 
accomplish  said  changes,  and  together  with  such  recom- 
mendations as  may  be  deemed  necessary  relative  to  the 
administration  of  existing  laws  or  as  to  the  enforcement 
of  said  suggested  Act  or  Acts.  Said  Committee  shall 
have  power  to  elect  its  own  Chairman,  to  sit  after  the  ad- 
journment of  the  Legislature,  to  employ  legal  counsel  and 
such  other  offcers  and  employes  as  may  be  needed  to 
enable  it  to  properly  perform  its  duties  as  aforesaid ;  but 
its  expenditures  shall  be  limited  to  the  amount  provided 
therefor  in  the  general  appropriation  bill  to  be  passed 
at  this  session  of  the  Legislature,  and  shall  be  paid  out 
of  the  State  Treasury  upon  vouchers  signed  by  the  Chair- 
man of  said  Committee. 


241 

"Said  committee  shall  also  have  power  to  issue  sub* 
poenas  signed  by  its  chairman,  requiring  the  attendance  of 
persons  and  the  production  of  books  and  papers,  as  in  its 
judgment  will  assist  in  the  performance  of  its  duties  as 
aforesaid. 

"Said  Committee  shall  make  a  full  report,  in  writing, 
to  the  Governor  of  the  Commonwealth  of  its  findings,  with 
such  recommendations  as  it  may  deem  proper,  six  months 
prior  to  the  meeting  of  the  General  Assembly  in  the  ses- 
sion of  1911." 

Now,  this  Act  was  approved  May  13,  1909.  Imme- 
diately thereafter  this  Committee  proceeded  to  search  for 
information.  It  has  gathered  data  from  all  over  the 
world ;  it  has  collected  all  of  the  laws  from  the  different 
States  of  the  Union;  it  has  also  collected  the  reports  of 
commissions  similar  to  this  which  have  from  time  to  time 
been  appointed  by  these  States,  and  has  considered  the 
result  of  their  labors.  We  have  delayed  public  meetings 
for  the  reason  that  the  National  Government,  as  you  all 
recall,  in  the  summer  of  last  year,  passed  an  Act  which 
directly  applied  to  the  taxation  of  corporations,  and  it 
was  deemed  unwise  by  this  Committee  that  there  should 
be  any  further  consideration  or  public  consideration  or 
agitation  of  this  subject  at  that  time  or  at  least  until  the 
Secretary  of  the  Treasury  and  other  officials  should 
have  perfected  some  scheme  so  that  we  might  know  how 
it  affected,  directly  or  indirectly,  the  interests  of  our 
people.  That  was  done  in  December  of  last  year.  In 
fact,  we  are  still  considering  it,  but  I  think  it  has  gotten 
into  such  shape  that  this  Committee  is  justified  now  to 
proceed  with  its  public  meetings  and  in  the  further  per- 
formance of  its  duties. 

Of  course,  you  will  all  appreciate  that  the  first  thing 
to  consider  is  that  before  the  Commonwealth  of  Pennsyl- 
vania should  levy  taxes  from  her  people,  they  should  be 
in  some  way  or  other  determined  by  the  expenditures, 
the  uses  which  are  to  be  put  these  moneys,  and  the  thought 


242 

• 

was  that  as  the  private  hospitals  or  institutions  not  under 

State  control,  but  receiving  State  aid,  demand  each  year, 
say  $10,000,000  and  received,  as  I  recall  last  year, 
$5,000,000  it  would  be  a  good  starting  place  to  determine 
and  ascertain  whether  or  not  the  State  of  Pennsylvania  was 
properly  appropriating  these  moneys.  That  is,  whether  or 
not  if  it  was  whether  it  was  doing  it  in  a  way  from  which 
it  was  getting  a  return  which  would  justify  such  an  ap- 
propriation; in  other  words,  whether  these  moneys  were 
being  used  not  in  the  way  intended  to  be  used.  This  is  an 
investigation  to  determine  whether  the  Commonwealth 
is  getting  a  dollar's  return  for  every  dollar's  expenditure, 
and  if  not,  whether  some  scheme  which  would  probably 
be  more  economical  could  be  devised  for  obtaining  the 
same  results. 

Now,  I  have  sent,  in  the  performance  of  the  duty  of 
this  Committee,  or  the  Committee  has  had  sent  out  since 
December  1st,  23,000  letters.  They  have  gone  to  all  the 
National  Banks,  State  Banks,  Trust  Companies,  Savings 
Institutions,  Bankers,  The  Lawyers  Club,  Philadelphia, 
Law  Association,  Philadelphia,  Lawyers  in  Pennsylvania. 
Newspapers  in  Pennsylvania,  Trade  Journals  in  Pennsyl- 
vania, Commercial  Journals  in  Pennsylvania,  all  County 
Bar  Journals  in  Pennsylvania,  Dental  Journals  in  Pennsyl- 
vania, Legal  Journals  in  Pennsylvania,  All  County  Bar 
Associations  in  Pennsylvania,  Pennsylvania  Bar  Associa- 
tion, Trade  Associations  in  Pennsylvania,  Business  Asso- 
ciations in  Pennsylvania,  Building  and  Loan  Associations 
of  Pennsylvania,  all  Judges  of  all  Courts  in  Pennsyl- 
vania, Insurance  Companies,'  State  Officials,  County  Offi- 
cials (every  county)  Members  of  State  Senate,  Members 
of  House,  Mayors  of  principal  cities,  boroughs,  etc.,  Hos- 
pitals, Homes,  State  Institutions,  semi-State  Institutions, 
Manufacturing  Companies  in  Pennsylvania,  Gas  Compa- 
nies, Water  Companies,  Land  Companies,  Land  Improve- 
ment Companies,  Homestead  Companies,  Hotel  Com- 
panies, Miscellaneous  Companies  in  Pennsylvania.  Brick 


243 

Companies,  Clay  Companies,  Stone  Companies,  Slate  Com- 
panies, Quarry  Companies,  Bridge  Companies,  Turnpike 
Companies,  Brewing  Companies,  Distilling  Companies, 
Coal  Companies,  Coke  Companies,  Coal  Mining  Companies, 
Oil  Companies,  Mining  Companies,  Light,  Heat  and  Power 
Companies,  Market  Companies,  Railroad  Companies,  Rail- 
way Companies,  Transportation  Companies,  Ferry  Com- 
panies, Telegraph  Companies,  Telephone  Companies,  Fer- 
tilizer Companies,  Electric  Light  Companies.  There  is 
now  being  sent  a  circular  letter  to  all  foreign  corpora- 
tions doing  business  in  Pennsylvania,  in  so  far  as  they  are 
registered  with  the  Auditor  General. 

That  letter  recited  the  resolution  in  substance ;  and  fur- 
ther: 

''The  Committee  is  collecting  data  upon  the  forma- 
tion, regulation  and  taxation  of  corporations  and  the  ap- 
propriation of  State  Revenue  for  all  purposes,  in  this 
State,  in  all  of  the  United  States,  by  the  Federal  Govern- 
ment, and  by  other  nations.  These  subjects  are  being 
specially  discussed  and  legislated  upon  at  the  present 
time  throughout  the  world. 

"The  Committee  desires  the  co-operation  of  all  inter- 
ested in  these  subjects  and  requests  your  opinion  as  to 
any  defects  in  the  present  laws  of  the  Commonwealth 
relating  to  the  formation,  regulation  and  taxation  of  cor- 
porations, associations,  partnerships  or  individuals,  the 
exemption  of  them  or  any  of  them  from  taxation,  the  ap- 
propriation of  the  Revenue  of  the  State,  and  any  changes 
therein  which  you  make  think  necessary. 

"You  will  notice  that  the  resolution  requires  a  report 
of  the  Committee  to  be  filed  with  the  Governor  in  July, 
1910,  and  we  therefore  request  an  early  reply,  as  it  is  im- 
portant that  all  suggestions  be  rtceived  for  consideration 
prior  to  the  public  meetings  which  the  Committee  may 
hold.  We  should  also  be  glad  to  have  from  you  the 
names  and  addresses  of  any  persons  whom  you  may  know 
who  are  specially  qualified  to  give  to  the  Committee  infor- 


244 

mation  and  assistance  in  the  consideration  of  these  most 
important  subjects." 

I  might  say  that  up  to  date  the  Committee  has  received 
approximately  5,000  replies  to  this  communication,  with 
all  manner  of  suggestions  for  other  laws  covering  all  sub- 
jects which  are  included  in  the  general  scheme  of  the 
Commonwealth's  taxation,  and,  personally,  I  have  been 
very  much  gratified  by  the  interest  that  the  people  of  this 
Commonwealth  have  taken  in  this  subject.  That  is  just 
merely  preliminary  to  our  meeting  to  be  considered  today 
and  for  general  information.  I  assume  the  first  one  to 
call  in  order  would  be  to  hear  from  our  State  Board  of 
Charities,  as  being  the  supervisory  body  of  these  insti- 
tutions, and  I  would  call  upon  the  Secretary,  who  is  here 
to  represent  them,  Mr.  Bromley  Wharton. 

Mr.  Wharton,  do  you  wish  to  make  any  preliminary 
statement  or  remarks?  If  not,  I  have  some  questions  I 
would  like  to  ask  you. 

Mr.  Wharton :  I  would  be  glad  to  answer  any  questions. 

By  Mr.  Brown: 

Q.  Upon  what  does  the  State  Board  of  Charities  make 
its  recommendations  to  the  Legislature  for  appropriations 
to  institutions  not  under  State  control  ? 

A.  Upon  the  reports  which  we  gather  from  those  insti- 
tutions, of  which  I  have  a  copy.  This  report  shows  the 
financial  statement,  the  number  of  hospital  days,  free  hos- 
pital days,  based  upon  the  free  work  done  by  the  hospital. 

Q.  What  investigation  is  made  by  the  Board  itself  in 
addition  to  the  report  which  you  receive ;  what  do  they  do 
to  verify  this? 

A.  The  Legislature  of  1907  gave  the  Board  of  Chari- 
ties two  assistant  general  agents.  Those  two  men  in  con- 
nection with  the  Secretary  and  General  Agent  visit  these 
institutions,  sometimes  two  and  three  times  a  year  when 
it  is  necessary  to  verify  the  reports  furnished  yearly  at 
the  end  of  the  fiscal  year,  May  31,  to  the  Board. 


245 

Q.  What  has  been  the  result  of  the  personal  investi- 
gations which  have  been  made  by  the  Board  as  to  the 
use  of  the  State's  money  given  these  institutions? 

A.  On  the  whole,  I  would  say  it  was  wisely  used,  ex- 
ceedingly so. 

Q.    How  about  economically  used;  does  that  "wisely" 
include  economically? 
A.    Yes,  I  would  say  economically. 

Q.  Has  your  experience  in  these  investigations  pre- 
pared you  to  make  any  suggestions  as  to  the  consolidation 
of  any  of  these  institutions,  whether  that  could  be  wisely 
done  in  the  way  of  economy? 

A.  Well,  I  think  that  depends  on  the  localities.  I 
think  in  some  of  the  larger  cities  the  consolidation  of 
some  of  the  hospitals  would  be  beneficial. 

Q.  Would  that  in  any  way  diminish  the  advantages 
which  the  people  would  receive  because  of  the  accessi- 
bility of  the  several  hospitals  which  might  be  consoli- 
dated? 

A.  That,  of  course,  would  depend  on  circumstances. 
There  are  cases  where  two  large  hospitals  are  near  each 
other;  they  might  be  consolidated.  I  do  not  mean  where 
they  are  far  apart. 

Q.    How  many  hospitals  have  they  in  the  State  of  Penn- 
sylvania, if  you  recall,  154  or  something  like  that? 
A.  One  hundred  and  forty-seven,  receiving  State  aid. 

Q.    In  how  many  counties? 
A.  Sixty-seven. 

Q.     In  how  many  counties? 

A.  Sixty-seven — 147  hospitals,  93  homes.  Of  course, 
I  am  not  going  into  State  institutions. 

By  Mr.  McNichol : 
Q.     How  many  State  institutions? 
A.     Twenty-four. 


246 

Q.     Located  where? 

A.  Insane :  Norristown,  Danville,  Warren,  Harrisburg. 
Q.  Can  you  have  those  scheduled  for  us? 
A.  Yes,  sir,  we  can  do    anything    you   want,    I    will 
submit  that. 

By  Mr.  Brown: 

Q.  What  counties  have  no  hospitals?  About  how 
many,  not  to  go  into  details,  because  you  have  the  table? 

A.     Eighteen. 

Q.  There  are  eighteen  counties  in  this  Commonwealth 
that  either  have  no  hospitals  or  have  no  hospitals  receiv- 
ing State  aid? 

A.     Yes,  sir. 

Q.     How  are  the  people  there  provided  for? 

A.  By  the  nearest  hospital.  For  instance,  Adams 
County,  I  will  give  you  this  as  an  illustration,  the  nearest 
hospital  is  the  Todd  Hospital  in  Carlisle,  Cumberland 
County,  and  in  Bucks  County  the  nearest  hospital  would 
be  Frankford,  on  the  outskirts  of  Philadelphia,  and  the 
Norristown  Hospitals;  Cameron  County  would  be  Elk 
County ;  Carbon  would  be  Wilkesbarre  and  Allentown.  I 
have  all  these  worked  out  for  you. 

Q.  What  is  the  proportion  of  the  amount  that  these 
several  hospitals  receive  from  private  sources  as  com- 
pared with  the  State  aid? 

A.     Well,  I  have  to  quote  here.     I  will  take  some  of 
the  big  Philadelphia  hospitals  and  some  of  the  hospitals 
outside.     I  will  submit  this  to  you:  Take  May  31, 
to  May  31,  1909,  one  year,  take  the  Jefferson  Hospit 
From  their  reports  I  take  these  figures :  their  receipts  froi 
all  sources  would  be  $211,481;  the  State  contributed 
that  for  one  year  $80,000,  leaving  a  balance  of  $131,< 
The  University  Hospital  receives  $198,864;  of  that 
State  contributed  $62,500,  leaving  a  balance  of  $136,< 


247 

By  Mr.  Moyer : 

Q.  Have  you  anything  there  that  shows  the  amount 
received  from  donations? 

A.  Yes,  sir,  I  can  give  you  that. 

Q.     Not  from  the  pay  of  patients? 

By  Mr.  Brown : 

Q.  I  presume  in  your  items  of  receipts  there  would  be 
interest  on  the  investments? 

A.  Yes,  sir. 

By  Mr.  Moyer : 

Q.     Pay  patients,  too? 

A.  Pay  patients,  yes.  The  University  Hospital,  from 
donations  for  current  expenses,  $8,376.89.  I  have  got 
this  in  detail  for  every  hospital  in  the  State. 

By  Mr.  Brown : 

Q.  How  did  that  proportion  compare  with  the  other 
sections  of  the  State?  I  mean,  do  the  other  institutions 
throughout  the  State  receive  private  donations  that  com- 
pare to  the  same  proportion  as  those  two  institutions  you 
have  mentioned. 

A.  Yes,  sir,  all  through  the  State  they  receive  private 
donations,  from  fairs,  entertainments  and  various  other 
ways  and  means  of  raising  money.  In  looking  over  it  I 
see  the  donations  are  given  of  all  other  hospitals. 

Q.  The  donations  from  the  State  have  been  annually 
increasing  as  I  understand.  Have  the  private  donations 
been  increasing  in  like  ratio?  In  other  words,  has  the 
State  appropriation  tended  to  a  diminution  of  the  gifts 
from  private  donations  either  during  life  or  by  will? 

A.  Yes,  I  would  say  they  have,  for  the  reason  that  if 
I  have  so  much  money  given  to  me  you  are  not  likely 
to  give  me  the  same  amount  of  money.  In  Pittsburgh, 
however,  within  the  last  few  years,  in  making  our  recom- 
mendations to  the  Legislature,  in  many  cases  they  have 


248 

said  if  the  Legislature  will  give  us  so  much  they  would 
duplicate  it.  I  refer  to  the  South  Side  Hospital  particu- 
larly, to  which  a  great  deal  of  money  has  been  given,  and 
I  find  that  often  to  be  the  case  where  we  have  made  a 
recommendation  that  they  have  duplicated  the  amount, 
even  giving  more  than  the  Legislature  has  given. 

Q.  How  does  it  apply  to  other  sections  of  the  State? 

A.  Some  other  sections  have  done  the  same  way.  Elk 
County  particularly  comes  to  my  mind,  where  the  Hills 
have  given  a  great  deal  of  money. 

Q.  Have  you  made  any  investigation  to  ascertain 
whether  or  not  the  increase  in  the  request  for  appropria- 
tions has  been  in  proportion  to  the  accretion  of  the  capi- 
tal of  the  Commonwealth? 

A.  No,  sir,  not  particularly. 

By  Mr.   Moyer: 

Q.  Can  you  furnish  us  with  a  list  of  endowment  funds 
of  these  several  institutions  ? 

A.  I  think  I  can,  yes,  sir. 

By  Mr.  Brown : 

Q.  How  do  other  States  provide  for  the  institutions? 

A.  There  are  thirty-four  States,  from  what  I  gather, 
that  only  contribute  to  the  State  institutions;  out  of  the 
total  thirty-four  contribute  to  the  State  institutions,  make 
appropriations  to  State  institutions  only. 

Q.  Have  you  attempted  or  has  your  Board  attempted 
to  ascertain  the  reason  for  this? 

A.  No,  we  have  not. 

Q.  Why  the  State  of  Pennsylvania  should  be  an  ex- 
ception to  the  general  rule? 

A.  We  have  not.  Today  the  condition  that  is  confront- 
ing us  in  this  State  is  different.  Pennsylvania  is  a  big 
workshop,  with  its  factories,  its  mines  and  mining  inter- 
ests. When  we  consider  that  in  Allegheny  county  there 
are  60,000  employed  in  the  mine  and  steel  district,  it  re- 
quires hospitals. 


249 

By  Mr.   McNichol : 

Q.  Has  not  the  State  provided  hospitals  of  that  charac- 
ter for  such  people? 

A.  Not  in  Allegheny  county. 

Q.  Has  it  inaugurated  the  system  within  the  last  four 
years  ? 
A.  Yes. 

Q.  Under  State  supervision? 
A.  Yes,  sir. 

By  Mr.  Moyer : 

Q.  The  Miners 'hospitals? 
A.  Miners'  hospitals. 

By  Mr.  McNichol : 

Q.  What  is  your  thought  as  to  that  system  in  com- 
parison with  the  one  in  operation  in  Philadelphia  ? 

A.  They  are  necessary,  there  is  no  doubt  about  it. 

Q.  I  mean  as  to  the  management  and  efficiency  of  the 
same? 

A.  The  management  and  efficiency  of  the  State  hos- 
pitals we  consider  very  good. 

Q.  How  could  you  give  any  comparison  to  the  system 
in  operation  in  Philadelphia  ?  Have  you  made  any  observa- 
tion of  it  in  person? 

A.  No,  sir. 

Q.  Do  you  not  think  that  that  would  be  information 
which  the  Legislature  should  have  when  it  is  condering 
this  subject? 

A.  Undoubtedly.  While  we  have  this  many  hospitals 
concentrated  throughout  the  City,  in  the  mining  regions 
they  do  not  always  cover  the  amount  of  ground  we  care 
for. 

Q.  Well,  they  will  eventually  do  that  when  we  give 
them  sufficient  money? 

A.  Take  Jefferson  County,  Punxsutawney,  through  the 


250 

soft  coal  region,  we  have  not  any  raining  hospital  right 
there.  Near  there  there  is  a  private  hospital. 

Q.  You  gave  us  a  receipt  of  the  different  hospitals  :n 
Philadelphia.  Is  there  incorporated  in  that  all  the  money 
these  hospitals  receive  outside  of  private  donations,  pri- 
vate rooms  and  things  of  that  kind? 

A.  That  is  for  maintenance.  I  am  not  discussing  the 
buildings  at  all. 

Q.  Jefferson  Hospital  receives  $211,000? 

A.  Yes,  sir. 

Q.  Of  which  $80,000  comes  from  the  State? 

A.  Yes,  sir. 

Q.  Do  you  want  us  to  believe  that  $131,000  is  all  that  the 
Jefferson  receives  from  all  sources  outside  of  private  sub- 
scriptions ? 

A.  That  is  all  the  receipts  that  I  have  here. 

Q.  Well,  I  know,  but  how  thoroughly  have  you  gone 
into  the  receipts? 

A.  Well,  I  can  only  take  this  that  has  been  given  to  me 
under  oath. 

Mr.  Brown:  Mr.  Potter  is  here  representing  the  Jef- 
ferson Hospital. 

Mr.  Wharton:  For  instance,  from  patients,  I  will  give 
you  the  detail  of  the  total  which  you  hold  in  your  hand : 

From  patients  full  paid $71,403 

From  patients  part  paid 12,691 

From  State  appropriation 80,000 

From  municipal  appropriation,  annual 375 

From  donations  for  current  expenses 5,654 

From  investments  for  income 13,754 

From  nurs«s  for  service  5,342 

From  all  oth»r  sources 7,094 

From  sale  of  drugs  15,166 

Making  a  total  of  $211,481  for  that  year,  leaving  a  defici 
for  the  year  of  $1,403. 


251 

By  Mr.  McNichol : 

Q.  Nurses  are  paid  for  by  the  patients  of  the  hospitals  ? 
A.  Yes,  sir,  but  they  may  have  nurses  outside. 
Q.  Principally  hospital  nursing? 
A.  Yes,  sir. 

By  Mr.  Hunter : 

Q.  Dovyou  know  whether  or  not  any  of  the  institutions 
receive  aid  from  the  counties  in  which  they  are  located  ? 

A.  In  this  case  I  have  before  me,  the  Municipal,  the 
City  of  Philadelphia  gives  $375  for  the  ambulance,  and  in 
some  cases  I  can  tell  you  that.  I  will  submit  this 
to  you.  In  some  cases  I  find  they  give  a  small  amount.  It 
is  very  small. 

Q.  Do  you  think  the  county  should  contribute  to  the 
support  of  these  hospitals  1 

A.  Yes,  where  they  can,  but  there  are  so  many  counties 
in  debt,  the  taxes,  county  taxes,  and  township  taxes  are 
so  high,  and  road  taxes  and  so  on,  they  do  not  have  the 
money  to  do  it.  The  State  being  out  of  debt,  they  look 
to  the  State  to  help  them. 

By  Mr.  Brown: 

Q.  Mr.  Wharton,  in  your  opinion  is  there  any  necessity 
for  the  construction  of  State  institutions  additionally,  and 
if  so,  for  what  purpose? 

A.  I  think  there  is,  especially  for  the  insane.  We  have 
over  16,000  insane  in  Pennsylvania.  We  are  overcro\vded 
in  Philadelphia  County.  We  are  overcrowded  in  State 
institutions  and  it  is  of  great  importance  to  have  these 
institutions  completed  that  are  under  way.  For  instance, 
Allentowrn,  which  should  be  completed  at  once,  and  in 
Southwest  Pennsylvania  Dixmont  is  overcrowded. 

Q.  When  was  Allentown  commenced ;  1901,  was  it  not  ? 

A.  1901  or  1902. 

Q.  And  it  is  not  finished  yet  ? 

A.  Is  not  finished  yet,  and  in  my  opinion,  if  it  is  of  iin- 


252 

portance,  the  system  of  giving  small  amounts  to  hospitals, 
instead  of  giving  the  amount  necessary  to  complete  it 
and  have  the  thing  done,  of  every  session  of  the  Legis- 
lature, giving  a  couple  hundred  thousand  dollars,  it  is  all 
wrong.  For  instance,  at  Allentown  we  are  commencing 
to  re-paint  and  varnish  some  of  the  rooms  anyway  before 
the  buildings  are  ready. 

Q.  Is  it  your  opinion,  assuming  that  the  State  has  not 
sufficient  to  do  both  at  the  same  time,  that  the  construction 
of  the  State  institutions  should  be  preferred  ? 

A.  Absolutely.  They  should  take  care  of  the  State  in- 
stitutions first,  and  then  after  they  have  done  that  give 
them  what  they  need. 

Q.  Does  the  State  ever  give  to  the  State  institutions 
all  that  is  needed  for  the  completion  of  its  buildings  ? 

A.  Not  in  my  recollection. 

Q.  In  other  words,  it  has  been  pared  down  at  the  re- 
quest of  private  institutions  ? 

A.  It  has  always  been  pared  down  to  some  extent. 

Q.  You  have  been  asked  by  Mr.  Hunter,  of  the  Com- 
mittee, about  the  counties,  why  the  counties  cannot  sup- 
port the  institutions;  I  am  asking  the  result  of  your  in- 
vestigation as  well  as  your  personal  opinion? 

A.  So  far  as  my  investigation  has  gone,  the  counties 
are  mostly  in  debt.  It  is  very  hard  to  get  the  County  Com- 
missioners to  take  care  of  the  almshouses  and  the  jails 
proper.  I  am  having  a  great  deal  of  trouble  to  get  at- 
tention and  money  for  the  almshouses  and  jails.  When  it 
comes  to  a  hospital,  they  will  not  listen  to  such  a  thing. 

Q.  In  other  words,  the  demands  of  patients  for  rooms  in 
those  institutions,  almshouses,  exceeds  the  supply.  You 
think  the  State  institutions  should  be  completed  first  ? 

A.  I  do. 

Q.  And  would  the  completion  of  the  State  institutions 
have  affected  the  appropriations  for  these  several  institu- 
tions in  the  last  five  years,  if  you  can  give  it  to  me  off 
hand  without  hunting  up  data  ? 


253 

A.  I  do  not  think  it  would  affect  them  very  much,  to 
some  extent  it  might,  probably  a  small  amount,  but  if  it 
was  divided  up  equally  it  would  have  not  been  a  great 
hardship.  I  think  we  could  have  built  Allentown  and 
completed  Spring  City  without  great  hardship. 

Q.  Has  the  investigation  of  the  Board  been  in  the  di- 
rection of  determining  whether  or  not  these  institutions 
are  using  the  State  money  economically;  in  other  words, 
getting  a  dollar  for  a  dollar? 

A.  We  have  been  in  regards  to  State  institutions  some- 
times; we  thought  they  were  extravagant.  I  have  often 
asked  them  whether  they  had  to  do  this  or  that  and  asked 
for  explanations.  You  know  every  institution  has  its  own 
Board  of  Directors  and  they  are  managed  independently, 
that  is  to  say  each  institution  buys  for  its  own  institution. 
It  is  a  thing  we  have  not  gone  into  very  carefully. 

Q.  You  have  not  considered  whether  or  not  it  would  be 
better  for  the  State  of  Pennsylvania  to  purchase  the  several 
supplies  which  these  institutions  use  in  large  quantities 
and  then  distribute  them  among  all  on  requisition  ac- 
cording to  their  needs? 

A.  I  should  think  it  would  be  a  good  business  policy,  it 
looks  that  way.  If  we  could  buy  15  or  20  carloads  of  flour, 
instead  of  buying  a  few  hundred  barrels,  you  might  get  it  a 
great  deal  cheaper. 

Q.  Has  the  Board  made  any  investigation  to  ascertain 
as  to  the  prices  paid  and  made  a  comparison  as  to  whether 
or  not  that  could  be  done,  or  is  that  your  personal  opinion? 

A.  It  is  my  personal  opinion.  We  have  not  gone  into 
the  question  of  contracts. 

By  Mr.  McNichol: 

Q.  Has  the  State  Board  of  Charities  taken  up  the  ques- 
tion as  to  whether  a  central  board  having  supervision 
over  all  of  these  State  institutions  would  be  able  to  more 
economically  run  those  institutions  ? 

A.  We  have  never  taken  that  question  up. 


254 

Q.  Do  you  not  think  it  is  the  duty  of  the  State  Board  of 
Charities  to  recommend  to  the  Government  and  State  Leg- 
islature such  things  as  that  ? 

A.  I  never  considered  it  in  that  way,  Senator. 

Q.  I  know,  but  this  is  an  age  of  consolidation  wherein 
one  central  office  is  used  for  the  distribution  of  all  the 
paraphernalia  and  matters  of  that  kind  in  government  ? 

A.  It  might  be.  Of  course,  we  have  discussed  the  thing 
among  ourselves,  but  we  have  never  made  any  recom- 
mendations. 

Q.  Is  not  that  the  condition  of  the  State  of  Pennsylvania 
today,  an  accumulation  of  thoughts  and  ideas  without  any 
centralization  ? 

A.  Yes,  it  is.    There  is  something  in  what  you  say. 

Q.  And  there  has  been  no  attempt  to  remedy  that  by 
suggestion  from  the  State  Board  of  Charities ;  the  Legisla- 
ture is  pretty  sure  to  act  upon  suggestions  from  people  in 
those  positions,  and  they  have  failed  to  furnish  those  in 
the  last  five  or  six  years  in  my  knowledge,  and  now  we 
are  asking  for  those  thoughts? 

A.  It  is  the  first  time  in  my  knowledge  that  the  Legisla- 
ture has  ever  asked  for  their  opinion. 

Q.  Would  it  not  be  the  thought  of  a  man  engaged  in  a 
work  of  that  kind  that  he  would  be  apt  to  give  the  best 
ideas  or  thoughts  without  having  to  be  called? 

A.  My  idea  and  recommendation  has  never  been  seri- 
ously considered. 

Q.  Possibly  because  it  was  not  very  seriously  made. 

A.  I  beg  your  pardon.  I  think  the  recommendation  we 
made  at  the  last  session  of  the  Legislature  was  seriously 
made. 

Q.  The  last  vital  suggestion  made  by  yourself  was  the 
economical  management  of  the  whole  proposition? 

A.  We  have  never  had  any  time  to  discuss  it ;  the  bills 
we  proposed  were  never  heard. 


255 

By  Mr.  Brown : 

Q.  Your  supervisory  board  visits  these  institutions  and 
reports  whether  or  not  the  moneys  which  they  request  are 
sufficient  amounts  or  proper  amounts,  and  they  are  to  ap- 
prove or  disapprove  them? 

A.  Yes,  sir.  We  make  our  recommendations  under  the 
Act  of  1869  to  the  Legislature.  We  are  to  report  to  the 
Legislature.  As  I  told  you,  the  basis  of  everything  is 
these  reports  we  get. 

Q.  Suppose  the  institution  wants  $50,000  for  mainten- 
ance and  $50,000  for  buildings,  and  one  or  two  thousand 
dollars  for  fire  appliances  and  a  sewer  disposal  plant  and 
a  half  a  dozen  other  things,  what  does  the  Board  do  to  as- 
certain whether  those  items  are  proper  on  which  they  could 
make  a  recommendation  to  the  Legislature? 

A.  We  discuss  that  with  people  who  come  before  us ;  we 
interrogate  them  and  then  we  send  an  agent,  and  members 
of  the  Board,  if  there  is  any  question,  go  to  the  institution, 
or  we  have  reports  as  to  the  necessity  of  these  things  be- 
fore us,  and  then  we  recommend  to  the  Legislature,  not 
always  what  they  ask  for. 

Q.  No,  I  notice  in  the  Markleton  Free  Hospital  they 
asked  for  $30,000  maintenance  and  $5,000  for  buildings, 
and  the  application  was  disapproved.  Taking  that  for  a 
concrete  illustration,  what  was  the  cause  of  your  disap- 
proval of  their  application  ? 

A.  In  that  case  we  thought  it  was  a  tuberculosis  in- 
stitution, and  as  Dr.  Dixon  and  the  Department  of  Health 
have  taken  care  of  that  class,  we  did  not  approve  it.  It 
afterwards  turned  out  that  it  was  a  general  hospital,  and 
we  recommended  some  $5,000. 

Q.  What  do  you  do  in  cases  of  institutions  reporting 
deficits ;  I  notice  a,  number  of  institutions  report  deficits ; 
some  are  approved  and  some  are  disapproved;  in  other 
words,  they  have  overrun  the  appropriations? 

A.  As  a  rule  we  do  not  make  any  recommendations  for 
deficits.  There  may  be  one  or  two  isolated  cases. 


256 

By  Mr.  McNichol : 

Q.  What  effort  do  you  make  in  cases  of  State  institu- 
tions receiving  their  appropriations  and  having  a  defi- 
ciency at  every  session  of  the  Legislature,  to  find  out 
whether  that  deficit  is  a  proper  one  ? 

A.  Up  to  the  last  session  there  was  always  a  deficiency 
bill.  We  never  opposed  those  bills,  because  as  a  rule  we 
thought  they  were  proper.  The  insane  hospitals  particu- 
larly, they  have  been  all  right,  because  the  population 
has  been  increasing  right  along.  In  the  private  institu- 
tions you  refer  to  ? 

Q.  I  refer  to  the  State  institutions? 

A.  Yes,  the  State  institutions,  we  never  have  opposed 
any  of  those. 

Q.  Do  you  not  think  the  Legislature  should  be  informed 
as  to  what  brought  about  the  deficiency,  and  the  calcula- 
tions of  the  authorities  based  on  their  reports  ?  They  come 
into  the  Legislature  with  $85,000  or  $100,000  deficiency 
in  a  period  of  two  years? 

A.  Well,  if  you  remember  for  some  years  the  mainten- 
ance of  the  insane  hospitals  has  been  about  $2,000,000, 
and  we  increased  that  $500,000  and  we  found  that  was  not 
sufficient.  I  went  before  the  Committee,  I  think  the  Chair- 
man of  the  Appropriation  Committee  will  bear  me  out,  and 
they  increased  it  to  $3,000,000. 

By  Mr.  Brown: 

Q.  I  notice  in  reading  your  report  and  considering  the 
report  of  the  Board  that  the  per  capita  cost  seems  to  vary 
in  each  institution.  Have  you  endeavored  to  ascertain  why 
that  is? 

A.  In  the  larger  hospitals  greater  population  is  probably 
the  chief  thing.  In  the  country  it  varies  in  the  different 
localities.  I  find  in  the  mining  regions  those  things  arc 
higher. 

Q.  Take,  for  instance,  the  Pennsylvania  Institution  for 
the  Blind  at  Overbrook.  I  notice  the  cost  of  maintenance 


257 

is  $2.70  per  capita,  and  at  a  similar  institution  for  the 
blind  at  Pittsburgh  it  is  $3.50  per  capita ;  they  are  both  in 
cities  ? 
A.  Yes,  sir.    I  cannot  explain  that. 

Q.  I  notice  also  in  some  of  your  recommendations  you 
attach  a  condition  recommending  the  appropriation,  pro- 
viding the  institution  itself  raises  so  much.  "Why  is  that 
done  for  some  and  not  for  others;  is  there  any  general 
actuating  motive  or  principle? 

A.  There  is.  In  some  cases  we  think  they  have  not  done 
as  much  for  private  charity  as  they  ought.  We  know  the 
locality ;  the  community  is  rich  enough  to  do  something  for 
that  hospital  and  very  often  we  put  that  proviso  on. 

Q.  Then  you  do  consider  the  element  of  private  con- 
tribution in  recommending  the  appropriation? 

A.  Yes,  certainly  we  do,  and  where  a  hospital  has  done 
a  great  deal  towards  private  charity  we  consider  it. 

By  Mr.  McNichol : 

Q.  That  pertains  to  hospitals  largely? 
A.  I  am  considering  private  hospitals. 

By  Mr.  Moyer: 

Q.  Is  it  not  a  fact  in  nearly  all  cases  they  are  very 
anxious  to  load  the  burden  of  taxation  and  burden  of 
supporting  hospitals  on  the  State,  and  exonerate  them- 
selves thereby? 

A.  Yes,  in  many  cases. 

Q.  You  find  that  pretty  generally  true? 
A.  Yes,  sir. 

By  Mr.  Brown: 

Q.  To  what  do  you  attribute  that,  purely  self-preserva- 
tion? 

A.  I  think  so. 

Q.  To  let  somebody  else  carry  the  load? 

A.  It  is  probably  a  human  trait. 
13 


258 

By  Mr.  Moyer : 

Q.  You  do  not  want  us  to  infer  that  that  is  the  general 
condition  ? 
A.  Oh,  no. 

Q.  The  manner  in  which  you  treated  it  might  lead  the 
people  to  believe  that  was  a  general  condition? 

A.  Very  often  in  some  towns  doctors  may  have  a  private 
hospital,  and  the  doctors  may  have  a  disagreement  and 
they  go  out  and  start  another  hospital. 

Q.  In  other  words,  it  is  a  disagreement  amongst  the 
medical  fraternity? 

A.  Sometimes. 

Q.  Is  it  a  gentlemen's  agreement? 

A.  A  gentlemen's  agreement. 

By  Mr.  Brown: 

Q.  In  your  opinion  does  that  element  figure  very  largely 
in  the  matters  in  this  Commonwealth  ? 

A.  No,  not  exactly. 

Q.  As  I  understand  you,  they  are  isolated  cases? 

A.  They  are  isolated  cases. 

Q.  Is  there  anything  else  you  want  to  say  for  the  benefit 
of  the  Committee? 

A.  I  will  hand  over  some  statements  to  you. 

By  Mr.  Sproul: 

Q.  I  would  like  to  ask  Mr.  Wharton  one  question.  Is 
it  your  opinion  that  the  general  result  of  this  system  as 
practiced  in  Pennsylvania  has  led  to  as  good  or  better 
care  of  the  worthy  and  deserving  poor  in  the  hospitals 
and  institutions  of  the  State,  than  in  other  States  which  do 
not  make  these  appropriations? 

A.  In  my  slight  experience  in  other  States,  I  think  our 
system  is  better. 

Q.  Do  you  not  think  they  are  better  cared  for  in  Penn- 
sylvania than  in  other  States? 

A.  I  do. 


259 

Q.  You  think  there  are  more  facilities  and  more  pro- 
visions for  taking  care  of  poor  people,  especially  consider- 
ing the  large  proportion  of  the  population  of  this  State 
which  is  engaged  in  what  you  call  precarious  occupa- 
tions ? 

A.  Yes,  sir,  I  do,  and  I  think  it  is  less  trouble  to  get 
a  worthy  man  in  an  institution.  There  is  less  red-tape 
about  it.  I  think  there  is  more  charity.  I  wanted  to  sub- 
mit this,  the  amount  of  maintenance  expended  from  June 
1,  1907,  to  May  31,  1908.  That  is  the,  maintenance  en- 
tirely. 

By  Mr.  McNichol : 

Q.  Mr.  Wharton,  I  think  if  you  will  get  up  a  statement 
with  the  recommendations  of  the  Board  of  Charities  and 
give  us  their  ideas  and  views,  what  they  would  suggest 
and  recommend  in  that  particular  line  of  work,  it  will 
give  us  the  information  we  are  seeking  and  we  will  not 
have  the  trouble  of  hunting  through  memoranda  and 
papers  of  that  kind  to  get  an  outline  of  what  we  want. 

A.  I  did  not  know  exactly  what  you  wanted. 

Q.  We  think  the  Board  of  Charities  should  at  least  be 
able  to  give  us  some  recommendations  on  which  we  would 
base  our  report? 

A.  We  would  be  very  glad,  indeed,  to  do  it.  That  is  all 
I  have  to  submit. 


260 


DR.  CHARLES  C.  HARRISON,  University  of  Pennsyl- 
vania, called. 

Mr.  McNichol:  What  do  we  understand  the  Doctor  is 
going  to  speak  about? 

Mr.  Brown:  The  thought  is  this,  these  gentlemen  have 
been  invited  here  today  to  consider  the  subject  from  the 
standpoint  which  I  indicated  in  my  brief  opening,  and  I 
propose,  with  the  approval  of  the  Committee,  to  ask  ques- 
tions similar  to  those  asked  of  Mr.  Wharton,  to  get  their 
views  and  their  judgment.  These  men  asked  here  to-day 
are  representative  citizens  of  this  Commonwealth,  and  I 
think  we  are  entitled  to  have  the  benefit  of  their  best 
judgment  and  their  experience. 

Dr.  Harrison :  Have  you  any  questions  you  desire  to  ask 
me? 

Mr.  Brown :  Do  you  desire  to  say  anything  preliminary  ? 

Dr.  Harrison:  No,  sir,  I  would  be  very  glad  to  answer 
any  questions,  to  save  the  time  of  the  Committee. 

By  Mr.  Brown: 

Q.  Do  you  think  the  State  of  Pennsylvania  should  ap- 
propriate money  for  institutions  not  under  her  control? 
That  is  a  very  comprehensive  question,  now. 

A.  I  think  it  ought  to  do  so,  under  very  wise  discretion 
and  knowledge  of  each  case. 

Q.  Take,  for  instance,  the  one  that  is  nearest  to  your 
heart,  take  the  University  of  Pennsylvania.  Do  you  think 
the  State  of  Pennsylvania  should  appropriate  money  t< 
various  institutions,  and  if  so,  why? 

A.  Of  course,  there  is  a  moral  reason  and  a  legal  reasoi 
why  the  State  of  Pennsylvania  should  contribute  to  th< 
support  of  the  University  of  Pennsylvania.    The  very  firs 
Constitution  of  the  State  provided  that  one  or  more  institi 
tions  of  learning  should  be  supported  and  maintained 


261 

the  State  of  Pennsylvania.  That  was  as  early  as  '76,  and 
the  State  of  Pennsylvania.  That  was  as  early  as  '76,  and 
State  in  the  Union  which  has  such  a  provision  in  its  Consti- 
tion.  Further  than  that,  while  the  organic  relation  be- 
tween the  University  and  the  State  has  not  been  so  close 
that  it  is  a  State  controlled  institution,  by  the  courtesy  of 
the  University  the  Governor  of  the  Commonwealth  has 
from  the  beginning  been  an  ex-officio  trustee  of  the 
University  and  we  have  been  obliged  to  make  our  returns 
to  every  session  of  the  Legislature  of  our  needs,  so  that 
they  might  be  supplied  by  the  Legislature. 

tQ.  Is  it  your  thought,  speaking  from  a  constitutional 
standpoint,  that  that  assistance  which  was  originally  given 
when  our  institutions  were  in  their  almost  primeval  con- 
ditions, certainly  elementary  conditions,  should  be  con- 
tinued now  when  the  people  are  so  prosperous  ? 

A.  I  think  that  is  a  question  which  lawyers  will  have 
to  answer.  "We  are  advised  by  the  highest  counsel  of  the 
State  of  Pennsylvania,  as  I  recall,  that  the  State  of  Penn- 
sylvania is  under  legal  obligations  to  the  University  of 
Pennsylvania.  I  could  not  as  a  layman  answer  that  ques- 
tion. You  can  answer  that  question. 

By  Mr.  McNichol : 

Q.  Under  legal  obligations  or  moral  obligations? 

A.  I  think,  Mr.  McNichol,  under  legal  obligations  to  the 
University  of  Pennsylvania.  I  believe  the  highest  legal 
authority  in  the  Commonwealth  would  say  that  the  State 
of  Pennsylvania  is  legally  bound  to  maintain  the  Uni- 
versity. 

Q.  Would  it  be  possible  to  have  that  opinion  filed  with 
the  Committee  ? 
A.  I  think  it  would. 
Q.  We  would  like  to  have  it. 

By  Mr.  Brown : 

Q.  Take  the  next  reason,  as   to  the  utility   of  the  in- 


262 

stitution  and  its  part  in  promoting  the  welfare  of  our 
people  as  a  reason  for  it,  what  is  your  thought  on  that? 

A.  Well,  the  answer  which  I  would  make  to  that  ques- 
tion would  be  this :  There  are  now  at  the  University  of 
Pennsylvania  5,033  students ;  of  that  number  about  3,500 
come  from  the  State  of  Pennsylvania. 

Q.  Including  Philadelphia? 

A.  From  the  State  of  Pennsylvania.  Of  the  total  num- 
ber at  the  University,  which  is  now  5,033  students,  under 
500  instructors— 3,500  or  precisely  3,495, 1  say  in  speaking 
round  numbers — 3,500  come  from  the  State  of  Pennsylva- 
nia.. I  cannot  say  that  this  year  every  county  in  the  State 
of  Pennsylvania,  every  one  of  the  67  counties  is  represented 
in  the  University,  but  last  year  all  but  one  county  in 
Pennsylvania  was  represented  at  the  University.  I  infer 
that  this  year  every  county  has  been  represented,  because 
there  is  a  very  large  increase  in  ratios. 

By  Mr.  Moyer. 

Q.  Are  there  any  free  scholarships  granted  by  the 
University  ? 

A.  Dr.  Smith,  who  is  here,  has  a  list  of  the  scholar- 
ships; he  has  that  in  detail  and  will  leave  that  with  the 
Committee;  he  has  full  information  upon  that  point.  I 
would  like  to  say  this  briefly,  taking  as  little  time  as 
possible,  that  I  think  it  is  well  understood,  of  course, 
without  my  trying  to  explain  it,  that  almost  every  interest, 
every  human  interest  in  which  this  Commonwealth  is  con- 
cerned, has  its  origin  in  the  work  which  is  done  at  the 
University  of  Pennsylvania,  and  that  the  5,000  young  men 
who  are  working  there  do  represent  all  the  interests  in 
life  which  the  Commonwealth  enjoys.  That  is,  you  may 
take  the  scientific  work  they  are  doing,  or  the  chemistry, 
or  the  engineering,  or  the  work  they  are  doing  in  their 
preparation  to  become  teachers,  and  there  are  great  num- 
bers of  those,  or  the  work  they  are  doing  in  preparation 
for  admission  as  members  of  the  bar  or  medicine.  That 


263 

is,  you  can  hardly  conceive  of  any  one  of  the  activities  of 
the  Commonwealth  whose  origin  has  not  been  at  the 
University  of  Pennsylvania. 

Q.  Assuming  that  there  is  not  sufficient  revenue  to 
properly  provide  according  to  the  requests  of  these  several 
institutions,  and  there  is  admitted  that  there  should  be 
additional  State  institutions  or  the  finishing  of  present 
State  institutions,  which  do  you  think  should  be  pre- 
ferred; have  you  given  that  subject  any  thought,  any 
serious  thought,  I  mean,  for  the  purpose  of  public  expres- 
sion ?  If  you  have  not,  I  cannot  expect  you  to  answer  it. 

A.  I  have  not  given  the  subject  thought.  Of  course, 
naturally  ,the  State  would,  in  my  judgment,  be  called 
upon  to  complete  the  institutions  which  it  has  under  its 
own  control  and  which  it  had  undertaken  to  erect  and 
maintain.  There  is  another  question  involved  in  that,  of 
course. 

Q.  Those  of  the  insane,  indigent,  the  weak  minded,  and 
similar  institutions? 

A.  It  seems  to  me  in  any  case  where  the  dependent 
classes  of  the  Commonwealth  are  involved,  that  they 
should  have  a  prior  claim  upon  the  Commonwealth. 

Q.  Have  the  State  appropriations,  from  your  experi- 
ence, tended  to  diminish  private  contributions? 

A.  Well,  I  would  rather  speak  conservatively  of  the 
University  of  Pennsylvania. 

Q.  I  will  not  say  private  contributions,  but  I  would 
say  the  contributions  which  you  have  been  able  to  get? 

A.  I  have  a  statement  during  the  past  thirteen  years 
of  the  relation  of  the  State  aid  and  private  gifts  to  the 
University  of  Pennsylvania. 

Q.  How  does  that  compare  generally  ? 

A.  During  the  last  thirteen  years,  that  is,  from  1894 
and  1895  to  1907  and  1908—1  have  not  taken  the  last  legis- 
lative grant  which  has  been  just  coming  in — the  State 
of  Pennsylvania  contributed  towards  the  educational  work 


264 

of  the  University  of  Pennsylvania,  I  mean  outside  of 
its  hospital  work,  and  when  I  say  educational  work  I  in- 
clude also  the  veterinary  department,  which  is  almost  a 
State  institution  and  should  be  so  considered,  the  total 
of  $693,000  in  round  numbers.  The  total  of  gifts  and 
bequests  at  the  same  time  for  educational  purposes  was 
about  $6,500,000,  so  that  the  relation  of  the  State  aid 
educationally  to  the  University  of  Pennsylvania  and  the 
relation  of  private  gift  has  been  about  ten  per  cent.,  but 
this  entirely  excludes  any  computation  of  the  income  from 
investments  or  the  income  from  tuition  fees. 

Q.  Those  are  direct  contributions? 

A.  Those  are,  absolutely,  made  current  by  the  University. 

Q.  You  have  mentioned  about  the  money  which  has  come 
in.  We  have  received  a  number  of  letters  complaining 
about  the  time  of  the  year  when  the  State  appropriations 
are  available? 

A.  "We  have  no  complaint  to  make  about  that  at  all.  I 
have  the  hospital  figures  also. 

Q.  To  what  uses  are  the  State  moneys  put  by  your  in- 
stitution, have  you  any  special  account? 

A.  They  are  applied  precisely  for  the  purposes  for 
which  application  was  made.  That  is,  during  the  last 
session  of  the  Legislature  a  grant  wras  made  of  $130,000, 
for  two  years,  for  the  current  expenses  of  the  University, 
including  equipment.  We  have  not  drawn  upon  that  fund 
yet;  it  will  be  drawn  upon  and  applied  for  the  purposes 
for  which  it  was  made.  Another  grant  was  made  for  the 
veterinary  department,  which  will  be  applied  to  that  de- 
partment. 

Q.  What  do  you  include  in  current  expenses? 

A.  Anything  excepting  the  building  account. 

Q.  The  maintenance? 

A.  The  maintenance  of  the  University,  what  we  call 
the  general  maintenance  of  the  University. 

Q.  Is  there  any  limitation  upon  the  access  that  charity 
patients  have  to  your  institution? 


265 

A.  There  is  none,  Prof.  Smith,  who  is  in  charge  of 
that,  is  prepared  to  answer  you  any  question  on  that  point, 
and  he  can  answer  any  question  in  relation  to  internal 
management  better  than  I  can. 

Q.  Have  you  given  any  thought  to  the  question  of 
whether  or  not  it  would  be  better  for  the  State  of  Penn- 
sylvania to  purchase  the  supplies  which  these  institu- 
tions use  and  then  distribute  them  on  requisition;  take, 
for  instance,  flour,  sugar,  salt  and  staple  articles? 

A.  Those  are  bought  under  the  direction  of  the  hos- 
pital, and  Mr.  McFadden  can  answer  that  question  better 
than  I  can. 

By  Mr.  McNichol : 

Q.  What  is  your  appropriation  for  1909  and  1910? 

A.  The  last  session  of  the  Legislature  made  an  appro- 
priation of  $480,000,  and  that  was  divided  in  three  de- 
partments; $150,000  given  for  educational  purposes,  of 
which  $20,000  was  for  the  library  of  the  University,  and 
$130,000  for  maintenance,  that  was  $150,000,  and  $130,000 
was  given  to  the  veterinary  department,  making  $280,000, 
and  $200,000  to  the  University  Hospital,  making  $480,000. 

Q.  What  was  your  appropriation  for  150  years  up  to 
within  ten  years  ago? 

A.  Well,  until  about  15  years  ago  we  received  very  little. 

Q.  About  $30,000,  was  it  not? 

A.  No,  more  than  that.  In  1838  the  Legislature  of 
Pennsylvania  made  a  grant  for  five  years  of  a  thousand 
dollars  a  year  to  the  University,  but  it  only  paid  $500  of 
its  last  payment,  so  that  as  a  matter  of  fact  we  received 
$4,500  of  the  $5,000  which  was  granted.  I  would  like, 
Mr.  Chairman,  to  put  you  in  mind  of  this  fact,  that 
these  gifts  which  I  have  stated  here,  which,  added  to 
the  hospital  gifts,  make  nearly  $8,000,000  in  the  last 
fifteen  years,  are  really  gifts  to  the  Commonwealth  of 
Pennsylvania,  and  just  in  so  far  are  additions  to  the  Treas- 
ury of  Pennsylvania,  because  none  in  the  audience  or 
14 


266 

community  will  say  that  if  the  University  of  Pennsyl- 
vania did  not  exist  the  State  of  Pennsylvania  would 
not  itself  maintain  the  University,  just  as  all  the  States 
to  the  west  of  us  do.  That  would  certainly  cost 
the  State  during  every  legislative  period  $2,500,000,  so, 
looking  at  this  question  of  the  contributions  to  the  Uni- 
versity of  Pennsylvania,  which  has  this  relation  organic 
to  the  State,  I  think  it  ought  to  be  upon  the  minds  of 
every  one  in  this  audience  and  the  Committee  that  they 
are  gifts  to  the  Treasury  of  the  Commonwealth. 

By  Mr.  Sproul: 

Q.  Have  you  any  information  with  you  which  will  show 
how  the  donations  which  are  given  by  the  State  to  the 
University  of  Pennsylvania  compare  with  the  appropria- 
tions made  by  other  States  to  their  principal  educational 
institution  ? 

A.  Mr.  Sproul,  compared  with  the  State  to  the  west  of 
us  particularly — and  that  is  one  of  the  great  dangers 
which  the  University  of  Pennsylvania  is  encountering  at 
this  time,  that  is,  while  the  University  is  entirely  out  of 
debt,  and  we  do  not  owe  a  dollar,  we  need  millions  of 
dollars  to  do  things  which  we  are  not  able  to  do  because 
we  have  not  the  money  and  the  State  has  not  given  us 
the  money.  More  money  has  been  raised  by  private  gift 
to  the  University  of  Pennsylvania  in  the  last  fifteen  years 
than  has  been  raised  for  any  single  public  purpose  within 
the  State  of  Pennsylvania  since  the  landing  of  William 
Penn.  That  is  the  record  which  the  University  wishes 
to  present  to  you  to-day.  But  the  States  to  the  west  of 
us,  beginning  with  Ohio,  are  giving  a  million  of  dollars 
where  the  State  of  Pennsylvania  gives  this  University 
$100,000.  The  appropriations  of  the  State  of  Illinois  are 
two  and  one-half  millions  of  dollars  for  educational  pur- 
poses, where  we  get  $150,000. 

Q.  The  University  of  Illinois? 
A.  Yes,  sir. 


267 

Q.  They  have  a  number  of  colleges  in  Illinois  ? 
A.  Yes,  sir. 

By  Mr.  Brown : 

Q.  Assuming  all  these  millions  are  needed,  and  the 
State  of  Pennsylvania  cannot  under  her  present  taxing 
system  collect  them,  have  you  folks  given  any  thought 
to  any  method  by  which  the  State  can  raise  these  addi- 
tional sums?  Do  you  think  there  should  be  a  more  strin- 
gent application  of  the  law  of  taxation  of  personal  prop- 
erty? 

A.  I  think  that  is  a  very  fair  question.  I  think  it  is  a 
question  which  the  economists  ought  to  meet. 

Q.  The  question  is  now,  if  these  moneys  are  all  needed, 
how  are  we  to  get  them;  are  we  to  enforce  more  strin- 
gently our  laws  for  the  collection  of  personal  property 
tax,  tax  manufacturing  companies,  are  we  to  go  out  and 
tax  as  they  are  doing  in  England,  everything  that  is  in 
sight  and  more?  We  would  like  to  get  the  thought  of 
your  department,  of  your  University,  on  that  subject. 

A.  If  you  would  like  our  views,  we  will  submit  them 
to  you. 

Q.  I  speak  upon  the  subject  of  the  tax  on  personal 
property  as  one  directly  interested  on  the  subject.  Is 
there  anything  else  you  desire  to  say? 

A.  Not  unless  you  have  a  question  to  ask  me. 

By  Mr.  Mover: 

Q.  You  made  a  statement  a  moment  ago  that  the  State 
of  Pennsylvania  contributed  $100,000  towards  the  Uni- 
versity of  Pennsylvania,  and  that  as  compared  to  other 
Commonwealths  west  of  us,  it  is  quite  a  small  amount? 

A.  Yes. 

Q.  Do  those  same  Commonwealths  contribute  anything 
towards  private  charity? 

A.  I  am  not  able  to  answer  that  question.  I  do  not 
believe  that  there  are  as  many  charitable  gifts  by  the 


268 

Legislature  as  there  are  in  the  State  of  Pennsylvania, 
but  I  am  pretty  well  occupied  and  I  have  not  had  very 
much  time  to  go  outside  of  my  work. 

Q.  Does  the  State  of  Ohio  have  a  University  main- 
tained entirely  by  the  State? 

A.  I  think,  practically.  I  heard  that  question  asked 
at  a  meeting  in  New  York  a  few  months  ago,  and  the 
President  of  the  University  stated  that  it  was  supported 
by  the  State  entirely. 

Q.  It  is  not  as  large  as  yours  ? 

A.  Not  as  large  as  ours,  but  growing  very  rapidly;  but 
the  total  of  private  gifts  to  the  University  since  its  in- 
ception had  not  exceeded  $100,000. 

Q.  Practically  a  State  institution,  pure  and  simple? 

A.  Absolutely,  yes,  sir. 

By  Mr.  McNichol : 

Q.  Would  it  be  well,  from  a  financial  standpoint  of 
view,  to  consolidate  the  educational  features  of  the  Com- 
monwealth by  centralizing  our  appropriations  in  one  State 
institution,  rather  than  handing  it  out  to  State  colleges 
and  places  of  that  kind;  in  other  words,  you  could  handle 
all  of  the  business  that  would  be  necessary  if  the  Legis- 
lature deemed  it  wise  to  make  an  appropriation  covering 
all  that  you  need  or  anybody  claimed  you  performed, 
which  the  State  college  is  practically  undertaking  to  di- 
vide from  its  infancy,  practically  a  young  institution? 

A.  Of  course;  the  State  College  is  the  agricultural  and 
grain  college  of  the  State,  but  I  would  rather  speak  for 
the  University. 

Q.  We  are  now  getting  down  to  what  would  be  the 
best  method  of  carrying  these  things  out  at  the  least  pos- 
sible cost? 

A.  There  are  undoubtedly  too  many  institutions  in  the 
State  of  Pennsylvania ;  very  many  too  many. 

By  Mr.  Brown : 

Q.  Coming  down  to  our  own  home,  what  is  your  though 


• 


269 

about  consolidating  any  institutions  here  in  Philadelphia? 
Could  they  be  consolidated  and  not  use  their  usefulness  ? 

A.  I  think  there  could  be  consolidation  to  a  certain 
extent,  which  would  be  most  economical  and  very  fruitful 
in  results  in  every  way.  I  do  not  think  you  want  to 
lose  sight  of  the  fact  that  there  ought  to  be  a  certain 
amount  of  competition. 

Q.  Do  you  or  do  you  not  think  that  the  medical  men, 
for  instance,  and  those  who  are  especially  interested  in 
these  institutions,  should  get  together  and  see  if  they 
cannot  devise  some  way  or  make  some  suggestions  as  to 
a  more  economical  use  of  the  State  money  appropriated 
to  those  institutions? 

A.  I  believe  there  could  be  a  saving  of  money,  and  an 
increase  in  efficiency,  in  standard,  too,  but  at  the  same 
time  I  think  there  ought  to  be  more  than  one  institution, 
because,  if  there  is  only  one  institution,  that  institution 
may  not  keeep  up  to  the  highest  state  of  efficiency  all 
the  time. 

By  Mr.  McNichol: 

Q.  It  would  be  a  harder  problem  to  consolidate  all  the 
medical  institutions  under  one  head,  don't  you  think? 

A.  I  heard  of  that  question,  the  suggestion  that  it  would 
be  beneficial  to  make  a  consolidation,  in  the  minds  of 
certain  men,  and  steps  might  be  taken  towards  that  end. 
I  think  the  question  might  arise  as  to  how  the  Legislature 
would  regard  a  question  of  that  kind. 

By  Mr.  Sproul : 

Q.  It  would  be  hard  to  reconcile  the  doctors,  too,  would 
it  not  ? 

A.  Of  course,  many  institutions  exist  not  for  the  sake 
of  the  community,  but  for  the  sake  of  the  physicians. 
That  is  perfectly  true,  as  we  all  know. 

By  Mr.  Brown: 

Q.  Is  there  any  way  of  obviating  that  question  or  ameli- 


270 

orating  it ;  have  yon  given  any  thought  as  to  how  it  could 
be  lessened? 

Mr.  McNichol:  I  do  not  think  that  is  a  fair  question. 

Dr.  Harrison:  I  want  to  speak  for  the  University,  and 
I  do  not  wish  to  speak  concerning  any  institution. 

Q.  Is  there  anything  more  you  wish  to  say,  Doctor? 

A.  Not  unless  I  am  asked  a  question.  We  have  nothing 
else  to  offer  unless  we  are  asked.  If  I  have  satisfactorily 
answered  the  questions  which  the  Committee  has  asked 
me,  the  University  will  rest  its  case  now. 


271 


DOCTOR  SMITH,  University  of  Pennsylvania,  called. 

By  Mr.  Brown : 

Q.  For  what  purposes  are  the  moneys  of  the  State  used 
by  the  University  of  Pennsylvania? 
A.  The  largest  sums  have  been  given  to  its  hospital. 

Q.  And  how  is  it  used,  for  what  purpose? 
A.  I  think  I  shall  have  to  refer  that  question  to  Mr. 
McFadden. 

Q.  Have  you  any  special  thought  of  your  own  which 
you  wish  to  express  here  on  this  subject  ? 

A.  You  asked  Provost  Harrison  a  question  in  regard  to 
what  the  University  was  doing  in  the  way  of  free  scholar- 
ships, and  as  I  happened  to  know  something  about  that 
gift  of  the  University  to  the  State,  I  handed  to  him  this 
morning,  and  he  has  asked  me  to  present  it  to  you.  It  is 
briefly  this:  That  this  year  there  are  in  the  University  of 
Pennsylvania  307  students  whose  tuition  is  remitted  There 
are  to-day  91  students  holding  senatorial  scholarships. 
There  are  13  holding  gubernatorial  scholarships,  making  a 
total  of  104  students  under  those  lists.  The  University  has 
given,  in  addition,  49  scholarships  to  the  high  schools  of 
this  State,  to  the  High  Schools  at  Harrisburg,  Altoona, 
Johnstown,  and  three  schools  in  Pittsburg,  Scranton,  Erie, 
pilkes-Barre,  and  so  on.  Then  there  are  a  number  of 
scholarships,  or  a  number  of  students,  who  have  free  tu- 
ition because  of  a  needy  students'  aid  fund,  which  is 
provided  for  by  the  University.  I  think  when  you  come 
to  consider  the  appropriations  of  the  State  to  the  Uni- 
versity, you  should  not  lose  sight  of  what  the  University 
is  giving  to  the  boys  of  this  State  in  the  way  of  free 
tuition.  Multiply  307  by  150  and  you  know  exactly 
what  we  are  giving  this  year  in  the  way  of  free  tuition. 
Of  course,  $150  is  the  lowest  tuition  fee,  $200  being  the 


272 

fee  in  the  schools  of  engineering,  in  the  medical  schc 
and  other  departments;  law  is  $150,  I  think. 

Q.  Has  the  University  kept  any  record  of  what  becom< 
of  all  these  boys  after  they  leave ;  do  they  stay  in  Pem 
sylvania  and  does  the  State  of  Pennsylvania  receive 
benefit  of  their  education,  or  do  they  go  elsewhere  and  go 
the  whole  country. 

A.  The  whole  country  benefits  by  it. 

Q.  Can  you  give  us   an  idea   of   what   percentage 
them  will  stay  in  Pennsylvania? 

A.  I  cannot  off-hand,  but  I  could  furnish  you  this  ii 
formation. 

By  Mr.  Sproul: 

Q.  There  are  Pennsylvania  boys  who  receive  the  edi 
cation  ? 

A.  Yes. 

By  Mr.  McNichol: 

Q.  Before  you  leave,  the  Legislature  and  this  Com- 
mittee wants  to  know  your  views  as  to  the  economical 
question  in  regard  to  the  appropriation  being  distributed 
throughout  the  State  to  several  institutions  and  the  present 
subject — concentration  of  its  appropriations  to  one  main 
institution;  have  you  any  views  on  that  subject  as  to  the 
benefit  that  would  be  derived  by  the  whole  State? 

A.  I  do  not  think  I  am  prepared  to  speak  on  that.  I 
would  rather  speak  for  the  University. 

Q.  Is  it  simply  because  you  do  not  want  to  interfere 
with  the  other  institutions  ? 

A.  No;  I  am  not  sufficiently  well  acquainted  with  what 
they  are  doing. 

Q.  We  will  come  back  to  this  proposition.  The  Uni- 
versity of  Pennsylvania  does  not  have  different  branches 
of  her  institution  separated  into  different  parts  of  the 
City  of  Philadelphia  or  throughout  the  State  of  Pennsyl- 
vania ? 

A.  No. 


273 

Q.  Will  you  tell  us  why? 

A.  Well,  we  think  that  the  dental  department,  for  ex- 
ample, prospers  better  when  it  is  under  the  wing  of  an 
educational  department  such  as  the  college;  that  inde- 
pendent institutions  in  veterinary  medicine  and  in  medi- 
cine have  all  found  it  to  their  advantage  to  come  in  con- 
tact with  the  collegiate  department.  They  are  all  seeking 
that  help,  and  the  independent  institution  is  slowly  dis- 
appearing. 

Q.  And  all  those  branches  of  the  University  feel  it 
beneficial  to  come  under  the  wing  of  the  main  body? 

A.  Yes,  sir. 

Q.  And  that  applied  to  the  State  -of  Pennsylvania 
would  be  beneficial? 

A.  I  would  say  so,  yes,  sir. 


274 


MR.  McFADDEN,  University  of  Pennsylvania,  called. 

By  Mr.  Brown: 

Q.  Can  you  tell  us  how  the  appropriation  of  the  State 
to  the  University  is  expended? 

A.  If  it  is  given  for  maintenance  it  is  expended  for 
maintenance,  and  if  it  is  given  for  building  it  is  expended 
for  building. 

Q.  What  does  maintenance  include? 

A.  It  includes  everything  excepting  buildings  and  re- 
pairs. 

Q.  The  purchase  of  supplies? 

A.  The  purchase  of  supplies. 

Q.  In  your  opinion,  would  it  be  more  economical  for  the 
supplies  to  be  furnished  by  the  State  and  distributed 
among  the  several  institutions  on  requisition? 

A.  I  do  not  think  so. 

Q.  You  think  you  can  buy  as  closely  in  the  quantities 
in  which  you  buy  as  a  State  officer  could  in  larger  quan- 
tities ? 

A.  I  do  not  know  that  we  buy  any  cheaper,  but  we  can 
use  the  goods  more  beneficially.  Under  our  system  we 
have  a  contract  every  three  months,  make  a  new  contract 
every  three  months,  except  those  things  like  green  goods 
in  the  market,  and  we  take  each  day  the  supply  to  the 
hospital.  Our  refrigerator  only  holds  enough  for  one 
day's  use  and  there  is  no  extravagance,  and  the  thing  is 
empty  at  night. 

Q.  Do  you  hold  the  same  opinion  the  Provost  has  ex- 
pressed, that  the  University  is  needing  not  only  what  she 
has  received,  but  should  receive  millions  more? 

A.  Yes,  sir,  certainly. 

Q.  That  is  your  thought  ? 

A.  Certainly. 


275 

Q.  Assuming  that  this  State  cannot  pay  these  millions 
or  appropriate  these  millions  on  present  revenues,  is  it 
your  thought  that  other  measures  should  be  adopted  for 
the  collection  of  more  revenue? 

A.  I  have  not  given  that  sufficient  thought.  I  think 
the  State  is  entitled  to  take  care  of  its  hospitals  and  take 
care  of  the  citizens  of  the  State. 

Q.  You  consider  that  a  pressing  claim  and  a  moral 
obligation  on  the  State  to  do  it  ? 

A.  I  think  the  State  has  taught  the  citizens  of  Pennsyl- 
vania to  expect  that  assistance. 

Q.  You  consider  it  a  high  moral  obligation  on  the  part 
of  the  Commonwealth  to  do  that  for  the  people? 

A.  Absolutely.  As  long  as  they  taught  the  child,  the 
child  must  be  maintained. 

Q.  Have  you  given  any  thought  as  to  a  more  stringent 
enforcement  of  the  collection  of  personal  taxes? 

A.  No,  I  have  not. 

Q.  Or  the  taxing  of  other  subjects  for  the  purpose  of 
raising  revenue? 

A.  No,  I  have  not. 


276 


MR.  WILLIAM  POTTER,  Jefferson  Hospital,  called. 

Mr.  Potter :  I  would  like  to  say,  Mr.  Chairman  and  Gen- 
tlemen of  the  Committee,  Mr.  Counsel  and  Ladies  and  Gen- 
tlemen, just  a  few  words  in  a  general  way  about  all  hospital 
work  in  the  Commonwealth  of  Pennsylvania.  I  have  had 
some  experience  in  other  States,  notably  in  Missouri,  where 
I  have  a  married  daughter  living,  and  I  know  that  the 
system  of  Pennsylvania  of  taking  care  of  her  sick  and  poor 
is  being  seriously  thought  of  being  followed  in  other  States, 
and  I  think  in  a  general  way  that  there  is  an  evolution 
going  on  all  over  the  world,  or  what  might  be  called  a  trend 
towards  socialism.  All  we  have  got  to  do  is  to  look  at  the 
old  age  pension  law  in  England  and  the  budget  discussions 
there  to-day  to  know  that  this  is  the  time  when  those  that 
have  money  are  going  to  be  compelled  to  look  after  those 
that  have  not,  and  I  believe  myself  that  the  present  con- 
ditions existing  in  Philadelphia,  in  Pennsylvania,  of  sup- 
porting the  University  of  Pennsylvania,  while  there  may  be 
some  reforms  instituted,  I  believe  in  a  general  way  it  is 
the  system  that  is  more  apt  to  be  followed  by  other  States, 
and  I  would  extremely  regret  seeing  this  State  go  away  from 
it.  But  what  I  am  here  for  to-day  is  not  to  speak  for  the 
general  hospital  work;  that  I  have  no  doubt  will  be  amply 
and  ably  agitated  by  the  different  representatives  here. 
What  I  would  like  to  say  is  upon  a  subject  which  has  not 
yet  been  discussed,  and  that  is  the  question  of  medical 
education  in  the  Commonwealth  of  Pennsylvania,  and  if  it  is 
your  desire  I  will  either  answer  questions  on  that  line  or 
proceed.  I  believe  medical  education  in  Pennsylvania  to- 
day can  only  be  supported  in  one  of  two  ways.  It  is  a  well- 
known  fact,  gentlemen  of  the  Committee,  that  Pennsylvania 
has  been  a  medical  center  since  Revolutionary  days.  Our 
prestige  to-day  is  being  seriously  threatened,  and  threat- 
ened in  the  direction  of  New  York,  of  Chicago,  of  Baltimore 
and  of  Boston,  and  it  is  due  to  this  fact,  that  the  cost  of 


277 

medical  education  has  become  so  tremendously  expensive 
that  it  has  appealed  to  the  multi-millionaires  of  this  country 
who  have  given  millions  of  dollars  to  those  cities  for  medi- 
cal education,  and  Pennsylvania  has  got  to  be  kept  in  the 
running  or  our  young  men  are  going  to  leave  Pennsylvania 
where  they  have  been  getting  their  medical  education,  and 
going  to  those  cities  who  offer  special  facilities  it  is  utterly 
impossible  for  us  to  offer,  and  I  want  to  say  I  am  not 
speaking  for  my  own  institution.  I  am  speaking  for  every 
medical  teaching  institution  in  the  Commonwealth  of 
Pennsylvania,  and  I  particularly  include  the  University, 
the  Hahnemann,  the  Medico- Chirurgical,  the  Western 
Women 's,  and  the  institution  over  which  I  have  the  honor 
to  preside.  This  has  got  to  be  solved  in  one  or  two  ways. 
The  fees  from  the  students  are  not  sufficient.  Medical 
education  has  increased  tremendously  in  cost,  because  it  is 
absolutely  vital  in  the  education  of  students  that  they 
shall  have  hospital  experience.  The  greatest  living  author- 
ity to-day  is  Dr.  Osier.  Dr.  Osier  says  the  student  of 
medicine  should  be  thrown  into  the  hospital  during  his 
junior  and  senior  years.  Therefore  they  cannot  get  that 
hospital  practice  unless  we  have  the  facilities,  and  I  am 
happy  to  say  that  as  a  result  of  the  increased  interest  in  tak- 
ing care  of  the  hospitals  of  the  State — I  say  without  contra- 
diction that  the  sick  and  the  poor  can  get  better  hospital 
treatment  in  the  State  of  Pennsylvania  than  in  any  other 
Commonwealth  in  the  United  States.  Now,  it  is  absolutely 
necessary  for  this  hospital  practice  for  the  medical  students. 
We  will  either  have  to  go  to  the  multi-millionaires  and  ask 
them  to  give  us  their  millions  of  dollars  to  keep  us  in  proper 
competition  with  our  rival  cities,  or  the  State  will  have  to 
help  us  out.  I  have  never  gone  before  any  Legislature  in 
the  position  of  a  supplicant  or  asking  for  alms,  I  have 
always  gone  in  the  feeling  of  mutual  agreement,  that  it 
was  just  as  much  to  the  interest  of  the  State  to  help  us, 
as  it  was  for  us  to  ask  the  State  to  help  us  in  the  matter  of 
medical  education.  I  do  not  know  of  any  way  of  helping 
my  fellow  men  better  than  in  taking  the  young  men  of  the 


278 

country  and  educating  them  to  go  out  and  administer  to 
the  sick  and  suffering,  and  at  the  same  time  in  getting  that 
education  by  administering  to  the  sick  and  suffering  in  the 
hospitals  of  this  great  Commonwealth,  in  this  great  City. 

By  Mr.  Brown : 

Q.  What  is  the  average  number  of  your  students  who 
stay  in  the  several  counties  of  this  Commonwealth? 

A.  The  great  bulk  of  them  are  from  Pennsylvania,  but  of 
course  our  students  are  from  every  State  in  the  United 
States  also,  and  we  have  them  from  different  parts  of  the 
world.  Pennsylvania  is  celebrated  all<  over  the  world  as  a 
medical  center. 

Q.  Your  thought  is  that  while  the  money  is  directly  ap- 
propriated to  Jefferson,  for  instance,  several  counties  are 
benefited  because  of  the  location  in  their  midst  of  men 
specially  skilled  by  reason  of  their  instruction  here  ? 

.  A.  Not  only  that,  Mr.  Brown,  but  also  you  will  find  all 
over  this  State  that  in  complicated  cases  where  the  family 
physician  is  doubtful,  they  will  send  them  down  to  the 
City  or  they  will  ask  the  City  doctor  to  go  there  in  con- 
sultation, but  those  cases  will  be  sent  to  the  hospitals  here. 

Q.  Has  there  been  any  special  improvement  in  the  medi- 
cal profession  throughout  the  State,  say  within  the  last 
fifteen  or  twenty  years,  which  you  could  in  any  way  at- 
tribute to  the  benefits  received  from  State  appropriations? 

A.  There  is  no  question  about  it.  There  is  no  profession 
that  has  increased  proportionately  more  than  the  medical 
and  surgical  profession  has. 

Q.  You  think  part  of  that  might  be  properly  attributed 
to  the  appropriation  from  the  State,  the  additional  help 
given  ? 

A.  I  know  it.  I  know  in  this  great  new  hospital  there 
is  to  be  a  tablet  placed  in  the  very  center  of  it  to  the 
Commonwealth  of  Pennsylvania,  to  the  Legislature  of  Penn- 
vsylvania,  who  made  possible  this  new  hospital.  I  know  it  is 
almost  directly  to  the  State  aid  of  these  institutions  that 
they  are  all  in  the  splendid  condition  they  are  in  to-day. 


270 

Q.  What  is  your  thought,  assuming  that  the  State  of 
Pennsylvania  is  to-day  not  able  to  pay  these  large  sums 
to  these  institutions,  or  larger  sums,  what  is  your  thought 
as  to  the  levying  of  additional  taxes,  or  enforcing  the  pres- 
ent laws  more  stringently,  the  collection  of  personal  prop- 
erty and  other  taxes ;  I  am  asking  you  as  a  business  man  ? 

A.  I  did  not  come  here  prepared  to  answer  any  questions 
of  that  character,  but  I  should  say  one  of  the  laws  that 
ought  absolutely  to  be  insisted  upon  is  the  collection  of  the 
tax  on  personal  property.  I  agree  with  Benjamin  Har- 
rison, who  said  that  the  meanest  citizen  and  most  un- 
patriotic was  the  man  who  did  not  pay  his  personal 
property  tax,  as  he  was  the  man  that  had  means  enough 
set  aside  to  invest  outside  of  his  regular  business,  and  I 
think  those  taxes  ought  to  be  collected,  if  they  are  not. 
I  only  infer  from  what  you  said  that  possibly  they  are  not 
collected. 

Q.  Assuming  that  they  are  not,  do  you  think  the  demands 
or  requirements  of  your  and  similar  institutions  justifies 
the  strict  enforcement  of  those  laws  relating  to  them? 

A.  I  do. 

Q.  That  is  your  thought  as  a  business  man.  How  is  the 
State  money  spent  in  your  institution? 

A.  We  have  never  received  any  moneys  except  for  main- 
tenance, and  in  the  earlier  part  of  these  proceedings  I 
remember  the  Chairman  asked  the  question  as  to  whether 
$231,000  was  all  the  money  that  had  been  received  by 
Jefferson.  Not  at  all.  That  is  all  the  money  that  has  been 
received  for  the  support  and  maintenance  of  the  hospital. 
That  does  not  include  any  donations  for  construction  or  for 
buildings  or  anything  like  that. 

Q.  Have  you  given  any  thought  as  to  whether  or  not  the 
supplies  common  to  these  several  institutions  could  not  be 
more  economically  bought  by  one  person  and  distributed 
among  them,  like  the  Pennsylvania  Railroad,  for  instance, 
has  a  purchasing  department  which  purchases  supplies  for 


280 

all  its  stations ;  would  not  such  a  scheme  as  that  be  practi- 
cable ? 

A.  I  do  not  know  that  I  am  prepared  to  answer  that  for 
this  reason,  that  in  the  special  institution  that  I  am  connect- 
ed with,  a  teaching  hospital,  doctors  have  such  a  variety  of 
desires  in  their  purchases,  and  the  different  minutise  that 
enters  into  the  purchases  of  a  teaching  hospital  that  it 
would  not  be  practicable  to  have  it  bought  by  somebody 
who  is  not  an  expert,  and  while  it  might  be  a  good  thing  for 
general  hospitals,  I  do  not  know  that  it  would  be  a  good 
thing  for  teaching  hospitals,  unless  some  arrangement  might 
be  made  for  purchasing. 

Q.  Has  the  appropriation  of  State  moneys  tended  to 
lessen  the  interest  of  the  institutions  towards  obtaining 
private  subscriptions? 

A.  I  do  not  think  I  can  answer  that.  I  know  there  has 
been  a  great  deal  of  money  raised  by  personal  donations, 
I  do  not  think  that  could  ever  be  thoroughy  answered  un- 
less the  State  aid  ceased  and  we  were  up  against  it  and  had 
to  do  it.  It  would  take  princely  donations  to  do  it. 

Q.  Do  you  think  those  interested  in  the  institution  make 
the  same  effort  to  obtain  gifts  that  they  would  otherwise 
have  made  if  they  had  not  the  State  aid  ? 

A.  I  can  say  this,  so  far  as  the  people  interested  in  the 
institution  are  concerned,  they  give  just  as  liberally  now, 
receiving  the  State  aid,  as  they  would  if  they  did  not — as 
if  the  State  did  not  give  a  dollar. 

Q.  How  about  the  free  beds  in  your  institution? 

A.  It  is  almost  absurd.  Almost  every  bed  in  this  place 
is  free.  The  percentage  of  free  beds  has  increased  tremen- 
dously, so  that  the  only  charge  we  ever  make  there  for  any- 
body that  can  afford  to  pay  is  forty  cents,  or  a  dollar  a  day, 
but  if  they  cannot  it  is  free  anyhow.  I  know  we  have 
often  gone  to  the  extent  of  having  committees  getting  up 
little  entertainments,  all  the  time  trying  to  get  money. 
Even  with  the  liberal  State  aid  we  are  getting,  we  cannot 
make  both  ends  meet. 

Q.  Do  you  not  think  it  is  probable  that  the  authorities 


281 

in  the  institutions  arc  lax  in  making  collections,  due  to  the 
charity  laws  or  State  aid  received? 

A.  It  has  not  been  our  experience. 

Q.  Is  it  not  probable  that  patients  who  might  be  able 
to  pay  but  have  not  paid  and  have  been  discharged,  that 
the  hospital  might  have  said,  ' '  We  will  just  charge  that  up 
to  charity  cases  ? ' ' 

A.  There  might  be  something  in  that.  I  believe  it  is 
better  to  have  a  hospital  abused  in  that  respect,  than  not 
to  be  in  a  position  to  treat  the  poor  when  they  come  in, 
and  I  do  not  think  there  is  anything  like  the  abuse  that  is 
generally  supposed,  because  there  is  pretty  thorough  super- 
vision anyhow. 

Q.  Supposing  the  State  has  not  sufficient  revenue  to  con- 
struct her  State  institutions  and  at  the  same  time  give  as 
she  is  giving  to  private  institutions,  which  do  you  think 
should  have  the  precedence? 

A.  The  first  thing  you  ought  to  look  after  your  insane, 
but  I  think  the  very  next  pressing  thing  is  to  look  after  the 
sick  poor. 

By  Mr.  Moyer : 

Q.  Has  your  hospital  a  heavy  endowment  fund? 

A.  Not  as  heavy  as  we  would  like  to  have  it,  but  we  have 
got  pretty  close  to  $400,000  in  our  endowment  fund. 

Q.  You  have  had  that  for  some  years? 

A.  Yes,  and  adding  to  it  constantly.  I  do  not  believe 
there  is  a  single  institution  going  before  the  Legislature  for 
State  aid  that  would  not  feel  better  if  they  did  not  have 
to  do  it,  but  we  see  it  is  a  necessity. 

By  Mr.  Brown : 

Q.  Do  you  think  the  State  of  Pennsylvania  exercises  a 
proper  supervision  over  your  institution  to  see  that  the 
money  is  properly  expended  ? 

A.  I  think  our  friend  Wharton  is  very  zealous. 

Q.  I  asked  this  for  the  purpose  of  drawing  you  out,  not 
that  I  have  any  opinion  or  belief  on  it. 

A.  We  live  in  the  glare  of  publicity  all  the  time,  so  far 
as  that  is  concerned. 


282 


CHARLES  D.  BARNEY,  called. 

By  Mr.  Brown : 

Q.  Do  you  desire  to  make  any  preliminary  remarks  be- 
fore I  ask  you  a  few  questions  ? 

Mr.  Barney:  Nothing  except  that  I  would  like  to  say 
Mr.  Potter  stole  most  of  my  ideas  but  I  do  wish  to  lay 
emphasis  on  one  idea  he  expressed,  so  far  as  the  State  of 
Pennsylvania  giving  money  to  the  indigent  poor  is  con- 
cerned, I  do  not  think  they  ought  to  take  the  back  track 
on  that,  because  the  other  States  do  not  do  it  as  we  have 
done,  and  we  will  be  a  lesson  to  the  rest  of  the  United 
States  and  perhaps  the  world.  Let  up  keep  on  in  the  good 
work  and  they  will  come  into  line  finally,  because  there 
is  no  question  about  the  wisdom  and  godliness  of  it. 

Q.  Assuming  that  we  ought  to  keep  on,  of  course  that 
means  additional  expense,  because  the  population  is  con- 
stantly increasing,  what  do  you  think  about  the  advisability 
or  the  justice  of  the  State  levying  additional  revenues  for 
this  purpose? 

A.  I  think  they  will  have  to  do  it.  I  think  we  have  got 
very  wise  men  at  Harrisburg  who  can  easily  take  care  of 
that.  I  say  so  far  as  the  taxes  are  concerned  there  will  be 
no  trouble  about  that,  the  wiseacres  at  Harrisburg  can 
easily  handle  that.  They  are  there  for  that  purpose  and 
can  easily  do  it. 

Q.  Take  the  personal  property  tax,  do  you  think  this 
additional  money  should  be  raised  by  a  more  stringent  en- 
forcement of  that  law? 

A.  I  do.  I  would  raise  the  money  in  any  way,  and  have 
an  income  tax  if  necessary. 

Q.  Then  you  think  the  end  would  almost  justify  any 
means  ? 

A.  I  do  by  all  means. 


283 

By  Mr.  Sproul : 

Q.  Do  you  think  a  tax  on  stock  transactions  would  be — 

A.  I  used  to  be  in  the  stock  business,  I  do  not  know  much 
about  it  now.  Yes,  I  would  tax  stocks. 

Q.  Is  the  New  York  tax  a  hardship  ? 

A.  It  is  considered  so  by  them  over  there,  but  they  hate 
to  give  up.  I  do  not  think  it  would  be  for  us,  we  are  more 
liberal. 

Q.  It  would  not  be  so  hard? 

A.  No,  I  think  you  could  levy  a  tax  on  that. 

By  Mr.  BroAvn : 

Q.  You  stand  on  a  very  broad  platform  on  the  subject 
of  revenue? 

A.  I  was  brought  up  in  this  school,  never  mind  what  the 
taxes  are;  spend  the  money;  the  more  money  you  spend, 
the  more  you  will  have  to  spend. 

Q.  Have  you  given  any  thought  to  the  question  of 
the  consolidation  of  these  institutions  at  all,  whether  or 
not  they  could  be  consolidated  without  lessening  their 
usefulness  ? 

A.  I  do  not  see  why  we  ought  to  consolidate. 

Q.  You  could  consolidate  but  the  others  would  not  ? 

A.  The  others  can  very  easily,  I  am  told.  I  believe  in 
consolidation.  I  think  the  doctors  should  consolidate. 

Q.  You  believe  that  in  union  there  is  strength? 

A.  I  do,  indeed. 

By  Mr.  Sproul: 

Q.  The  doctors  and  preachers  would  oppose  it? 
A.  Well,  they  are  amenable  to  reason. 
Q.  The  lawyers  are  not? 

A.  Well,  lawyers  can  be  handled  when  we  get  them  on 
the  operating  bench  or  table. 

By  Mr.  McNichol  : 

Q.  That  is  about  the  only  place  you  can  handle  them  ? 
A.  Well 


284 

By  Mr.  Brown : 

Q.  What  do  you  think  about  the  purchase  of  supplies; 
do  you  think  that  it  could  be  done  more  economically  by  a 
central  bureau? 

A.  My  present  view  is  that  it  could  not. 

Q.  It  could  not  ? 

A.  No.  I  think  if  you  have  a  State  purchasing  agency 
you  would  have  an  awful  howl,  and  the  whole  thing  would 
mean  graft. 

Q.  You  speak  of  graft.  Would  there  be  any  more  danger 
of  that  from  one  man,  than  there  would  be  with  all  these 
147  institutions;  do  you  not  think  there  would  be  more 
opportunity  for  grafting  among  147  than  there  would  be 
with  one  ? 

A.  I  do  not  say  that  there  would  be  graft.  There  would 
be  more  accusations  of  graft.  The  institutions  who  did  not 
know  anything  about  it  would  be  up  in  the  air.  As  to  the 
other  question  about  there  being  graft  in  our  institutions, 
I  cannot  conceive  of  that  going  on  to  any  great  extent,  be- 
cause in  all  our  institutions  we  have  some  of  the  best  men 
in  the  community  on  the  board  and  they  are  able  to  take 
care  of  affairs,  and  they  certainly  know  a  good  thing  when 
they  see  it,  and  if  they  have  a  steward  or  purchasing  agent 
making  a  lot  of  money,  it  don't  take  a  long  time  to  find 
it  out. 

Q.  My  thought  was  perhaps  the  various  supplies  could  be 
purchased  more  cheaply  by  one  man  than  by  having  156 
different  institutions  doing  it  ? 

A.  I  do  not  think  so.  You  have  had  one  expression  to 
this  effect  that  estimates  are  given  out  or  bids  received  for 
the  supply  of  staple  articles  and  all  that  sort  of  thing  in 
such  quantities  as  they  can  use.  If  you  buy  a  larger  quan- 
tity and  it  goes  to  waste  or  is  destroyed,  there  is  no  econ- 
omy in  that.  I  think  the  thing  is  all  right.  There  is  a 
movement  on  foot  in  New  York  now  for  the  hospitals  to 
consolidate  as  a  purchasing  agency  among  themselves  for 
the  supply,  for  instance,  of  gauzes  and  things  like  that  that 


285 

do  not  spoil.  I  just  learned  about  it  yesterday,  and  we  have 
been  discussing  that  a  great  deal  and  are  going  to  take  it  up 
and  find  out  what  is  in  it.  If  they  are  going  to  make  any- 
thing by  the  arrangement  we  are  going  to  be  in  it  over  here, 
all  the  hospitals. 

Q.  Like  the  Pennsylvania  Railroad? 

A.  You  say  the  Pennsylvania  purchasing  agent.  He  does 
not  buy  for  the  Reading  or  for  any  other  railroad.  He 
buys  for  that  railroad.  We  thought  of  joining  together  and 
exchanging  views  and  buying  a  whole  lot  of  flour  to  dis- 
tribute around  among  ourselves,  we  know  what  this  one 
pays  for  flour  or  another  one  pays  for  flour  or  sugar,  but 
there  is  competition  in  the  sales  among  the  sellers  that  will 
fix  all  that.  There  would  not  be  anything  saved  by  buying 
a  great  deal,  I  do  not  think. 

Q.  Assuming  there  is  not  enough  money  for  the  State 
institutions  and  these  private  institutions,  what  is  your 
idea  as  to  who  should  receive  the  precedence? 

A.  The  State  institutions,  by  all  means. 


286 


MR.  HENRY  F.  WALTON,    President    Medico-Chi. 
Hospital,  called. 

Mr.  Walton:  Mr.  Chairman  and  Gentlemen:  I  cannot 
too  strongly  endorse  what  Col.  Potter  has  said  with  re- 
gard to  the  charitable  side  of  the  teaching  institutions 
of  the  City.  I,  as  President  of  the  Medico-Chirurgical 
Institution  for  the  past  two  years,  have  had  an  oppor- 
tunity to  know  the  good  side  of  the  charity  dispensed 
by  the  State  of  Pennsylvania.  Everyone  knows  the  in- 
terest that  I  take  in  the  disposal  of  the  State's  money 
to  the  various  charitable  institutions  of  the  State.  I 
want  to  say  that  I  consider  the  worthy  sick  poor  are  as 
much  entitled  to  the  charity  of  the  State  as  I  do  the  in- 
digent or  poor  insane. 

By  Mr.  McNichol: 

Q.  Do  you  consider  that  the  worthy  sick  poor  receive 
the  consideration  from  the  hospitals  such  as  you  are  re- 
ferring to,  as  well  as  they  do  from  the  municipal  institu- 
tions ? 

A.  County  almshouses — outside  of  the  large  cities — I 
do  not  consider  they  do,  no,  sir.  I  do  not  consider  that 
the  county  poorhouses  in  the  State  of  Pennsylvania  out- 
side of  the  large  cities  extend  the  proper  treatment, 
surgical  treatment,  and  the  proper  medical  care  that  is 
given  and  administered  by  such  hospitals  as  we  have  in 
Philadelphia  and  as  can  be  found  in  other  counties. 

By  Mr.  Brown: 

Q.  Why  is  that? 

A.  Simply  because  they  do  not  have  the  facilities. 

Q.  Suppose  the  State  of  Pennsylvania  were  to  establish 
a  central  or  easily  accessible  hospital  with  local  dispen- 
saries in  every  county  throughout  the  State? 


287 

A.  Now  you  are  talking.  I  have  thought  about  that 
subject. 

Q.  What  effect  would  that  produce? 

A.  That  is  a  very  serious  subject  for  thought  and  con- 
sideration. 

By  Mr.  McNichol: 

Q.  Suppose  the  State  of  Pennsylvania  came  to  the 
County  of  Philadelphia  for  financial  support? 

A.  They  do  come,  sir.  I  should  like  to  think  about 
that  subject  a  little  more.  I  want  to  say  this,  it  has  al- 
ways been  my  thought  that  where  the  counties  through- 
out the  State  have  sent  their  patients  to  Philadelphia 
institutions,  like  our  teaching  institutions  especially,  for 
treatment,  that  the  money  appropriated  to  those  counties 
for  the  maintenance  of  their  patients  should  be  handed 
over  to  these  institutions  here  in  Philadelphia.  I  mean 
by  that  that  today  perhaps  not  every  county  is  repre- 
sented in  a  bed  in  the  Medico-Chi,  and  m  the  Jefferson 
and  in  the  University  Hospitals,  but  nearly  all  of  them 
all  the  time  are  represented  there.  The  peculiar  and  se- 
vere cases  which  are  sent  to  us  from  the  various  counties 
throughout  the  State,  and  which  we  always  accept,  the 
majority  of  them  are  too  poor  to  pay  us  anything,  and 
where  they  are  maintained  in  our  institution  out  of  the 
appropriation  given  to  us  by  the  Legislature,  plus  the 
private  charity,  and  the  county  that  sends  the  patient 
there  is  free  from  his  expense,  we  should  get  the  money 
that  is  appropriated  to  the  county. 

By  Mr.  Sproul: 

Q.  They  are  maintained  under  a  State  appropriation? 

A.  Yes,  they  are  entitled  to  the  ratio  we  are  entitled 
to  per  capita,  except  that  wer  as  a  teaching  institution 
here,  have  a  greater  burden  to  bear  than  the  other  insti- 
tutions which  do  not  have  the  educational  opportunities 
attached  to  them. 


288 

By  Mr.  Brown: 

Q.  Why  should  not  the  counties  be  required  to  have 
a  hospital  and  then  receive  aid  from  the  State? 

A.  I  will  say  it  is  a  question  whether  it  is  not  less  ex- 
pensive to  have  them  sent  here.  For  instance,  I  will  il- 
lustrate: A  man  in  the  Pennsylvania  Steel  Works,  at 
Steelton,  is  injured  by  an  explosion  and  he  is  taken  to 
one  of  the  hospitals ;  say,  for  instance,  at  Harrisburg ;  the 
Harrisburg  Hospital  thinks  the  oculist  at  the  Medico-Chi- 
rurgical  can  do  that  man  some  good.  The  man  works  for 
a  dollar  a  day  and  he  has  a  big  family  of  children.  He 
goes  to  the  'phone  and  telephones  us  and  we  tell  him 
to  send  him  down.  He  notifies  our  hospital  that  he  will  send 
him  down  on  the  next  train.  Our  ambulance  is  at  the 
station  to  meet  him  and  we  take  him  in  and  take  care 
of  him  and  give  him  treatment.  Still  the  county  that 
gets  an  appropriation  from  the  State  is  not  charged  with 
that  man's  maintenance,  it  comes  off  of  us.  Now,  I  only  do 
this  to  illustrate  the  terrible  expense  which  is  attached 
to  the  running  of  our  institution  as  compared  with  the 
other  smaller  institutions.  We  are  supposed  to  adminis- 
ter our  charity  in  Philadelphia.  Well,  we  do  not  do  any- 
thing of  the  kind.  We  do  not  go  out  of  the  State,  it  is 
true.  I  was  asked  this  morning  to  take  a  man  in  from 
New  Jersey,  a  very  serious  case.  I  told  them  I  did  not 
see  how  we  could  afford  to  do  it.  These  are  questions 
which  ought  to  be  considered,  and  I  am  in  favor  of  the 
most  strict  observations  by  the  State  or  control  of  the 
State  over  its  institutions,  so  far  as  the  expenditure  of 
the  State  money  is  concerned,  whether  by  the  State 
Board  of  Charity  or  by  the  establishment  of  a  bureau  at 
Harrisburg,  or  whatever  it  may  be.  I  agree  with  what 
has  been  said  here  today,  and  my  report  on  my  investi- 
gation of  the  insane  institutions  of  the  State  will  show 
you  that  there  are  not  two  of  them  that  are  maintained 
and  have  the  same  cost  per  capita  of  maintenance ;  there 
are  no  two  of  them  that  keep  the  same  set  of  books ;  there 


289 

are  no  two  of  them  that  pay  the  same  money  for  clothing 
or  supplies.  They  are  all  run  upon  a  different  basis,  and 
I  think  that  the  State  cannot  be  too  strict  in  the  control 
of  the  expenditure  of  this  money.  I  would  be  very  glad 
for  the  State  to  come  into  our  institution  and  if  there  is 
any  grafting  going  on  over  there  I  want  to  know  it,  and 
I  think  I  would  know  it.  We  maintain  today  at  the  Medi- 
co-Chirurgical  Hospital  one  of  the  lowest  costs  per  capita 
for  the  maintenance  of  patients  of  any  institution  in  the 
country,  and  I  want  to  say  to  you,  Mr.  Brown,  that  ii' 
you  will  travel  over  the  United  States  and  visit  the  hos- 
pitals and  insane  asylums  and  public  institutions  as  I 
have  done,  you  will  be  very  proud  to  find  that  there  is 
not  a  single  one  of  them  that  I  have  ever  visited  that  I 
did  not  find  the  graduates  in  medicine  coming  from  one 
of  the  four  or  five  colleges  in  Philadelphia.  In  fact,  in 
some  of  them  all  their  doctors  are  from  Philadelphia  in- 
stitutions. I  say  to  you  very  frankly,  that  I,  as  Presi- 
dent of  the  Medico-Chirurgical  Board,  intend  at  the  next 
session  of  the  Legislature  to  ask  for  an  appropriation 
toward  the  educational  side  of  our  institution.  As  Col. 
Potter  has  told  you,  I  know  of  no  institution  whose  stu- 
dent body,  the  income  from  which  maintains  it,  in  the 
country  today,  and  we  cannot  subject  ourselves  and  the 
position  we  occupy  as  connected  with  that  institution  in 
worrying  almost  every  day  and  trying  to  get  somebody 
to  contribute  some  money  to  help  us  keep  it  in  a  proper 
condition  and  pay  our  expenses. 

By  Mr.  Brown : 

Q.  Have  you  made  any  investigation  in  other  States 
as  to  how  they  do  this? 

A.  Yes,  and  I  want  to  say  the  system  in  Pennsylvania 
is  admired  by  every  State  in  the  Union.  I  do  not  know 
of  a  single  State  that  does  not  administer  charity  in  this 
way,  except  where  they  give  as  a  reason  that  they  are  too 
poor  to  do  it.  You  make  better  citizens;  you  raise  the 
15 


290 

standard  of  our  people  by  administering  this  charity 
through  the  State  to  your  people.  The  State  of  Penn- 
sylvania is  a  rich  State,  and  you  gentlemen,  members  of 
the  Legislature,  will  have  no  trouble  to  raise  increased 
revenues  if  you  want  to  do  it,  in  my  judgment.  I  should 
think  a  good  while  before  I  would  vote  for  a  bill  to  tax 
the  manufacturing  companies  in  the  State  of  Pennsyl- 
vania, the  manufacturing  concerns,  and  I  might  say 
if  you  will  turn  back  to  the  files  of  the  session  of  1905 
you  will  find  a  bill  there  that  I  helped  to  prepare  putting 
four  mills  tax  on  coal,  which  will  greatly  increase  the 
revenues  of  the  State.  Let  some  of  our  natural  resources 
help  to  pay  this  increased  revenue  and  give  increased 
privileges  to  our  people.  I  did  not  come  here  to  express 
any  certain  opinion  upon  this  subject,  but  by  reason  of 
my  official  association  with  gentlemen  who  are  .my  col- 
leagues, by  reason  of  my  public  service  at  Harrisburg, 
I  must  confess  I  have  formulated  some  opinions  on  some 
of  these  questions.  I  should  be  very  glad  to  have  you 
come  over  and  visit  our  institution,  and  any  suggestions 
you  might  make  would  be  gladly  received,  but  I  should 
hate  to  see  the  time  come  when  Pennsylvania  should  sud- 
denly withdraw  her  support  from  the  maintenance  of 
these  great  charities. 

Q.  Should  the  State  institutions  in  course  of  construc- 
tion wait  while  these  appropriations  are  made? 

A.  Not  at  all,  sir,  it  is  not  necessary.  State  institutions 
are  well  cared  for.  I  believe  a  greater  improvement  has 
been  made  in  the  building,  in  the  course  of  treatment, 
maintenance,  and  in  everything  connected  with  her  State 
institutions  during  the  past  three  years,  than  has  been 
made  in  any  ten  previous  years.  I  know  what  I  talk 
about. 

Q.  Do  you  think  it  is  wise  to  have  them — take,  for  in- 
stance, the  Allentown  Insane  Asylum,  started  in  1901— 
wait  while  other  institutions  receive  appropriations,  the 
reason  being  given  that  there  is  not  enough  money  to  go 


291 

around,  or  should  that  institution  have  been  completed 
lorg  since,  say  within  the  first  two  years? 

A.  1  do  not  think  it  is  a  good  reason. 

Q.  You  think  that  should  have  been  finished  first? 

A.  I  think,  in  the  first  place,  if  that  institution  had  been 
so  constructed  that  when  it  was  half  finished  it  could  have 
been  used,  and  then  when  the  other  quarter  is  put 
on  that  could  have  been  used,  and  so  on  until  it  was 
completed,  it  would  have  probably  been  the  better  way  to 
have  constructed  it,  but  in  view  of  its  peculiar  construc- 
tion and  these  plans  having  been  adopted  years  ago,  I  do 
not  see  that  the  State  could  have  done  anything  else  except 
what  she  has  done  in  that  regard.  I  am  Chairman  of  the 
Commission  and  Senator  Sproul  is  the  Treasurer  of  the 
Commission  for  the  construction  and  erection  of  the  crim- 
inal insane  institution  at  Fairview,  27  miles  north  of 
Scranton.  I  am  also  a  member  of  the  Board  of  Commis- 
sion for  the  construction  of  the  Home  for  Feeble  Minded 
and  Apoplectic  at  Spring  City.  After  the  work  had  pro- 
ceeded on  that  institution  for  two  and  one-half  years  I 
prepared  an  act  of  the  Legislature,  a  proposed  act  which 
was  passed,  which  put  the  State  in  possession  of  that 
institution.  The  Commission  is  still  in  existence.  The 
Board  of  Trustees  was  appointed  by  Governor  Stuart  soon 
after  his  inauguration,  and  that  institution,  which  is  over 
half  completed  has  been  occupied  and  is  occupied  today 
and  contains  500  feeble  minded  and  apoplectic  children  of 
the  State.  It  will  not  be  completed  for  perhaps  two  or 
two  and  a  half  years.  That  was  at  my  suggestion/ 
There  was  some  little  complication  there,  but  it  was  easily 
overcome.  Both  Boards  are  now  in  control  and  are  work- 
ing in  harmony,  and  I  think  the  institution  will  reflect 
great  credit  and  honor  on  the  State. 

By  Mr.  McNichol  : 

Q.  Don't  you  think,  Mr.  Walton,  that  in  these  enlight- 
ened days  it  is  almost  criminal  that  an  operation  of  that 
kind  should  take  almost  ten  years  to  complete  it? 


292 

A.  Yes,  undoubtedly  it  is,  but  appropriations  have  come 
in  so  slowly  and  the  plans  of  the  institution  were  such 
that  no  part  of  the  building  could  be  used  until  it  was 
completed. 

Q.  Are  there  any  operations  which  would  take  two 
years  to  complete,  which  involve  the  expenditure  of  a 
million  dollars?  I  think  it  is  a  shame  that  there  should 
be  such  a  delay  in  completing  a  structure  so  badly  needed 
by  the  State? 

A.  If  you  will  pardon  me,  you  know  how  things  were 
done  before  you  and  I  went  to  Harrisburg. 

Q.  No,  I  do  not.  That  is  what  I  am  trying  to  find  out, 
how  they  were  done. 

A.  So  far  as  this  consolidation  of  these  smaller  hospitals 
is  concerned,  I  think  it  would  be  wise — 

Q.  Before  we  get  to  consolidation,  let  us  get  to  the  main 
proposition.  Do  you  think,  as  an  experienced  legislator, 
that  a  commission  to  point  out  the  site  and  for  the  erection 
of  these  hospitals  and  things  of  that  kind  is  the  proper 
method  to  solve  construction? 

A.  If  you  will  read — 

Q.  You  have  got  the  law  with  you,  but  I  am  asking 
your  experience  of  six  or  eight  years? 

A.  No.  I  recommended  on  my  report  in  the  criminal 
insane  matters  the  creation  of  a  department  at  Harrisburg 
to  supervise  all  bureaus  and  boards  of  charities. 

Q.  Appointed  by  the  Governor? 

A.  If  you  will  read  my  report  you  will  find  the  Act  I 
drafted  in  that  report.  There  were  five  Acts  drafted 
during  the  Session  of  1907;  four  of  them  were  passed 
and  one  was  not.  I  do  not  think  that  Act  came  out  of 
Committee. 

Q.  Do  you  not  think  that  the  department  for  construc- 
tion of  public  buildings,  appointed  by  the  Governor,  with 
the  same  facilities  and  powers  as  the  Secretary  of  State 


293 

and  things  of  that  kind  would  be  the  proper  and  business- 
like method  to  do  it? 

A.  I  think  a  great  deal  of  improvement  can  be  made 
on  the  present  method. 

Q.  If  we  had  our  institutions  under  course  of  construc- 
tion all  completed,  that  would  practically  take  care  of  all 
the  wants  and  necessities  from  the  standpoint  of  the 
different  counties  concerning  these  different  institutions, 
and  they  would  be  under  the  administration  of  the  State? 

A.  Yes,  sir.  I  want  to  say  in  regard  to  these  smaller 
hospitals,  I  think  if  some  arrangement  could  be  made  by 
which  they  would  be  willing  to  amalgamate  with  the 
larger  institutions,  and  especially  the  teaching  institu- 
tions, that  they  could  be  handled  and  the  same  number  of 
beds  maintained  at  a  much  cheaper  cost  per  capita. 

Q.  We  would  be  pleased  if  you  woulu  give  .us  some 
suggestions  as  to  what  would  be  a  proper  restriction  to  be 
placed  upon  ambitious  doctors  who  desire  to  have 
hospitals  under  their  care? 

A.  I  think  you  ought  to  have  a  law  on  the  statue  books ; 
I  think  the  Legislature  should  pass  a  law  which  shall 
provide  that  no  hospital  shall  be  organized  in  the  future 
and  receive  State  aid,  except  under  certain  conditions. 
Now,  what  those  conditions  should  be  I  am  not  prepared 
to  say,  but  I  mean  to  say  that  you  should  put  upon  the 
books  a  law  which  will  be  a  notice  to  the  medical  fra- 
ternity, or  to  any  other  element,  which  for  financial 
reasons  might  want  to  start  an  institution,  that  certain 
things  must  be  complied  with  before  State  aid  can  be 
given,  and  I  think  in  that  way  you  would  prevent  the 
formation  and  the  organization  of  these  institutions,  a 
good  many  of  which  are  simply  brought  together  for  the 
gratification  of  a  few  professional  men. 

By  Mr.  Sproul: 

Q.  Would  you  vest  that  authority  in  a  board? 
A.  I  would  rather  talk  with  you  on  the  side  about  that. 


294 

I  do  not  want  to  express  iny  views  publicly  here  today 
unless  T  got  your  advice  upon  the  subject.  You  have  had 
almost  as  much  experience  with  these  institutions  as  I 
have,  and  while  you  feel,  I  presume,  that  something 
should  be  done — I  do — I  would  rather  sit  down  and  dis- 
cuss it  with  you  before  I  give  you  any  definite  idea  of 
what  I  think  you  ought  to  do. 

By  Mr.  McNichol : 

Q.  You  are  occupying  a  different  position  from  what 
we  do;  you  have  been  on  the  inside  of  the  matter  and 
we  are  only  on  the  outside ;  we  want  to  know  your 
opinion  ? 

A.  Fortunately,  or  unfortunately,  I  have  to  be  on  both 
sides. 

By  Mr.  Brown : 

Q.  Do  you  not  think  these  institutions  should  get 
together  wherever  they  can  and  try  to  formulate  some 
scheme  tending  to  benefit  the  public  and  in  the  line  of 
economy  ? 

A.  Yes.  I  believe  the  State  could  save  a  lot  of  money  if 
pome  system  is  adopted.-  In  other  words,  I  think  if  we 
fan  run  a  hospital  bed  for  $2.02  per  capita  cost  of  main- 
tenance a  year,  I  do  not  see  why  the  rest  of  them  should 
not  do  it.  The  smaller  ones,  of  course,  cannot  do  it 
because  they  cannot  buy  in  quantities  as  we  do;  we  buy 
m  quantities.  I  cut  out  the  market  business  in  our  insti- 
tution and  save  20  .per  cent,  by  it.  Our  superintendent 
does  not  go  to  market,  he  buys  wholesale. 

Q.  You  have  done  a  little  figuring  on  it.  What  have 
you  figured  out  that  the  State  of  Pennsylvania  could 
save  by  purchasing  these  supplies  through  a  State  officer? 

A.  I  would  not  like  to  name  the  figure,  but  I  think  by 
buying  in  a  quantity  you  can  buy  cheaper.  For  instance, 
we  can  take  a  half  of  beef  over  in  our  institution  and  hang 
it  up ;  we  pay  eight  cents  a  pound  for  it.  We  are  careful 


295 

of  it  and  use  every  particle  of  that  beef.  We  have  got 
it  in  cold  storage  and  we  can  keep  it  there  as  well  as  any 
other  person  who  has  got  the  same  facilities,  and  we  have 
it  carved  up  and  served  until  it  is  all  used.  But  here  is 
a  small  hospital  that  has  to  go  out  and  buy  the  fillets  of 
beef  and  they  must  buy  in  small  quantities;  they  have 
to  go  in  the  market  and  buy,  not  having  the  cold  storage 
facilities. 

Q.  Have  you  learned  in  your  investigation  that  some 
of  these  hospitals,  because  of  the  time  of  year  they  receive 
the  State  money,  go  into  debt  for  these  things? 

A.  Sure. 

Q.  And  await  the  appropriation  by  the  State? 
A.  Yes,  sir,  very  often. 

Q.  Does  that  mean  increased  expense? 

A.  I  do  not  know  of  any  single  instance  in  my  ex- 
perience where  we  ever  voted  a  dollar  to  an  institution 
that  incurred  a  debt  except  one.  I  think  we  helped  to 
pay  one  mortgaged  debt  of  one  poor  institution.  Outside 
of  that  the  State  institutions  come  in,  and,  of  course,  we 
had  to  pay  their  debts. 

Q.  I  am  referring  now  to  the  incurring  of  the  obliga- 
tions before  the  stated  periods,  before  they  received  their 
money  from  the  State? 

A.  They  certainly  do.  For  instance,  we  get  our  money 
every  three  months  from  the  State.  We  must  pay  our 
bills  and  send  the  receipted  vouchers  to  Harrisburg  before 
we  trot  that  money,  and  the  consequence  is  we  have  not 
got  money  enough.  We  put  up  security  and  pay  it  and  pay 
5  per  cent,  additional.  We  are  paying  all  the  time 
interest  on  money  we  borrowed  to  tide  us  over  until  we 
got  our  quarterly  remittance  from  the  State.  I  think  the 
State  of  Pennsylvania  is  big  enough  to  trust  these  institu- 
tions for  three  months.  I  do  not  believe  there  is  very 
much  graft  in  all  these  institutions.  That  is  my  opinion 
about  it.  I  think  there  are  a  good  many  mistakes  made 


296 

in  the  administration  in  the  affairs  of  some  of  the  insti- 
tutions, but  I  really  think  they  could  handle  their  money 
better  by  having  the  money  advanced  for  the  payment  of 
their  bills,  without  necessitating  the  borrowing  of  money. 

Q.  There  is  no  law  with  regard  to  that.  Is  not  that 
just  a  rule  of  the  Auditor-General  for  his  convenience? 

A.  Yes,  the  Auditor-General  thinks  he  ought  to  have 
the  receipted  vouchers  before  he  pays  the  money. 

Recess  until  2  o'clock  P.  M. 


297 


AFTERNOON  SESSION. 

The  Committee  met  at  Room  496,  City  Hall,  Philadel- 
phia, at  2  o'clock  P.  M.  Present  as  before. 

DR.  LAWRENCE  FLICK,  President,  White  Haven  Sana- 
torium Association,  called. 

Dr.  Flick:  Mr.  Chairman  and  Gentlemen: — I  would 
like  to  say,  briefly,  that  so  far  as  the  information  which 
I  have  been  able  to  gather  enables  me  to  judge,  we  have 
in  Pennsylvania  an  almost  perfect  system  of  public  char- 
ity, and  adequate  laws  to  administer  that  charity,  but 
we  have  not,  perhaps,  got  the  machinery  to  administer 
it  as  perhaps  we  would  like  to  have  it  administered.  Our 
Constitution  undoubtedly  countenances  the  idea  of  pro- 
viding charity  for  the  indigent,  and  I  believe  under  our 
Constitution  the  hospitals  are  entitled  to  State  aid,  and 
the  Legislature  has  made  laws  in  creating  the  State  Board 
of  Charities  by  which  the  administration  of  our  chari- 
ties should  be  made  perfect,  but  unfortunately  the  laws 
which  are  on  the  statute  books  cannot  be  enforced  be- 
cause we  have  not  the  proper  machinery  for  enforcing 
them.  I  would  be  exceedingly  sorry  if  anything  were  done  to 
change  the  system  in  Pennsylvania.  I  think  it  is  one  of 
the  things  of  which  Pennsylvanians  have  reason  to  be 
proud  that  they  have  such  a  system.  I  do  think  we  should 
find,  however,  a  way  of  getting  the  proper  control  and  in- 
spection over  the  administration  of  our  charities,  and  if 
you  gentlemen  can  devise  a  more  perfect  system  of  con- 
trol, I  do  not  believe  there  is  anything  else  to  be  done  to 
make  our  system  as  perfect  as  it  can  be  made. 

By  Mr.  Brown : 

Q.  You  have  been  in  charge  of  an  institution  for  the 
care  of  the  afflicted.    From  your  experience  in  the  conduct 
of  that  institution,  what  remedy  have  you  to  recommend  ? 
16 


298 

A.  Well,  the  remedy  I  have  to  suggest  is  that  we  have 
a  State  Board  of  Charities,  or  State  Department  of  Chari- 
ties, which  will  give  the  control  and  supervision  which 
the  law  contemplates.  There  are  some  little  details  in 
the  administration  of  State  aid  which,  I  think,  are  a  little 
indefinite.  One  was  referred  to  this  morning,  namely,  that 
bills  have  to  be  paid  in  advance  and  receipts  presented 
before  the  management  of  an  institution  can  get  the  as- 
sistance given  by  the  State.  That  becomes  exceedingly 
embarrassing  to  an  administration  that  wishes  exactly  to 
do  the  right  thing.  In  the  first  place,  it  necessitates  bor- 
rowing money  to  pay  the  bills,  and  in  that  way  it  puts  the 
institution  to  an  unnecessary  expense.  In  consequence, 
it  does  not  enable  the  management  of  an  institution  to 
use  its  resources  to  the  best  advantage. 

Q.  Have  not  the  managers  of  these  institutions  had  prac- 
tically unlimited  sway  in  their  conduct ;  I  mean  they  have 
not  been  substantially  interfered  with,  either  by  the  State 
Board  of  Charities  or  by  any  other  institute,  have  they? 

A.  I  do  not  think  they  have  been  interfered  with  enough 
by  the  State  Board  of  Charities.  I  do  not  think  the  in- 
stitutions get  enough  supervision.  I  think  there  should 
be  machinery  in  the  State  Board  of  Charities  which  would 
enable  that  Board  to  know  accurately  what  is  done  in 
every  hospital  in  the  State,  and  how  it  is  done,  and  as 
the  law  says,  whether  that  hospital  is  administered  for  the 
best  interests  of  the  entire  State.  I  think  if  that  were 
done,  we  have  got  that  supervision.  I  think  it  would  be 
much  easier  for  the  institutions  who  wish  to  conduct 
their  institutions  in  an  economical  and  honest  way.  It 
would  give  them  the  supervision  that  perhaps  doctor  their 
reports  and  do  not  always  show  on  the  surface  what  they 
are  doing. 

Q.  What  would  be  their  object  in  doing  that,  to  increase 
the  contributions  from  the  State? 

A.  I  was  looking  over  the  Auditor-General's  report  this 
morning,  or  the  report  of  the  State  Board  of  Charities, 
and  I  noticed  in  one  place  where  the  report  gave  the  cost 


299 

of  maintenance  of  a  State  institution  at  $8.90  a  week. 
I  then  turned  over  to  another  table  to  satisfy  myself  whether 
that  really  was  inaccurate,  that  report  in  the  other  part 
of  the  book,  and  I  found  that  that  institution  had  129 
beds,  with  an  average  of  124  free  days,  and  had  resources 
of  $80,000.  Now,  it  don't  take  much  figuring  to  show  that 
those  two  tables  do  not  correspond.  In  other  words,  in 
one  place  it  was  reported  that  maintenance  was  $8.90  a 
week,  and  in  the  other,  if  that  report  was  correct,  it  would 
be  about  $12  or  $15  a  week.  Now,  as  I  say,  we  want  ac- 
curate data  and  we  want  accurate  supervision  and  busi- 
ness management  of  our  institutions,  and  that  is  what  the 
law  contemplates  in  the  State  Board  of  Charities. 

Q.  Is  the  State  Board  of  Charities  in  a  position  to  give 
such  supervision? 

A.  No,  sir,   it  is  not. 

Q.  From  your  acquaintance  with  it? 
A.  It  is  not. 

Q.  It  has  abundance  of  law,  has  it  not? 

A.  It  has  abundance  of  law,  but  apparently  no  machinery 
and  apparently  no  money  to  do  it  with.  That  is  just  a 
characteristic  of  the  whole  subject. 

Q.  Has  not  the  Commonwealth  of  Pennsylvania  a  right 
to  rely  on  these  institutions,  that  they  will  deal  in  good 
faith  in  the  use  of  these  moneys?  Should  there  be  a  still 
closer  espionage,  as  has  been  suggested,  to  watch  these 
different  institutions  in  the  use  of  this  money  that  is  ap- 
propriated in  pure  charity? 

A.  You  and  I  know  human  nature  well  enough  to  know 
that  it  is  business.  People  will  sometimes  do  things  with 
the  very  best  intentions  and  have  the  very  best  purpose 
in  view  which  do  not  come  out  as  expected.  I  do  not  be- 
lieve there  is  any  dishonesty  in  the  management  of  our 
hospitals.  I  do  not  believe  there  is  any  intentional  mis- 
representation. I  take  no  stock  in  the  statements  made 
about  graft,  but  I  do  believe  that  through  ignorance  and 


300 

through  the  desire  of  the  management  of  institutions  to 
do  a  great  deal  and  make  a  good  showing  in  their  par- 
ticular institution,  that  business  methods  are  forgotten 
and  money  is  sometimes  expended  in  a  way  which  it  had 
better  not  have  been,  and  there  is  where  we  need  the 
State  Board  of  Charities '  absolute  control,  and  to  put  busi- 
ness methods  into  the  way  of  doing  things.  You  have  con- 
fidence in  the  management  of  your  business  and  your  em- 
ployees, and  yet  you  make  rules  in  the  conduct  of  your 
business  which  makes  it  an  impossibility  for  them  to  do 
wrong,  not  because  you  do  not  trust  them,  but  because 
you  want  methods  which  make  wrong  impossible. 

Q.  *  '  Lead  us  not  into  temptation. ' ' 

A.  That  is  what  we  want.  Let  us  have  rules  and  busi- 
ness in  the  administration  of  our  charity,  which  makes 
wrong  impossible  and  economy  absolutely  necessary,  and 
I  believe  we  have  plenty  of  moneq — we  are  spending 
plenty  of  money  to  take  care  of  every  sick  person  in  Penn- 
sylvania. Bight  here  I  want  to  direct  attention  to  one 
thing,  that  in  spite  of  the  fact  we  are  spending  from  five 
to  six  million  dollars  annually  for  public  charity  in  the 
care  of  sick  and  the  various  things  that  come  from  sick- 
ness, we  exclude  from  our  hospitals,  almost  absolutely, 
certain  diseases,  which  are  the  greatest  menace  to  the  wel- 
fare of  the  community  of  any  disease  we  have  to  deal 
with.  I  do  not  think  that  hospitals,  especially  which  get 
State  aid,  should  make  provision  for  every  poor  man  or 
woman  who  needs  assistance,  irrespective  of  the  disease 
from  which  he  is  suffering. 

Q.  Whether  contagious  or  otherwise? 

A.  Whether  contagious  or  otherwise.  It  is  up  to  the 
hospital  at  this  present  day  of  scientific  advancement  of 
medicine  to  make  such  provisions  in  hospitals  that  there 
is  no  danger  from  contagion.  The  acutely  contagious  dis- 
ease we  cannot  take  care  of  in  a  hospital. 

Q.  What  do  you  mean  by  acutely  contagious  diseases? 

A.  Such  as  smallpox  and  measles,  but  there  are  other 


I 


301 

contagious  diseases,  such  as  syphilis,  tuberculosis  and  gon- 
orrhoea, that  can  be  taken  care  of.. 

Q.  Can  those  be  treated  in  the  hospitals? 

A.  In  a  hospital  that  has  been  made  properly  for  those 
diseases,  not  in  the  wards.  We  have  evidence  of  a  prac- 
tical character  that  this  thing  can  be  done.  The  Pas- 
teur Institute,  in  Paris,  has  done  this  in  the  asylums  of 
Paris  for  many  years,  and  done  it  successfully.  If  they 
can  do  that  in  Paris,  we  can  do  it  here  in  Philadelphia. 
As  I  say,  when  the  State  is  spending  the  amount  of  money 
we  are  spending  for  the  care  of  the  sick  poor,  we  should 
spend  it  for  those  who  are  suffering  from  diseases  which 
are  a  menace  to  the  public.  That,  to  my  mind,  is  the 
chief  reason  why  the  State  can  give  aid  to  protect  the  well 
against  the  sick. 

Q.  You  think  it  is  not  vitally  necessary  that  the  State 
should  especially  assist  institutions  for  the  treatment  of 
tubercular  trouble,  for  instance? 

A.  I  think  it  would  be  better  if  the  State  was  not  to 
do  that.  In  the  present  state  of  public  opinion  it  is  nec- 
essary, but  it  would  undoubtedly  be  much  more  economical 
and  much  better  for  the  traveling  public  at  large  if  all 
tubercular  diseases  were  taken  care  of  at  public  hospitals. 
According  to  the  State  Board  of  Charities  we  have  from 
three  to  five  thousand  vacant  beds  every  day  of  the  year. 
If  we  could  use  those  vacant  beds,  in  which  we  have  an 
investment  of  from  three  to  ten  million  dollars,  and  they 
could  be  used  without  danger  to  anyone,  for  the  care  of 
the  poor  consumptive,  we  could  stamp  out  tuberculosis 
in  Pennsylvania  in  ten  years,  at  an  outlay  of  from  five 
to  ten  million  dollars;  whereas  at  the  rate  we  are  going 
now  it  will  cost  us  from  fifty  to  a  hundred  million  dol- 
lars, and  take  many  years. 

Q.  Could  that  be  done  and  not  in  any  way  impair  the 
use  of  the  hospital  for  the  treatment  of  other  diseases? 
A.  Not  at  all. 


302 

Q.  How  do  the  medical  fraternity  feel  on  the  subject, 
is  there  any  concensus  of  opinion,  or  is  this  simply  your 
personal  view  ? 

A.  I  am  afraid  I  stand  in  a  very  small  minority,  but 
I  believe  I  can  satisfy  any  reasoning  person  who  is  wil- 
ling to  be  satisfied. 

Q.  How  long  have  you  been  engaged  in  the  treatment 
of  tuberculosis? 
A.  Twenty  years. 

Q.  Of  course,  you  consider  yourself  an  expert  on  the 
subject  ? 

A.  I  am  willing  to  consider  myself  an  expert  so  far  as 
I  follow  my  own  reasoning,  and  so  long  as  I  can  see  that 
two  and  two  makes  four  I  am  willing  to  say  it  is  four. 

Q.  Is  there  any  other  place  outside  of  Paris,  and  in 
Paris — to  what  extent  is  this  confusion  or  commingling  of 
patients  suffering  from  different  kinds  of  contagious  dis- 
eases ? 

A.  The  Pasteur  Institute  is  'for  the  study  of  diseases, 
and  for  the  reason  that  they  have  all  kinds  of  diseases, 
and  they  lake  all  forms  of  contagious  diseases,  they  have 
demonstrated  the  fact  that  it  can  be  done  successfully 
without  endangering  anyone. 

Q.  That  is,  all  under  the  same  roof? 

A.  All  under  the  same  roof. 

Q.  Has  it  ever  been  attempted  in  this  country? 

A.  It  has  not;  but  formerly,  before  we  were  so  much 
afraid  of  tuberculosis,  every  hospital,  to  some  extent,  did 
take  consumptives,  and  I  think  very  likely  without  any 
danger  to  anyone  else.  They  did  not  take  them  under 
the  most  scientific  methods,  but  we  can  nowadays  take 
tuberculosis  in  every  hospital  by  simply  going  to  the  trouble 
of  having  a  separate  department,  without  any  danger  to 
anyone  else.  That  is  as  cleverly  demonstrated  scientifically 
as  can  be. 

Q.  Would  that  require  separation? 

A.  It  would  require  separation. 


303 

Q.  Nurses  and  all? 

A.  A  separate  department  of  nurses. 

Q.  Would  it  not  necessitate  a  change  in  the  hospitals? 

A.  Any  of  our  large  hospitals  in  Philadelphia  have  the 
resources.  Any  hospital  that  has  a  hundred  beds  or  at- 
tendants would  not  be  put  to  any  extra  expense.  Small 
hospitals  would  be  put  to  a  relatively  small  expense,  which, 
however,  compared  with  the  cost  itself  to  the  Common- 
wealth, would  be  nothing. 

Q.  You  are  reported  as  having  stated  before  the  gen- 
eral meeting  of  the  medical  society,  in  September,  1909, 
"  State  appropriations  should  be  made  to  all  hospitals  on 
the  basis  of  private  resources,  etc. "  What  was  your  thought 
you  had  in  mind  on  that  ? 

A.  My  thought  is  this,  the  best  way  you  can  judge  the 
good  work  which  a  hospital  does  is  in  the  support  which 
it  gets  from  its  neighbors.  If  you  have  a  hospital  doing 
certain  work  in  a  certain  community,  and  it  is  getting 
liberal  support,  that  is  evidence  that  it  is  doing  good  work, 
and  it  is  the  best  criterion  you  have  as  to  the  merits  of 
that  hospital.  For  every  dollar  which  the  Commonwealth 
spends  in  a  certain  defined  community,  for  the  care  of 
the  sick,  enough  people  in  that  locality  will  be  interested 
in  the  success  of  that  institution  to  contribute  liberally 
to  the  support  of  that  institution  also.  That,  I  think,  is 
the  history  of  at  least  every  institution  of  which  I  have 
any  knowledge.  Now,  in  the  different  parts  of  the  Com- 
monwealth, say  two  counties  or  three  counties,  if  the  popu- 
lation of  the  counties  is  not  large  enough,  if  the  counties 
would  combine  to  have  a  hospital  and  give  their  support 
to  that  hospital,  and  the  State  gives  encouragement,  just 
as  we  do  with  the  tariff,  put  a  bonus  upon  their  good 
work,  and  do  that  all  through  the  Commonwealth,  and 
give  support  to  those  institutions  in  comparison  to  what 
they  do  themselves  and  the  expense  to  which  they  can 
demonstrate  the  usefulness  of  their  institution,  the  State 
would  save  a  great  deal,  because  the  people  themselves 


304 

would  be  encouraging  the  charity,  and  the  State  would 
simply  give  enough  to  help  out  the  requirements  of  that 
locality. 

Q.  You  are  also  quoted  as  saying,  "  Strange  to  say,  if 
all  the  money  expended,"  etc.  Is  that  based  upon  sta- 
tistics, your  statement  there  ? 

A.  I  think  I  could  furnish  statistics  to  support  that. 

Q.  For  Pennsylvania? 

A.  For  Pennsylvania.  I  think  they  are  supplied.  You 
take  the  mortality  from  tuberculosis  and  fever  alone,  and 
the  sickness  caused  by  it  would  constitute  at  least  one-third 
of  all  the  suffering  of  humanity  in  Pennsylvania,  and 
if  you  add  the  other  two  you  will  probably  make  it  a 
good  deal  more  than  15  per  cent. 

By  a  Member  of  the  Committee : 

Q.  What  would  be  your  idea  of  State  aid,  based  upon 
per  capita? 

A.  I  think  it  would  be  a  much  fairer  system  than  we 
have  now.  I  do  not  know  that  it  would  be  the  best  sys- 
tem, but  it  is  the  system  adopted  in  a  good  many  States. 

Q.  You  think  it  would  be  an  improvement  over  the 
present  system? 

A.  Very  little  improvement. 

Q.  What  is  your  ground  for  that  statement? 

A.  It  would  compel  all  hospitals  to  go  on  a  common 
basis  in  their  expenses.  In  other  words,  if  a  hospital 
found  it  could  get,  say,  $7,  $9  or  $10  a  week  for  each  pa- 
tient per  capita,  if  they  went  above  that  they  would  have 
to  find  the  means  to  raise  the  money,  it  would  be  the  way 
of  telling  the  very  thing  that  was  discussed  here  this 
morning,  a  common  standard  of  expense.  We  have  hos- 
pitals that  run  along  very  successfully  on  $7  and  $9  a  week. 
The  Phipps  Institute  for  five  years — for  seven  years — 
has  averaged  a  little  less  than  $9  a  week,  and  includes  in 
that  scientific  work;  not  teaching  work,  because  I  do 
think  the  teaching  institution  requires  a  higher  standard, 


305 

but  on  a  business  basis  the  Phipps  Institution  has  been 
able  to  do  good  work  on  less  than  $9  a  week.  If  the  State 
would  make  the  per  capita  $2,  it  would  enable  the  State 
institutions  to  get  down  as  near  as  possible  to  a  common 
basis.  I  think  that  would  be  a  great  advantage.  I  think 
if  a  per  capita  arrangement  was  made,  there  should  be 
a  class  for  educational  institutions  by  themselves;  they 
have  to  have  a  higher  basis. 

By  Mr.  Brown : 

Q.  You  think  they  should  be  preferred? 

A.  I  think  they  shoujd  be  preferred,  and  I  do  say,  as 
was  said  this  morning,  that  the  State  of  Pennsylvania 
has  so  far  maintained  a  very  enviable  reputation,  and  I 
think  every  Pennsylvanian  must  be  most  ambitious  to 
maintain  that  position,  and  unless  we  do  give  our  insti- 
tutions State  support,  I  do  not  believe  it  can  be  possible 
to  maintain  the  position  which  Pennsylvania  has  main- 
tained in  that  regard. 

Q.  Your  thought,  as  I  understand,  was  that  the  State 
Board  of  Charities  should  be  the  supreme  arbiter  of  what 
should  be  allowed  ? 

A.  It  has  the  authority,  but  give  it  machinery. 

Q.  What  do  you  mean  by  machinery? 

A.  Create  a  State  Board  of  Charities  which  will  have 
enough  clerks  or  enough  arms  to  reach  out  over  this  en- 
tire Commonwealth  and  gather  the  information  which  is 
necessary  to  base  a  judgment  on. 

By  a  Member  of  the  Committee : 
Q.  Would  you  advocate  a  salaried  board? 
A.  Yes,  sir;  I  would,  indeed.     I  think  the  most  eco- 
nomical thing  this   Commonwealth   can  do  would  be  to 
create  a  Department   or  Board  of  Charities  which  will 
absolutely  carry  out  the  law  and  spend  the  money  neces- 
sary to  do  that.  I  think  you  can  concede  the  whole  question 
to  them.     Make  it  a  business  proposition.     Somebody  re- 


306 

f erred  to  the  State  Board  of  Charities  this  morning.  The 
State  Board  of  Charities  do  a  good  work,  but  they  have 
not  the  employees  and  money  to  do  things.  You  give  us 
in  Pennsylvania  a  State  Board  of  Charities  or  Depart- 
ment of  Charities,  and  equip  it  in  such  a  way  that  it  can 
get  the  necessary  information,  and  it  will  get  it  and  you 
have  got  the  whole  control.  You  have  got  plenty  of 
laws,  and  I  am  satisfied,  as  was  said  this  morning,  that 
if  the  State  Board  of  Charities  were  so  equipped  that  it 
could  seek  information  authoritatively  and  give  the  facts 
behind  it  to  the  Legislature,  that  the  Legislature  would 
do  what  the  State  Board  of  Charities  would  suggest. 

By  Mr.  McNichol : 

Q.  Why  would  you  transfer  it  to  the  State  Board  of 
Charities,  why  not  put  it  in  the  Health  Department  of  the 
State? 

A.  That  would  be  a  most  unfortunate  mix-up. 

Q.  Why? 

A.  The  Department  of  Health  has  enough  to  do  as  it 
is.  I  think  the  Legislature  has  already  made  a  very  serious 
mix-up. 

Q.  That  is  from  your  standpoint? 

A.  I  believe  they  have  from  the  standpoint  of  political 
economy.  In  other  words,  matters  of  health  and  health 
departments  and  health  boards  are  of  such  recent  origin 
that  none  of  us  probably  have  yet  got  the  right  standard 
or  idea  of  what  such  a  thing  ought  to  be,,  and  if  we  take 
the  knowledge  we  can  gleam  from  the  world,  so  far  as 
that  experiment  has  been  made,  we  have  to  reach  the  con- 
clusion that  the  Department  of  Health  should  be  a  ju- 
dicial department,  and  should  be  as  free  as  possible  from 
all  sources  of  serious  complications  with  the  people  with 
whom  it  has  to  deal.  I  would  like  to  tell  you  a  little  story 
which  I  told  at  a  meeting  not  long  ago,  which  illustrates 
my  point.  This  may  be  all  falsehood,  and  I  am  not  wil- 
ling to  stand  for  the  truth  of  the  story,  but  it  illustrates 
5 


307 

me  very  point  I  make.  Up  in  the  interior  of  our  State, 
iast  summer,  I  happened  to  visit  and  was  spoken  to  by 
jj  couple  of  medical  men  who  were  very  much  distressed 
about  the  State  Dispensary  in  their  district,  and  felt  that 
jfchey  were  very  seriously  and  unjustly  dealt  with.  They 
were  so  much  agitated  over  it  that  one  of  the  young  men, 
Who  felt  himself  most  particularly  unfairly  dealt  with, 
?aid  he  would  come  down  to  the  State  -Medical  Society  and 
but  in  his  complaint  and  see  whether  the  State  Medical 
pociety  could  not  do  something  to  give  him  relief,  and  I 
really  think  he  had  a  pretty  good  story,  and  I  think  he 
;iad  pretty  good  ground  for  feeling  aggrieved,  but  before 
he  left  home  he  was  called  in  by  the  man  on  whom  he 
depended  for  bread  and  butter,  from  whom  he  draws  a 
salary,  who  said  to  him,  "Now,  you  go  down  to  Philadel- 
phia and  keep  your  mouth  shut.  I  have  been  pushed 
jvery  hard  here  for  a  bacteriological  sewage  plant  here 
j'ately,  and  I  am  the  only  one  who  has  been  pushed  for 
that  in  this  community,  and  I  have  been  talking  about  it, 
and  no  one  else  wants  it,  and  I  don't  want  to  have  a 
>ewage  plant  if  nobody  else  does."  That  illustrates  my 
point.  The  Department  of  'Health  Dispenses  charity, 
ind  gives  free  milk  and  ice,  and  runs  hospitals  and  dis- 
oensaries,  and  therefore  apportions  out  certain  good  things 
the  people,  and  at  the  same  time  it  is  supposed  to  be 
i  judge  and  pass  judgment  at  certain  times  upon  what 
shall  be  done.  The  two  things  do  not  fit  together  at  all. 

3y  Mr.  McNichol : 

Q.  It  has  all  the  clerks  and  stenographers  necessary? 

A.  Those  might  as  well  be  put  in  the  Department  of 
Charities  and  the  two  things  kept  distinct  and  separate, 
is  they,  are  all  the  world  over.  Pennsylvania  is  the  only 
State  where  these  are  mixed  up. 

Q.  I  think  with  the  capability  of  Dr.  Dixon  all  would 
be  in  safe  hands? 
A.  I  do  not  think  the  capabilities  or  honesty  or  good 


308 

intentions  of  any  man  will  suffice,  when  you  put  into  his 
jurisdiction  two  conflicting  duties. 

Q.  One  is  really  a  supervision  over  expenditures,  a  sort 
of  clerical  position? 

A.  It  does  not  work  out  in  practice  and  I  do  not  believe 
it  ever  will.  Moreover,  the  Legislature  has  controvened 
the  laws  of  this  Commonwealth,  without  any  doubt,  so 
far  as  I  am  able  to  judge  right  along. 

By  Mr.  Brown: 

Q.  You  think  there  ought  not  to  be  any  general  ap- 
propriation laws? 

A.  The  Constitution  says  there  should  not,  but  leaving 
out  the  question  of  the  Constitution,  the  law  on  our  statute 
books  certainly  contemplated  that  public  charity  shall  be 
expended  under  the  supervision  and  direction  of  the 
State  Board  of  Charities  with  the  Legislature.  The  State 
Board  of  Charities  was  not  consulted  about  the  appropria- 
tion for  the  Department  of  Health  for  work  which  is  sup- 
posed to  come  under  the  work  of  the  Department  of 
Charities,  and  I  do  not  believe  would  have  answered  if 
they  had  been  consulted.  Therefore,  in  the  spirit  of 
the  law  it  is  against  the  laws  of  this  Commonwealth  that 
that  work  should  be  put  in  the  Department  of  Health. 

By  a  Member  of  the  Committee : 

Q.  As  Chairman  of  the  Appropriation  Committee,  I  con- 
sulted and  was  in  consultation  every  day  with  the  State 
Board  of  Charities  and  their  agent,  and  we  consulted  with 
the  Attorney-General  and  he  said  it  was  all  right. 

A.  I  consulted  with  the  Attorney-General  and  he  told 
me  that  has  been  going  for  forty  years  and  it  was  not 
up  to  him  to  stop  it.  He  did  not  say  to  me  it  was  con- 
stitutional. 

By  Mr.  McNichol : 

Q.  It  was  not  up  to  him  to  pass  upon  the  constitution- 
ality of  it,  was  it  ? 

A.  He  did  not  think  so. 


309 

Q.  What  is  the  objection  to  the  State  Board  of  Health 
doing  this  work;  are  they  not  doing  good  work? 

A.  I  think  they  are  doing  good  work,  but  the  goodness 
of  a  work  is  not  always  sufficient  excuse  for  the  method 
of  doing  it.  I  think  the  method  of  doing  the  work  in 
the  tuberculosis  field  is  a  very  much  more  expensive 
method  than  the  method  recommended  by  the  State  Board 
of  Charities  years  ago.  Some  people  have  said  this  is 
a  personal  matter  with  me.  It  is  not,  absolutely  not.  I 
withdrew  White  Haven  from  State  appropriation  because 
I  wanted  to  remove  my  own  personality  from  the  subject. 
When  I  first  started  out  in  the  work  of  fighting  tuber- 
j  culosis  I  was  in  favor  of  a  State  hospital  for  tuberculosis, 
and  I  worked  very  hard  for  that  for  some  years.  We 
then  found  the  State  Board  of  Charities  in  its  judgment, 
and  based  upon  its  experience,  was  opposed  to  a  State 
hospital  for  the  treatment  of  tuberculosis,  and  they  said 
to  us  we  would  get  up  private  corporations  throughout 
the  State,  that  the  State  would  be  glad  to  make  appropria- 
tions to  those  private  corporations  for  the  work,  and  that 
is  why  the  plan  which  was  originally  advocated  by  the 
Pennsylvania  Society  for  the  Prevention  of  Tuberculosis 
was  changed  and  the  State's  private  corporations  in  dif- 
ferent parts  of  the  State  were  established.  Those  private 
corporations  in  different  parts  of  the  State  were  doing 
excellent  work  and  doing  it  in  the  most  economical  man- 
ner possible.  They  were,  moreover,  educating  the  entire 
State  of  Pennsylvania,  and  Pennsylvania  is  the  best 
educated  State  in  the  whole  Union,  on  the  subject  of 
tuberculosis.  The  change  which  was  made  in  1905  of 
practically  taking  away  from  the  private  societies  that 
has  been  established  throughout  the  State,  the  State  sup- 
port, and  concentrating  all  that  work  in  the  Department 
of  Health,  was,  in  my  judgment,  a  serious  blunder  and 
which  will  cost  this  Commonwealth  many  millions  of  dol- 
lars. I  may  be  mistaken,  but  I  have  studied  the  subject 
of  tuberculosis  and  its  administration  and  that  is  my  judg- 
ment. 


310 

Q.  How  is  it  done  in  other  States? 

A.  In  other  States,  some  of  the  States  have  appointed 
commissions  to  study  the  subject,  and  they  have  got  up 
such  institutions  as  they  recommend. 

Q.  What  has  been  the  result  of  the  work  of  the  com- 
missions, have  they  distributed  themselves  throughout  the 
State  as  contemplated  by  you? 

A.  Yes,  the  best  work  done  by  any  State  is  Massachu- 
setts. She  has  proceeded  along  that  plan  and  has  created 
State  hospitals,  and  it  is  the  only  State  in  the  Union  so 
far  which  has  recommended  at  the  present  time  a  means 
of  not  only  caring  for  the  early  cases,  but  caring  for  the 
advanced  cases,  and  with  the  general  recommendation 
that  the  proper  thing  for  the  Commonwealth  to  do  in  the 
grapple  against  tuberculosis  is  to  provide  beds  for  the  ad- 
vanced cases  in  order  to  stamp  out  the  disease.  It  has 
appropriated  money  for  two  hospitals  for  advanced  cases, 
and  it  is  the  only  State  in  the  Union  which  is  approaching 
that  subject  in  the  proper  way.  In  Pennsylvania  we 
have  no  provision  for  the  advanced  cases,  except  that 
made  by  the  Phipps  Institute  and  White  Haven ;  the  much 
maligned  City  of  Philadelphia  is  doing  the  best  work  for 
the  prevention  of  tuberculosis  of  any  city  in  the  country, 
because  it  has  concentrated  its  efforts  on  the  advanced 
cases  among  the  poor,  and  Philadelphia  in  consequence  of 
that  one  thing,  I  believe,  will  be  the  first  city  in  the  Union 
to  win  out  in  stamping  out  the  disease  of  tuberculosis. 


311 


DR.  0.  J.  SNYDER,  called. 

The  proposition  under  discussion  is  first  whether  the 
State  should  make  appropriations  for  the  support  of  in- 
stitutions and  hospitals  not  under  its  control,  and  secondly, 
;if  so,  whether  such  hospitals  should  be  connected  or 
[identified  with  schools  or  colleges  of  therapeutics  or  be 
independent  of  them.  This  carries  with  it  the  acknow- 
jledginent  or  recognition  of  the  obligation  that  the  State 
jshould  give  support  to  institutions  of  that  character,  but 
with  the  implication  that  when  the  State  does  render  such 
iassistance  that  it  should  have  control  of  them.  It  would 
be  a  change  from  the  present  policy  of  rendering  support 
under  which  the  State  has  now  no  directing  power  over 
the  expenditure  of  moneys  thus  appropriated.  In  sub- 
stance— it  reduces  itself  to  a  change  not  so  much  in 
principle  as  in  method  of  execution.  While  there  may  be 
occasion  for  change  of  method  in  the  directing  of  the 
expenditure  of  moneys  appropriated  for  such  purposes, 
yet  we  are  of  the  conviction  that  such  institutions  should 
not  go  wholly  into  the  hands  of  municipal  and  State  regu- 
lation and  management. 

The  one  great  incentive  that  fosters  progress  and  stimu- 
lates growth  is  rivalry  or  competition.  There  are  several 
schools  or  sects  contending  for  supremacy  in  the  thera- 
peutic field,  and  this  very  condition  of  rivalry  for  public 
endorsement  and  patronage  is  what  has  more  than  any- 
thing else  developed  or  has  resulted  in  their  present  high 
standing.  To  remove  this  element  of  rivalry  would  be 
depressing  the  spirit  that  induces  advancement.  We, 
therefore,  urge  that  the  State  continue  its  appropriations 
for  institutions  and  hospitals  that  are  not  directly  under  its 
complete  domination.  It  may  be  advisable  to  devise  a 
new  method  of  determining  what  amount  should  be  ap- 
propriated to  the  various  institutions,  based  upon  a  basis 
of  merit.  For  instance,  we  might  suggest  in  this  con- 


312 

fraction  that  the  amount  of  appropriation  be  determined 
by  the  number  of  inmates  in  the  hospital  or  students  at 
the  college,  and  also  that  the  financial  officer  of  such  in- 
stitutions be  appointed  by  the  State,  and  be  amenable  to 
the  State,  and  render  to  it  correct  and  comprehensive 
reports  of  the  work  that  is  being  done,  and  that  such 
reports  serve  as  the  basis  for  further  appropriations. 

The  further  question  as  to  whether  hospitals  should  be 
connected  with  or  divorced  from  schools  of  therapeutics 
is  another  serious  and  important  proposition.  It  is  very 
difficult  and  expensive  to  equip  schools  of  therapeutics 
sufficiently  and  to  an  extent  that  will  make  it  possible 
to  furnish  the  most  advanced  and  best  possible  instruction 
to  the  students.  The  character  of  the  instruction  of  a 
medical  student  is  quite  different  from  that  presented  to  a 
student  qualifying  for  the  practice  of  law,  or  for  the 
ministry.  Instruction  for  those  vocations  does  not  re- 
quire the  laboratory  equipment,  nor  the  clinical  experience 
that  is  essential  for  the  thorough  instruction  of  the  medical 
student.  For  the  technical  instruction  of  the  medical 
student  an  extensive  and  expensive  laboratory,  in  prac- 
tically every  department  of  his  course  of  study,  is,  a 
requisite,  and  as  for  clinical  instruction,  there  must  be 
opportunity  for  him  to  do  practical  work  in  a  hospital 
under  the  supervision  of  clinical  instructors.  It  would 
be  quite  impossible  for  any  medical  school  to  provide  all 
of  these  extensive  necessities  without  aid  from  other 
sources  than  the  mere  tuition  money  obtained  from  the 
students.  If  medical  schools  had  to  depend  wholly  upon 
the  tuition  money  of  the  students,  the  tuition  charges 
would  have  to  be  so  high  as  to  practically  bar  all  but  the 
very  wealthy  from  its  doors,  neither  would  it  be  wise  or 
safe  to  depend  upon  endowments  or  contributions  from 
private  sources. 

The  matter  of  affording  opportunity  with  the  best  pos- 
sible and  most  competent  instruction  in  the  healing  art 
is  a  serious  and  important  matter  for  the  State.  The 


313 

health  and  life  of  its  citizens  depend  in  a  large  measure 
upon  the  intelligence  of  the  physicians  of  the  State,  who 
direct  the  sanitary  regulations  and  all  matters  relating 
to  the  health  and  the  very  life  of  the  citizens.  The  State 
should,  therefore,  lend  every  possible  aid  towards  the 
establishment  of  the  best  possible  schools  of  therapeutics. 
As  clinical  experience  and  hospital  instruction  is  so  im- 
perative to  the  best  training  it  is  but  natural  that  ample 
provision  should  be  made  for  the  support  of  a  good  hospital 
in  connection  with  every  reputable  and  approved  college 
that  provides  training  in  the  healing  art.  It  is  not  neces- 
sary to  furnish  statistics  to  show  that  those  States  that 
do  give  support  along  these  lines  have  the  best  medical 
schools,  and  the  best  sanitary  conditions,  and  it  is 
logical  and  consistent  to  contend  that  a  hospital  is  quite 
an  indispensable  part  of  a  medical  college  equipment  for 
instruction.  "We,  therefore,  contend  that  it  is  to  the  direct 
interests  of  the  State  to  encourage  education  in  thera- 
peutics, and,  therefore,  it  should  render  all  possible  support 
towards  the  establishment  and  maintenance  of  the 
necessary  requirements  for  such  purposes. 


314 


JOHN  CADWALADER,  President    Pennsylvania    Insti- 
tution for  the  Instruction  of  the  Blind,  called. 

Mr.  Cadawalader :  I  do  not  know  that  I  can  volunteer 
very  much  information.  I  am  now  speaking  primarily 
in  the  interest  of  an  institution  with  which  I  have  been 
associated  for  four  years,  the  Institution  for  the  Instruc- 
tion of  the  Blind  in  Pennsylvania.  It  is  an  institution 
which  has  some  notoriety.  Its  working  and  its  position, 
I  think,  is  not  much  understood.  In  addition  to  the  ques- 
tions you  gentlemen  are  now  considering,  I  think  it  holds 
a  distinct  position  from  institutions  which  are  considered 
under  the  light  of  charities.  The  work  of  the  instruction 
for  the  blind  ought  not  to  be  classified  among  the  charities 
refusing  State  aid.  In  my  judgment  it  comes  distinctly 
under  that  educational  class.  We  offer  practically  the 
only  fully  equipped  school  for  educating  blind  persons, 
and  upon  the  principle  of  the  right  of  education  of  every 
citizen,  we  alone  can  furnish  to  that  citizen  what  is  the 
essential  to  make  himself  sustaining  in  life.  The  work 
was  originated  with  a  man  of  great  philanthropic  char- 
acter, rather  well-known  in  Philadelphia,  Mr.  Robert 
Vaux,  who  was  the  father  of  the  late  Richard  Vaux,  who 
took  great  interest  in  this  subject,  which  was  then  being 
started  in  Europe,  who  asked  a  gentleman  who  was  going 
abroad  to  make  a  study  of  the  question  so  far  as  it  had 
been  pursued  there,  and  he  brought  back  with  him  the 
information  and  a  gentleman,  a  German,  from  Berlin,  came 
out  who  had  some  education  in  the  training  of  the  blind. 
The  outgrowth  of  that  was  that  the  institution  here  was 
the  first  that  was  conceived.  The  institution  in  Boston  and 
one  in  New  York  were  all  started  within  a  very  few 
months.  That  work  progressed  practically  without  any 
State  assistance  and  there  is  no  assistance  in  the  sense  of 
State  aid  furnished  to-day  to  the  institutions.  If  any  of 


315 

you  gentlemen  have  visited  the  present  institution  at  Over- 
brook,  it  is  an  institution  I  should  like  you  very  much  to 
see,  because  it  is  recognized  as  the  most  complete  institu- 
tion for  the  instruction  of  the  blind  in  the  world.  We  have 
had  endorsements  from  the  best  authorities  in  Europe  and 
also  in  this  country.  In  the  early  stages  of  my  connection 
with  the  institution  I  followed  the  course  of  saving  the 
legacies,  and  the  only  State  aid  given  to  them  is  a  fund 
per  capita  for  instructing  the  poor  blind  of  the  State. 
The  present  appropriation — for  a  great  many  years  it 
was  $300 — it  was  cut  down  and  now  it  has  reached  $275 
again.  There  never  has  been  a  year  in  which  the  cost 
per  capita  of  the  pupils  was  under  $400.  The  State  has 
never  furnished  the  actual  cost. 

By  a  Member  of  The  Committee : 

Q.  The  State  gets  the  advantage  of  the  endowments, 
just  as  to  the  other  pupils? 

A.  The  money  has  been  carefully  husbanded.  Of  course, 
it  stands  as  somewhat  in  the  way.  There  is  a  large  amount 
of  people  who  would  perhaps  seek  private  education  there. 
We  have  private  pupils,  but  they  are  not  inclined  to  send 
their  children,  especially  the  younger  ages,  to  an  institu- 
tion where  they  are  so  much  mixed  up,  both  races  and 
classes.  I  think  that  is  where  we  gain  enormous  benefit 
by  the  pupils  being  known.  I  think  I  ought  to  state  for 
the  information  of  your  committee,  without  taking  too 
much  time,  an  instance  which  I  think  may  appeal  to  you 
as  an  extraordinary  case.  About  ten  years  ago  there  was 
a  young  Italian  working  in  a  quarry  near  Philadelphia. 
A  premature  blast  almost  blew  him  to  pieces,  blew  an  arm 
out,  his  eyes  out,  and  he  was  wounded  in  a  great  many 
other  places,  and  he  lingered  for  quite  a  while,  nine  or  ten 
months,  in  the  hospital  without  an  expectation  of  re- 
covery. He  did,  however,  recover,  and  the  hospital  sent 
to  our  institution  to  know  whether  we  could  possibly  do 
anything  for  him.  He  could  not  speak  English.  We  tried, 


316 

at  all  events.  In  less  than  five  years  that  young  man  com- 
pleted his  education  there.  He  is  one  of  the  most  thor- 
oughly educated  men,  he  is  a  good  Latin  scholar,  and  he 
acquired  a  good  knowledge  of  English.  His  efficiency  has 
made  him  extraordinarily  useful.  Under  those  conditions 
he  was  of  great  use  to  blind  persons.  Under  the  census 
of  the  United  States  the  name  and  residence  of  every  blind 
person  is  given,  and  that  man  has  visited,  without  any 
escort,  alone,  every  blind  person  in  sixty  counties  of  Penn- 
sylvania. He  gets  out  at  a  station  and  walks  up  a  country 
road  and  inquires  whether  "So  and  so"  lives  there.  He 
then  instructs  that  man  in  what  is  possible.  If  he  is  not 
hopeless  of  the  future,  or  good  results  would  follow  from 
education,  he  urges  him  to  take  it,  and  of  course  the  in- 
fluence of  a  man  in  his  condition  is  simply  remarkable. 
He  has  brought  into  the  institution  a  great  many.  He 
knows  the  advantages  they  will  gain.  This  was  so  re- 
markable that  the  Governor  of  New  Jersey  requested  that 
we  send  him  into  that  State.  He  has  done  the  same  work 
there  and  been  publicly  thanked,  and  also  in  Philadelphia 
he  has  done  the  same  thing.  That  man  was  a  most  hopeless 
case.  He  was  a  goat  herder  in  the  mountain  districts  be- 
hind Naples,  absolutely  without  any  education  or  ad- 
vantages of  any  sort.  He  is  now  a  man  of  great  ability. 
That  is  one  instance  among  others. 

I  think  in  these  appropriations  a  distinction  should  be 
drawn  absolutely  between  the  moneys^  appropriated  for 
educational  purposes  exclusively  and  those  which  are  in 
the  most  strict  sensa  charitable.  Those  pupils — there  would 
be  an  attempt  to  send  them  into  the  public  schools,  some 
of  them  do  get  a  sort  of  preliminary  training,  but  with 
great  difficulty.  They  interfere  with  the  schools,  they  are 
not  able  to  advance  to  any  great  extent,  but  the  great  num- 
ber of  our  graduates — it  is  not  a  home,  it  is  not  an  asylum, 
but  unfortunately  people  call  it  an  asylum — there  is  no 
essential  of  an  asylum  about  that — they  come  there  and 
get  their  regular  diplomas  at  the  end  of  the  school  term, 


317 

but  that  educational  work  should  not  be  classified  with 
the  charitable  fund,  it  seems  to  me  that  it  would  be  very 
proper  to  charge  it  to  the  school  receiving  State  appropria- 
tion. The  appropriation  has  never  taken  the  form  of 
assistance  to  this  institution  in  forty  years  that  I  have 
been  connected  with  it. 

By  a  Member  of  The  Committee : 

Q.  Is  not  an  appropriation  made,  a  per  capita  appro- 
priation for  the  care  and  teaching  of  the  blind? 

Mr.  Brown :  Yes. 

By  a  Member  of  The  Committee : 

Q.  The  various  institutions  doing  that  work? 

A.  There  may  be  of  some  separate.  I  know  of  none 
except  the  Pittsburgh  Institution.  There  has  been  of 
comparatively  late  years  the  Institution  in  Pittsburgh, 
and  that  is  the  Western.  It  is  only  a  specified  appropria- 
tion of  so  much  per  capita.  Of  course,  if  the  students  are 
not  there  we  do  not  get  it,  and  we  have  to  certify  each 
term  the  amount. 

By  Mr.  Brown : 

Q.  Have  you  given  any  thought  to  the  question  of  the 
applicability  of  that  system  to  the  other  hospitals,  the  per 
capita  system ;  how  would  it  work?  I  think  it  is  the  only 
proper  way  for  the  purpose  of  estimating  the  proper 
amount,  and  I  should  suppose  that  hospitals  would  be  very 
glad  to  have  it? 

Q.  On  the  same  basis? 
A.  On  the  same  basis? 

Q.  Is  your  institution  purely  charitable? 
A.  No,  we  take  pay  patients. 

Q.  Yes,  but  all  your  money  goes  without  any  profit  to 
stockholders  or  anybody? 
A.  Absolutely. 
Q.  Your  officers  are  all  salaried? 


318 

A.  Yes,  paid  teachers.  The  directors  have  no  interest 
except  as  a  public  charity.  It  has  been  one  of  the  most 
successful,  and  the  Board,  I  might  state,  have  had  a  great 
many  things  to  contend  with  in  the  years  of  its  existence. 
For  instance,  it  requires  a  great  deal  of  medical  treatment. 
We  have  specialists  on  the  throat  and  eye.  Of  course,  the 
great  majority  of  blind  persons  are  blind  from  congenital 
causes  and  they  have  that  difficulty  to  contend  with,  and 
we  have  paid  physicians  in  the  institution.  We  have  a 
very  excellent  infirmary,  and  we  have  also  a  separate  build- 
ing for  contagious  diseases  exclusively,  and  I  was  in- 
terested in  what  Dr.  Flick  said  in  regard  to  that.  Not- 
withstanding we  have  entire  isolation,  both  in  construction 
and  treatment  and  everything,  the  State  Health  Depart- 
ment last  year,  when  there  was  an  epidemic  of  scarlet 
fever  and  diphtheria,  they  enforced  us  to  have  them 
quarantined,  and  they  carted  them  out  to  the  Municipal 
Hospital,  and  some  of  the  attendants  even  got  it  in  going 
there.  I  think  that  was  an  error  of  judgment  there,  but  we 
take  every  precaution  in  that  way  and  we  have  that  as  an 
incident  to  our  institution. 

Q.  As  I  recall,  yours  and  the  ward  at  the  Philadelphia 
Hospital  and  the  ward  at  the  Wills  Eye  Hospital  are  the 
only  ones  for  contagious  diseases  in  Philadelphia,  is  that 
correct? 

A.  Having  separate  buildings? 

Q.  Yes,  buildings  for  contagious  diseases? 

A.  We  constructed  that  in  our  new  buildings.  We 
felt  it  was  important  to  keep  pupils  there  if  we  could,  and 
so  we  constructed  it  with  the  greatest  provision.  I  do  not 
think  many  institutions  have  it. 

Q.  Let  me  ask  you  as  a  man  of  affairs,  assuming  that 
all  these  things  requiring  these  vast  millions  are  meritori- 
ous, and  the  present  revenues  are  not  sufficient,  what  is 
your  thought  about  the  right  or  the  justice  of  the  State 
in  levying  dues  for  this  purpose  ? 

A.  My  view  on  the  subject  is  that  the  public  moneys 


319 

ought  as  far  as  possible  to  be  applied  strictly  to  public 
uses.  I  rather  regret  any  tendency  to  put  at  the  disposal 
of  any  body  of  men,  legislative  or  any  other,  general  funds 
in  which  more  or  less  the  distribution  is  dependent  upon 
more  or  less  interest  or  pressure.  I  think  the  distribution 
should  be,  as  clearly  as  possible,  defined  by  law.  I  think 
it  would  lead  to  economy  and  justice. 

Q.  Assuming  that  the  custom  or  concensus  of  opinion  is 
that  these  moneys  as  distributed  now  are  properly  dis- 
tributed, and  they  are  not  sufficient  for  the  increased  need, 
do  you  think  in  your  judgment  that  the  State  would  be 
justified  in  levying  an  additional  tax,  for  instance,  a  strict 
enforcement  of  the  law  relating  to  personal  property 
tax? 

A.  Assuming  that  the  expenditure  is  right  and  meets 
with  the  approval  of  the  people,  why,  of  course,  I  am  like 
any  other  good  citizen,  I  approve  of  getting  the  money  to 
apply  to  it. 

Q.  Do  you  think  the  uses  expressed  here  today  are 
such? 

A.  I  think  there  is  bound  to  be  a  great  many  of  them. 
We  have  the  Pennsylvania  Hospital  for  the  Blind,  which 
has  never  sought  aid  of  the  State.  It  stands  pre-eminent 
at  the  head,  and  there  are  absolutely  none  superior  to  it 
in  the  world,  and  it  has  never  had  a  dollar  of  State  ap- 
propriation in  a  hundred  years. 

Q.  The  Episcopal  Hospital  has  not  either? 
A.  The  Episcopal  Hospital  I  do    not  think  has  ever 
either.    It  is  supported  with  relation  to  the  church. 

Q.  The  Presbyterian  Hospital  has  not  either,  has  it? 

A.  I  thought  it  was — showing  that  it  was  not  absolutely 
a  necessity.  I  think  I  have  known  what  has  been  done  by 
the  State  Board  of  Charities,  and  I  am  surprised  to  hear 
such  criticisms.  I  think  the  State  Board  has  done  what  has 
been  wise  to  do.  I  never  noticed  them  to  fail.  I  think 
they  have  succeeded.  They  send  notices  to  you  to  come 


320 

before  them,  and  they  have  been  a  very  intelligent  body 
of  men,  and  they  can  receive  the  information  upon  which 
to  act  much  better  than  a  great  corps  of  specialists  going 
into  the  work.  It  does  not  appeal  to  me.  I  think  you  will 
have  to  have  in  the  State  Board  of  Charities  a  man  who 
can  see  the  things  and  the  special  way  of  dealing  with 
each  institution.  These  boards  are  full  of  men  who  are 
there  by  a  variety  of  causes,  and  I  do  not  believe  if  the 
Legislature  would  go  into  the  institutions  in  this  City  and 
this  State  that  they  will  find  a  more  careful  supervisor, 
economical  and  everything  else,  anywhere. 

Q.  Or  philanthropic  ? 

A.  Almost  exclusively  philanthropic.  There  are  pos- 
sibly infirmities,  but  they  are  so  general  they  do  not  enter 
into  the  general  subject.  That  is  not  the  principle  on 
which  our  institutions  have  been  running,  and  I  think  it, 
is  a  very  unfair  way  to  look  on  our  institutions,  which 
stand  as  high  as  any  in  the  world.  Anything  that  we  can 
do  for  the  development  of  the  blind  we  do.  The  son  of 
Mr.  Campbell,  late  of  the  Royal  Institution  at  London, 
came  out  and  made  an  address  and  spoke  of  the  enormous 
advances  in  which  everything  was  administered. 

By  a  Member  of  the  Committee : 

Q.  As  a  business  proposition  what  would  you  say  as  to 
a  central  purchasing  station  for  the  supplies  ? 

A.  I  think  that  comes  under  the  main  difficulty.  The 
supplies  are  radically  different  under  different  conditions, 
with  different  bodies.  I  do  not  think  you  will  gain  much  in 
that.  I  have  had  the  experience  of  supplying  an  institu- 
tion where  we  had  to  make  purchases  under  the  Govern- 
ment of  the  United  States,  where  everything  was  to  be  bid 
for  and  contracted  for.  I  think  in  four  years  I  do  not  recall 
a  single  instance  in  which  the  bids  did  not  vary  100  per 
cent.  You  gentlemen,  of  course,  are  familiar  with  that. 
The  Senator  knows  how  impracticable  it  is  for  men  to 
look  at  the  same  thing  in  the  same  way.  Take  an  institu- 


321 

tion  like  ours ;  the  diet  system  is  of  very  great  importance. 
We  have  got  more  or  less  invalids,  our  physicians  suggest 
many  changes  of  diet,  systems  of  diet,  one  of  the  greatest 
things  in  maintaining  the  health,  and  that  is  not  consistent 
with  the  general  purchasing  of  supplies.  They  tried  it  for 
a  month  or  two  and  changed  it. 

By  Mr.  McNichol : 

Q.  Did  I  understand  you  to  say  that  the  cost  of  educating 
a  pupil  is  $400  ? 

A.  Yes,  sir,  that  is  the  actual  cost.  I  mean  to  say  that 
is  food,  a  proportionate  amount  of  clothing,  and  (the 
attendants. 

Q.  That  is  the  full  cost  of  educating  and  operating? 

A.  Yes. 

Q.  And  the  Stae  is  only  paying  at  the  rate  of— 

A.  Two  hundred  and  seventy-five  dollars,  and  that  only 
within  the  last  two  years. 

Q.  Was  there  any  protest  made  to  the  Committee  for 
a  higher  amount? 

A.  Yes,  the  Board  of  Charities  recommended  $300  of 
their  own  motion. 

Q.  Did  the  faculty  of  the  institution  make  any  protest? 

A.  No,  we  have  never  made  any  special  claim,  because  it 
is  entirely  a  function  for  the  State.  If  the  State  does  not 
feel  that  they  are  getting  anything,  it  is  not  so  very  import- 
ant to  the  institution. 

Q.  Are  the  pupils  of  the  State  getting  the  same  atten- 
tion as  the  private  pupils  ? 

A.  Every  bit:  There  is  no  necessity  of  anyone  sending 
money. 

By  a  Member  of  the  Committee : 
Q.  How  many  pupils  are  there? 
A.  It  is  limited  by  the  appropriation,  175. 
Q.  How  many  have  you  altogether? 
A.  Two  hundred  and  ten,  I  think.    It  is  not  desirable  to 
17 


322 

enlarge  on  that,  and  that  is  one  of  the  reasons  we  aided 
in  the  establishment  of  the  western  institution.  It  is  not 
desirable  to  have  very  large  institutions. 

Q.  Then  if  it  were  not  for  the  endowment  fund  of  the 
institution  and  careful  husbanding  of  the  bequests  and 
donations  made  the  institution  would  not  be  able  to  take 
care  of  these  students  at  the  price  the  State  pays? 

A.  It  never  has  been.  Of  course,  there  is  a  great  deal 
we  could  do  if  we  had  more  money,  because  the  field  of 
broadening  blind  pupils'  activities  is  wonderful. 

By  Mr.  Brown : 

Q.  I  notice  your  per  capita  is  $275  a  year  as  against 
$350  for  the  western  institution  at  Pittsburgh.  Have  you 
folks  ever  made  a  comparison? 

A.  No,  the  whole  institution  is  out  of  the  State.  They 
built  their  buildings,  and  I  suppose  they  have  not  got  other 
private  resources.  I  think  it  is  run  entirely  on  the  State 
funds.  It  has  always  been  very  much  larger  than  ours. 


323 


HON.  E.  L.  TUSTIN,  representing  Hahnemann  Hospital, 

called. 

Mr.  Tustin:  Mr.  Chairman  and  Members  of  the  Com- 
mittee, Ladies  and  Gentlemen:  In  a  large  industrial  State 
like  Pennsylvania,  I  do  not  think  the  right  of  the  State  to 
the  appropriation  of  moneys  for  charitable  institutions  will 
ever  be  questioned.  It  seems  to  me  the  question  is  not  so 
much  what  we  appropriate,  but  the  care  we  take  of  it  after  it 
is  appropriated,  and  as  a  trustee  and  active  manager  of  one 
of  the  hospitals  of  Philadelphia,  I  have  found  out  that 
while  the  State  Board  of  Charities  may  do  a  good  work, 
they  have  their  limited  powers,  their  powers  are  decidedly 
limited,  and  outside  of  hearing  you  before  a  meeting  of  the 
Legislature  once  in  a  while  as  to  your  wants,  we  see  very 
little  of  them  during  the  intervening  time.  It  seems  to  me 
the  Legislature  of  Pennsylvania  that  appropriates  so  much 
money  for  charitable  institutions  ought  to  add  to  their 
Appropriation  Committee  a  provision  for  a  standing  com- 
mittee to  meet  between  the  sessions  of  the  Legislature,  to 
which  all  questions  of  complaint  could  be  referred,  and  who 
will  have  a  supervisory  oversight  of  the  expendture  of  the 
vast  amount  of  money  which  they  appropriate  year  after 
year.  I  do  not  mean  to  say  that  they  ought  to  take  the 
same  position  of  the  State  Board  of  Charities.  They  repre- 
sent the  people  of  Pennsylvania  in  the  appropriation  of  a 
large  amount  of  money  and  they  ought  not  to  appropriate 
the  money,  in  my  opinion,  and  then  simply  forget  all  about 
it. 

By  Mr.  McNichol : 

Q.  Might  that  not  be  done  by  the  Department  of  Health, 
or  under  its  supervision  ? 

A.  I  think  it  would  be  better  to  do  it  under  the  super- 
vision of  the  Legislature,  for  the  reason  that  we  are  all 
human,  and  every  institution  would  know  that  the  Appro- 


324 

priation  Committee  of  the  Legislature  was  keeping  a  super- 
vision over  that  institution  and  would  be  more  careful  to 
bring  that  institution  up  to  the  very  highest  standard,  be- 
cause they  would  know  that  the  men  over  them  who  were 
looking  after  the  appropriation  and  the  expenditure  of  the 
money  would  probably  be  among  the  number  who  would 
vote  for  the  future  maintenance  of  the  hospital.  The  con- 
sequence would  be  that  the  institutions  who  receive  State 
aid  would  be  more  apt  to  bring  up  the  efficiency  of  their 
institutions.  I  think  there  should  be  appointed  a  Com- 
mittee who  would  meet  once  or  .twice  between  the  sessions 
and  have  a  detailed  report  from  the  agents  or  the  State 
Board  of  Charities  should  be  re-organized,  they  should  have 
more  power  and  a  greater  appropriation  and  have  more 
agents,  or  else  the  Committee  from  the  Legislature  should 
take  this  out  of  their  hands.  I  think  the  Committee  from  the 
Legislature,  even  if  the  State  Board  of  Charities  were  con- 
tinued, would  have  a  splendid  effect  upon  the  eleemosynary 
and  charitable  institutions  of  the  State.  I  think  the  mere 
fact  that  after  this  money  is  given  they  think  there  is  no 
other  Legislature  to  meet  for  two  years  now  to  look  after 
them,  but  the  State  Board  of  Charities,  and  the  State  Board 
of  Charities,  as  I  said  before,  is  limited  in  its  machinery 
and  there  should  be  an  investigation  and  this  report  given 
up  to  your  Committee,  and  then  future  Legislatures  will 
know  how  much  to  appropriate.  The  Appropriation  Com- 
mittee at  the  present  time  meet  and  I  do  not  think  the 
people  of  Pennsylvania  have  any  idea  of  the  work  the 
Appropriation  Committee  does  at  Harrisburg.  They  meet 
by  day  and  sometimes  by  night  and  hear  this  testimony,  but 
they  can  not  get  the  same  amount  of  testimony  they  could 
if  they  had  a  permanent  committee.  I  hope  your  Com- 
mittee will  take  up  that  subject,  as  to  whether  it  will  be 
wise  to  have  such  a  committee  appointed  between  the  meet- 
ings of  the  Legislature  and  have  that  supervision. 

Q.  You  are  an  officer  of  the  Hahnemann  Hospital? 
A.  Yes,  sir. 


326 

Q.  Is  your  thought  the  result  of  your  experiences  there 
or  with  other  institutions,  that  they  ought  to  have  this 
supervision  ? 

A.  Mr.  Barney,  Maule,  Perkins  and  I  have  been  active 
there  as  managers  between  the  meetings  of  the  Board  of 
Trustees,  and  I  have  taken  a  considerable  interest  in  it. 
I  have  appeared  once  before  the  State  Board  of  Charities, 
and  I  have  seen  nothing  but  the  auditor  who  comes  once  in 
a  while  to  audit  our  books.  Our  superintendent  gets  bids 
for  all  the  supplies  that  go  in  there  every  three  months, 
and  I  think  the  institution  is  managed  as  well  as  it  could  be 
managed,  yet  I  believe  the  supervision  would  be  a  good 
thing. 

Q.  I  can  not  understand  why  it  is  you  suggest  this  addi- 
tional supervision,  why  it  should  be  necessary  in  view  of  the 
fact  that  these  are  public  moneys  and  appropriated  purely 
for  charity. 

A.  That  is  just  the  reason,  because  they  are  public 
moneys  and  appropriated  for  charity,  it  ought  to  be  done. 

Q.  It  seems  to  me  if  they  do  not  consider  the  source  it 
comes  from,  they  would  consider  how  it  was  to  be  used.  I 
can  not  conceive 

A.  I  think  you  are  entirely  right. 

Q.  You  say  on  our  Boards  are  prominent  representative 
business  men,  and  I  can  not  understand  exactly  the  reason 
for  the  suggestions  that  they  should  be  so  carefully 
scrutinized. 

A.  It  is  not  a  question  of  scrutinizing  the  gentlemen  who 
are  on  the  Boards  of  Managers  of  these  institutions.  You 
know  very  well  and  I  know  very  well  that  they  take  no 
active  part  in  the  management  of  the  affairs  whatever. 

Q.  Should  they  not  be  men  who  will  take  an  active  inter- 
est, not  for  the  purpose  of  seeing  their  names  in  print,  but 
for  doing  the  service  for  which  they  are  appointed? 

A.  I  think  that  is  the  ideal  position. 

Q.  Is  it  not  possible  to  scrutinize  its  management  to  see 
that  the  moneys  are  properly  used  ? 


326 

A.  I  think  if  they  have  men  on  the  Board  of  Trustees 
who  will  lay  aside  their  private  business  and  devote  their 
time  to  it,  it  will ;  otherwise  it  would  not. 

Q.  Would  not  the  Legislative  Committee  have  to  be 
provided  with  more  authority  than  the  State  Board  of 
Charities? 

A.  It  ought  to  be  provided  with  more  machinery  than  the 
State  Board  of  Charities,  and  I  think  they  will  do  a  better 
work. 

By  a  Member  of  the  Committee : 

Q.  How  many  free  beds  are  there  in  your  institution 
wherein  the  public  get  the  benefit  of  all  this  appropriation  ? 

A.  The  public  get  the  benefit  of  all  the  beds  in  our  in- 
stitution if  there  is  a  demand  for  it. 

Q.  By  "demand"  you  mean  if  there  is  room  for  them? 

A.  I  mean  to  say  that  if  the  public  make  a  demand  at 
any  time,  and  no  case  is  ever  refused  that  comes  to  the 
hospital. 

Q.  Provided  there  is  an  empty  bed? 

A.  Yes,  sir. 

Q.  How  often  does  it  occur  that  those  beds  are  not  empty 
in  all  institutions? 

A.  I  do  not  know  about  all  institutions.  So  far  as  our 
institution  is  concerned,  we  are  located  in  a  neighborhood 
where  we  have  around  us  a  great  many  working  men  who 
work  hard  for  a  daily  wage,  who  are  just  as  good  as  any 
other  citizens  in  any  other  part  of  the  country,  but  they 
have  not  succeeded  in  saving  up  very  much  money.  They 
have  sickness  in  their  families  and  we  have  a  great  many 
accident  cases  from  the  Reading  Railroad,  Baldwin's,  etc. 

Q.  That  is,  they  come  in  and  go  out  continually  ? 

A.  Yes,  but  if  a  man  comes  into  our  dispensary  who 
ought  to  be  in  the  hospital,  he  is  put  in  the  hospital. 

Q.  How  many  private  rooms  have  you  in  the  hospital  ? 

A.  I  can  not  answer  that  question.  Mr.  Barney  can 
answer  you. 


327 

Mr.  Barney :  Free  beds,  187 ;  private  rooms,  51. 

Q.  You  are  familiar  with  conditions  in  West  Philadel- 
phia? 

A.  I  am. 

Q.  The  Philadelphia  Hospital.  If  the  Commonwealth  of 
Pennsylvania  perpetuated  the  hospital  and  gave  it  one-half 
the  support  which  it  is  giving  private  institutions  through- 
out the  State,  do  you  think  you  would  be  able  to  provide  for 
the  poor  of  the  City  more  efficiently  than  you  are  now  ? 

A.  I  don't  think  we  could  do  as  well  as  we  do  it  now, 
because  the  poor  of  the  City  would  have  to  congregate  in 
one  place. 

Q.  Isn't  it  practically  where  they  are  congregated,  90 
per  cent,  of  them? 

A.  You  mean  at  the  West  Philadelphia  Hospital  ? 

Q.  In  comparison  with  the  population  of  your  hospital, 
as  compared  with  the  West  Philadelphia  Hospital? 

A.  No,  because  the  objection  is  this,  whether  wisely  or 
unwisely,  the  idea  of  going  to  the  West  Philadelphia  Hos- 
pital or  Almshouse  is  very  repugnant  to  a  great  many 
people,  whereas  going  to  a  private  hospital  is  not  so  repug- 
nant and  they  are  perfectly  willing  to  go  there.  I  do  not 
believe  it  would  be  wise  to  take  our  hospitals  from  the 
different  locations  throughout  the  City,  a  large  City  like 
this,  and  combine  them  in  one  place. 

Q.  I  am  not  in  favor  of  taking  them  from  the  several 
locations;  I  believe  in  our  paying  a  Ittle  more  attention 
to  our  own  institutions  than  what  we  have  been  paying  in 
the  past. 

A.  I  do  not  think  anybody  would  object  to  that. 

Q.  That  is  where  it  would  not  hurt  the  private  institu- 
tions which  are  interested? 

A.  I  think  we  all  agree  on  that. 


328 


DR.  WILLIAM  B.  HACKENBURG,  President  Jewish 
Hospital,  called. 

Dr.  Hackenburg :  I  appear  solely  as  a  representative  of  a 
hospital.  My  connection  with  the  Jewish  Hospital  for  45 
years,  and  34  years  as  President  of  it,  and  I  simply  want  to 
address  you  upon  the  relative  matter  of  appropriations  for 
hospitals,  in  its  general  sense.  Hospitals  and  other  public 
institutions  for  the  care  of  the  sick  and  wounded,  for  the 
homeless,  for  the  aged  and  infirm,  poor  and  orphan  asylums 
must  be  regarded  as  necessary  and  important  objects  for 
the  proper  government  of  all  communities,  more  especially 
those  of  large  cities  and  towns.  I  contend  that  it  is  a  part 
of  the  obligation  due  to  the  people  that  proper  provision 
for  the  care  of  these  dependent  classes  must  be  made,  either 
by  wholly  supporting  them  from  State  or  municipality 
funds  or  by  assisting  such  private  institutions  that  are 
organized  for  that  purpose;  if  these  private,  or  we  may 
call  them  semi-public  institutions,  did  not  exist  it  is  very 
certain  that  the  different  State  governments  as  well  as  every 
large  city  would  be  enormously  taxed  for  the  support  and 
care  of  these  dependent  people,  therefore  appropriations 
from  public  funds  to  assist  in  their  support  are  just  and 
right  and  thereby  lessen  the  greater  tax  that  would  be 
necessarily  levied  for  such  purposes. 

It  has  been  said  that  there  is  danger  of  these  appro- 
priations beng  abused.  Whle  they  may  sometimes  be  dis- 
proportionate, I  will  venture  the  assertion  that  rarely,  if 
ever,  are  they  diverted  from  their  proper  use. 

From  a  pamphlet  recently  published  entitled  "The  Ap- 
propriation of  Public  Funds  for  the  Support  of  Voluntary 
Hospitals/'  by  S.  S.  Goldwater,  of  New  York,  I  find  that 
in  35  States  and  in  the  District  of  Columbia  of  this 
country  and  in  the  provinces  of  Alberta,  Manitoba,  New 
Brunswick,  Quebec,  Nova  Scotia  and  Ontario,  either  State 


329 

or  municipal  appropriations  are  made  to  private  hospitals 
for  the  partial  maintenance  of  free  beds  and  the  care  of 
the  indigent  sick;  they  are  allotted  either  in  yearly  gross 
sums  or  by  per  diem  payments  or  by  yearly  contracts  for 
each  free  patient  and  by  irregular  donations. 

In  this  State  our  Legislature  has  thoughtfully  and  liber- 
ally given  yearly  appropriations,  and  I  can  safely  assert 
that  had  it  not  been  for  this  aid  some  of  our  City  hospitals 
as  well  as  in  other  cities  of  this  Commonwealth  would  either 
have  been  compelled  to  close  their  doors  entirely  or  largely 
curtail  the  admission  of  free  patients.  I  am  also  safe  in 
asserting  that  every  large  hospital  in  this  City  has  for  a 
long  time  yearly  shown  a  deficiency  of  income  (some  of 
them  with  State  aid)  to  meet  their  current  expenses.  It  is  a 
well-known  fact  that  in  an  up-to-date,  well-managed  hospital 
proper  requirements  for  its  work  never  cease,  but  I  feel 
satisfied  that  they  are  as  economically  managed  as  these  con- 
stant necessities  for  the  proper  care  and  treatment  of  the 
sick  and  wounded  will  permit.  It  must  also  not  be  over- 
looked that  these  State  appropriations  to  hospitals  are  of 
much  value  to  the  public  in  aiding  a  large  number  of  young 
men  and  women  in  securing  a  scentific  education  for  the 
prevention  and  cure  of  disease.  Many  of  our  hospitals 
maintain  Nurses'  Training  Schools  in  which  young  women 
are  fitted  to  become  professional  nurses  and  are  enabled 
after  a  three  or  more  years  education  to  enter  the  corps  of 
assistants  to  the  physician  and  surgeon  in  their  work  of 
relief  and  cure  of  disease  and  injury,  earning  for  them- 
selves a  good  and  remunerative  return  for  their  services. 

Equally  as  great  advantages  are  given  to  the  medical 
student  by  assisting  him  in  his  collegiate  studies  with  the 
opportunity  of  a  practical  medical  and  surgical  knowledge 
of  diseases  and  study  of  their  prevention  and  cure,  by  at- 
tending at  different  hospital  operating  rooms  the  ward 
study  of  medical  cases  and  their  open  clinics. 

Surely  under  all  these  conditions  for  the  relief  and  care 
of  the  indigent  sick,  the  educational  advantages  to  the  two 


330 

classes  of  men  and  women  for  a  professional  training  it 
cannot  be  charged  that  the  funds  of  the  Commonwealth  are 
misapplied,  uselessly  or  recklessly  spent  in  appropriating 
money  for  the  furtherance  of  this  public  work  in  the  partial 
support  of  hospitals  and  other  cognate  institutions. 

It  may  be  possible  that  the  lump  appropriation  is  not 
always  the  best,  some  institutions  at  times  may  receive 
more  than  they  are  justly  entitled  to,  while  others  receive 
less  in  proportion  to  the  number  of  free  patients  treated 
in  the  institution. 

For  instance,  I  have  in  mind  a  hospital  in  this  City 
receiving  State  aid  in  which  about  two  thousand  house 
patients  were  treated;  nearly  1,600  were  free,  being  about 
80  per  cent,  of  the  whole  number,  who  received  an 
aggregate  of  40,000  days  support.  This  is  only  a  fair 
sample  of  the  work  of  many  large  hospitals  in  Philadelphia, 
and  this  institution  was  $15,000  short  of  enough  income  to 
meet  its  ordinary  expenses. 

It  seems  to  me  that  a  more  equitable  plan  might  be 
arranged  for  State  help  to  our  hospitals  and  other  chari- 
table institutions,  that  would  be  safe-guarded  for  the  State 
and  fair  for  the  recipient ;  for  instance,  a  per  capita  allow- 
ance for  each  day 's  support  of  indigent  or  worthy  non-pay- 
ing patients,  or  a  diem  amount  for  the  total  number  of 
days  furnished  to  free  patients  to  be  paid  monthly  or 
quarterly.  A  similar  system  controlled  by  proper  rules 
and  conditions  has  been  found  to  work  well  in  New  York, 
Massachusetts,  District  of  Columbia  and  other  places. 

An  appropriation  for  a  certain  number  of  free  beds  I  do 
not  think  would  be  a  good  plan  and  would  be  liable  to 
serious  abuse;  while  in  some  institutions  those  free  beds 
might  be  constantly  filled,  in  others  they  might  be  fre- 
quently without  occupants.  This  would  be  unjust  to  the 
crowded  house  and  an  imposition  upon  the  State. 

All  institutions  receiving  State  aid  should  at  the  end  of 
their  fiscal  year  render  a  sworn  itemized  statement  similar 
to  that  rendered  yearly  to  the  State  Board  of  Charities  to 


331 

the  Auditor  General  of  its  financial  affairs  for  the  year, 
number  of  free  beds,  how  many  were  occupied,  total  num- 
ber of  days  support  to  free  patients,  and  such  other  inform- 
ation to  verify  its  claim  for  State  aid  already  paid  for  the 
year  and  that  could  be  used  as  a  basis  for  the  following 
prepared  by  a  competent  hospital  authority  in  connection 
with  the  Auditor  General's  office  or  the  State  Board  of 
Public  Charities. 

I  can  safely  say  that  all  appropriations  by  the  State 
for  hospitals  and  cognate  institutions  I  am  perfectly 
satisfied  have  been  properly  used.  The  institutions  are  all 
economically  managed.  The  Board  of  Trustees  of  every 
similar  institution,  I  believe,  serves  without  any  com- 
pensation or  expectation  of  fee  or  reward. 

By  a  Member  of  the  Committee : 

Q.  Is  that  generally  true? 

A.  I  think  it  is,  with  the  exception  of  possibly  the 
Secretary.  He  is  generally  a  paid  officer  with  a  small 
salary. 

Q.  So  far  as  your  knowledge  goes,  no  officer  or  Presi- 
dent of  any  Board  of  Trustees  of  any  hospital  in  this  City 
receives  any  salary? 

A.  So  far  as  I  know,  no  officer  receives  any  compensa- 
tion excepting  the  Secretary.  I  have  yet  to  hear  of  the  first 
case  of  a  paid  officer. 

If  I  may  be  pardoned  for  introducing  a  matter  that 
possibly  may  look  like  rather  a  private  matter — I  do  not 
consider  it  a  private  matter — a  remark  has  been  made  here 
with  regard  to  the  care  of  tubercular  patients.  I  want  to 
say  that  the  hospital  over  which  I  have  the  honor  to  pre- 
side for  many  years,  seven  or  eight  or  ten,  has  tubercular 
patients  in  its  general  ward.  Since  1890  it  has  had  a 
separate  department,  a  separate  building  under  the  man- 
agement of  the  Board  with  a  separate  corps  of  nurses  and 
staff  to  take  care  of  it,  and  it  has  now  39  or  40  beds  in  it 
occupied  all  the  time,  with  from  forty  to  fifty  applications 


332 

for  admission.  I  only  say  this  because  the  remark  has 
been  made  here  to-day  that  there  is  no  general  hospital  in 
Philadelphia  taking  tubercular  patients. 

By  Mr.  Brown: 

Q.  Has  there  been  any  infection  of  patients  in  the  other 
wards  ? 

A.  Not  to  my  knowledge. 

Q.  Covering  a  period  of  how  many  years  ? 

A.  We  had  in  the  general  ward  up  to  1890,  I  suppose, 
possibly  more  or  less  for  twenty  or  twenty-five  years. 

Q.  What  about  the  question  of  supplies,  do  you  think  the 
supplies  could  be  furnished  more  cheaply  by  purchasing 
them  through  a  central  bureau? 

A.  That  is  a  very  serious  question.  I  have  looked  into 
that  question  quite  seriously.  They  have  taken  the  mat- 
ter up  in  the  City  of  New  York,  and  I  will  give  you  the 
particulars  of  that  in  a  few  minutes,  but  it  seems  to  me 
that  if  a  system  of  that  kind  was  adopted  it  would  be  a 
serious  injury  to  the  quality.  I  think  the  quality  would  be 
seriously  affected.  In  hospital  supplies  as  a  rule  large 
hospitals  or  fair-sized  hospitals  generally  buy  in  large 
quantities,  and  I  am  very  well  satisfied  the  system  adopted 
in  other  hospitals  is  very  much  as  our  own,  and  they  buy 
in  such  a  quantity  as  to  warrant  the  prices  being  put  down 
to  the  very  lowest  margin.  We  have  a  Supply  Committee 
which  asks  for  bids  and  they  buy  generally  in  very  large 
quantities,  quantities  to  last  a  year,  and  they  get  very 
low  prices,  I  am  satisfied  as  to  that.  As  to  our  marketing, 
we  have  in  connection  with  our  hospital  twenty  acres  of 
ground  and  we  raise  much  of  our  produce,  a  great  sav- 
ing to  the  institution,  and  I  think  that  the  other  supplies 
are  bought  at  the  very  lowest  market  prices,  and  I  doubt 
very  much  that  if  a  commission,  which  would  necessarily 
be  a  paid  one — the  expert  superintendent  would  be  paid, 
the  buyers,  who  necessarily  would  be  experts,  would  have 
to  be  paid,  and  all  the  expenses  of  running  the  institution 


333 

would  have  to  be  paid,  and  these  supplies  are  different 
from  a  railroad ;  in  the  railroad  the  man  who  buys  oil  does 
not  buy  railroad  ties,  and  they  have  experts  or  supervisors 
for  those  different  departments.  If  you  had  a  central 
depot  for  the  purchase  of  supplies  it  would  be  a  very 
expensive  institution  to  run,  if  you  had  experts  for  all 
the  departments  you  had,  like  the  purchase  of  instru- 
ments, which  are  a  very  delicate  instrument,  they  would 
not  want  to  go  to  anybody  else  than  their  own  experts. 

Q.  They  could  be  gotten  on  requisition? 

A.  Yes,  but  it  would  be  a  very  difficult  thing  to  get  the 
quantities  they  wanted. 

Q.  It  would  be  cheaper  to  buy  a  car  load  than  it  would 
be  to  buy  in  small  quantities,  would  it  not  ? 

A.  Not  in  all  cases. 

Q.  Not  referring  to  surgical  instruments  ? 

A.  No.  I  think  that  during  the  year  the  car  load  would 
not  be  any  cheaper  than  possibly  five  or  ten  bolts  of  muslin 
would  be.  Of  course,  a  great  deal  of  this  whole  business  is 
confidential. 

By  Mr.  McNichol : 

Q.  Is  there  a  teaching  class  connected  with  your  institu- 
tion? 

A.  Yes,  sir,  we  have  52  nurses. 

Q.  I  mean  any  class  for  the  doctors? 

A.  The  clinics,  we  have  the  surgeon  who  is  operating 
who  explains  his  cases  as  he  goes  along  with  them.  As  a 
rule  we  do  not  have  large  classes  at  all  operations,  as  we 
are  a  distance  from  the  City,  about  five  miles,  but  we 
have  at  times  a  number  of  students  and  visitors  there. 

Q.  People  come  there  from  different  colleges? 

A.  Yes,  sir. 

Q.  How  about  the  nurses  ? 

A.  The  nurses  have  lectures  every  afternoon  from  the 
chief  nurse,  and  lectures  three  or  four  times  a  week  from 
the  members  of  the  staff,  from  the  house  and  visiting  staff. 


334 

Q.  Their  tuition  is  free? 

A.  They  are  not  paid.  No  member  of  the  consulting 
staff  is  paid. 

Q.  How  long  do  they  have  to  serve? 

A.  About  a  month  at  a  time.  For  instance,  the  lecturer 
on  surgery  will  have  two  or  three  lectures  a  week  for  two 
or  three  months.  The  different  subjects  will  be  taken  up 
at  different  times. 

Q.  Do  you  get  any  returns  from  those  nurses  that  are 
occupied  in  attending  some  of  the  patients  there? 

A.  No,  sir.  We  pay  them  a  sufficient  amount  to  pay  for 
their  uniforms. 

Q.  Don't  you  have  any  private  patients  there  that  you 
collect  from? 

A.  Yes,  sir.  We  have  a  private  building  with  about 
thirty-eight  beds  in  it. 

Q.  Part  of  the  bill  of  that  patient  is  for  nursing  ? 

A.  We  do  not  always  have  our  own  nurses,  and  not 
always  private  nurses.  We  furnish  about  one  nurse  for 
four  patients,  is  our  average.  When  they  have  outside 
nurses  they  bring  them  in. 

Q.  When  they  furnish  the  nurses 

A.  We  do  not  charge  for  them. 

By  Mr.  Brown : 

Q.  Is  there  any  money  appropriated  by  the  State  used 
for  any  other  purpose  than  charity  ? 

A.  Nothing  under  the  sun.  We  had  sixteen  hundred 
free  patients  last  year  out  of  2,000  patients. 


335 


HENRY  W.  CATTELL,  Editor  Medical  Notes  and 
Queries,  called. 

Mr.  Cattell :  Mr.  Chairman  and  Gentlemen  of  the  Com- 
mittee, Ladies  and  Gentlemen:  The  hospital  was  origin- 
ally founded  for  the  poor.  It  has  become  a  refuge  for  the 
rich,  for  this  reason 

Mr.  McNichol :  Will  you  enumerate  as  you  go  along  those 
hospitals  which  you  place  in  that  category? 

Mr.  Cattell:  I  think  you  could  start  with  nearly  every 
hospital  and  put  it  in  that  category.  I  would  not  like, 
without  going  into  detail,  but  practically  all  the 
hospitals 

Mr.  McNichol :  All  the  hospitals  of  the  type  we  have  in 
Philadelphia? 

Mr.  Cattell :  Of  the  type  of  private  hospital  that  is  re- 
ceiving State  aid,  those  with  which  I  am  familiar,  origin- 
ally intended  for  the  poor,  have  now  very  largely  become 
the  refuge  for  the  rich,  and  it  is  the  great  middle  class, 
to  which  I  belong,  that  do  not  receive  benefit  from  these 
State  appropriations. 

Mr.  Sproul:  Is  there  any  objection  to  the  rich  taking 
this  advantage  of  these  things  if  they  can  take  care  of 
the  poor  as  well  ? 

Mr.  Cattell:  When  Socialism . comes  into  power,  then, 
perhaps,  the  poor  and  the  rich  will  be  taken  care  of  alike, 
but  as  I  understand  there  is  not  sufficient  funds  to  do 
things  as  they  should  be  done  in  the  State  of  Pennsylvania. 

By  Mr.  Sproul : 

Q.  As  I  understand,  the  rich  pay  for  what  they  get  in 
the  institutions? 

A.  The  rich  do  not  pay  for  what  they  get, 


336 

By  Mr.  McNichol : 

Q.  They  are  getting  the  benefit  of  these  appropriations 
we  have  been  making  to  these  institutions? 

A.  You  must  divide  the  appropriations  into  buildings, 
construction,  new  equipment,  and  into  maintenance.  Now, 
let  us  take  without  mentioning 

Q.  We  want  you  to  particularize,  because  we  have  an 
opportunity  to  go  after  these  particular  places.  If  you 
are  going  to  speak  in  generalities,  we  might  just  as  well 
have  your  paper  filed  here  and  go  over  it  ourselves. 

A.  I  would  not  like  to  mention  one  hospital  when  there 
are  so  many. 

Q.  Mention  all  the  hospitals  that  you  have.  Just  take 
the  curtain  off  and  let  us  look  into  it? 

A.  Let  us  then  take  the  appropriation  for  the  erection  of 
the  new  clinical  wing  of  the  University  of  Pennsylvania. 
I  do  not  know  the  figures  in  regard  to  that. 

Q.  Mr.  Brown  can  give  you  those  figures  possibly. 

Mr.  Brown:  For  new  buildings  for  1909- '10,  $165,000. 
For  1910-11,  $165,000.  University  of  Pennsylvania  Hos- 
pital Buildings.  Is  that  the  item  you  refer  to? 

Mr.  Cattell:  If  that  refers  to  that  special  new  wing. 

Mr.  Brown :  It  does  not  say. 

Mr.  Cattell :  The  amount  is  indifferent.  Let  us  say  the 
cost  of  that  new  wing  is  $100,000. 

Mr.  Brown:  I  will  give  it  to  you  exactly.  Is  that  the 
item? 

Mr.  Cattell :  No,  it  is  the  wing  right  next  to  the  Pepper 
Library.  It  was  dedicated  last  fall. 

Mr.  Brown:  No  such  appropriation  apparently. 

Mr.  Cattell :  It  was  State  money  used  for  that  purpose. 

Mr.  Brown:  There  are  only  three  items  for  which  they 
asked,  maintenance,  $150,000;  buildings  and  gymnasium, 
$125,000;  nurses'  home,  $75,000.  The  State  Board  of 
Charities  approved  $150,000  for  maintenance;  buildings, 


337 

$50,000,  and  nurses'  home,  $50,000,  and  the  appropriations 
in  1910-  '11  were  $330,000.  They  overlap,  $165,000  for  1910 
and  $165,000  for  1910-11. 

Mr.  Cattell :  It  is  immaterial  as  to  the  amount.  Let  us 
say  the  appropriation  is  given  for  construction,  $100,000. 
That  first  of  all  would  be  used  for  teaching  purposes,  a 
large  portion  of  it,  and  the  second  portion  of  it  will  be 
used  for  clinical  examination  in  diagnosing  diseases.  Now, 
it  is  the  rich  that  causes  the  demand  for  these  diagnoses, 
and  not  so  much  the  poor.  Therefore,  the  building  is  used 
first  for  teaching,  second,  largely  for  the  diagnosing  of 
the  diseases  of  the  sick  rich — and  not  for  the  poor — and 
this  cost  is  not  charged  up  properly.  Now,  to  illustrate, 
the  way  the  account  is  sometimes  kept,  a  bed  is  endowed 
for  $5,000;  the  income  from  that  sum  is  supposed  to  be 
sufficient  to  pay  for  the  patient — it  is  notj  quite;  that 
patient  pays  seven  dollars,  that  goes  into  that  bed,  and 
another  seven  or  eight  dollars,  or  whatever  the  mainten- 
ance may  be,  is  collected  from  the  State.  In  other  words, 
so  far  as  the  bookkeeping  is  concerned,  at  least  so  far 
as  I  can  make  it  out,  the  income  from  that  bed,  so  far  as 
the  hospital  is  concerned,  is  three-fold :  first,  from  its 
endowment;  second,  from  the  State,  and,  third  from  the 
patient. 

By  Mr.  McNichol:  Does  that  condition  exist  in  the 
University  of  Pennsylvania  ? 

A.  I  asked  to  have  access  to  the  books  of  the  University 
with  my  private  accountant  and  they  have  very  politely 
refused  me. 

Q.  Was  that  equally  true  of  the  Jefferson? 

A.  I  will  make  no  specific  charge  in  regard  to  that  thing. 
I  know  it  is  true  with  regard  to  some  of  the  hospitals  as 
they  exist  in  Philadelphia  to-day. 

Q.  You  made  an  attempt  at  several  of  the  hospitals 

A.  I  made  an  attempt  at  several  of  the  hospitals  to  get 
information  and  I  have  been  very  politely  denied  access 
to  the  books  with  expert  accountants  to  go  over  them. 


338 

Q.  And  you  make  the  statement  that  those  hospitals 
receive  a  revenue  in  three  ways :  from  an  endowment — 

A.  Yes. 

Q.  That  is  by  private  subscription? 

A.  Yes,  an  endowment.  Sometimes  they  pay  as  high  as 
five  or  seven  dollars,  and  they  can  charge  that  up  to  the 
State. 

Q.  That  is  the  condition  in  Philadelphia  ? 

A.  It  is  to-day. 

Now,  to  continue  this  thought,  I  personally  do  not  be- 
lieve that  the  present  method  of  distributing  the  State 
funds  in  Philadelphia  is  conductive  to  the  best  interests  of 
the  public.  I  believe  the  number  of  medical  schools  should 
be  reduced,  and  I  have  outlined  personally  a  little  scheme 
to  that  effect.  I  believe  the  number  of  hospitals  should  be 
reduced.  I  believe  greater  efficiency  can  be  maintained  by 
the  reduction  of  the  number  of  hospitals,  with  larger  cen- 
tral hospitals,  and  smaller  branches,  so  everybody  can  be 
taken  care  of. 

Q.  What  do  you  mean  by  "everybody  taken  care  of"? 

A.  Both  the  rich  and  the  poor  that  should  be  taken  care 
of. 

Q.  You  mean  the  patients  ? 

A.  Yes.  For  instance,  what  is  the  use  of  equipping 
every  hospital  with  an  X-ray  plant,  when  if  there  was  a 
good  X-ray  plant  in  one  of  these  hospitals  that  would  be 
sufficient,  and  the  money  saved  could  be  used  in 
strengthening  other  institutions  ?  I  therefore  believe  that 
any  appropriation  which  can  be  made  to  these  hospitals 
should  be  greatly  reduced  until  the  year  1915,  when  only 
two  or  three  of  the  teaching  institutions  should  have  ap- 
propriations, and  I  firmly  believe  that  the  question  of  the 
appropriation  should  be  used  as  a  means  for  bringing  the 
hospitals  together,  if  they  would  not}  get  together  and 
unite,  as  well  as  the  medical  schools. 

Q.  Have  you  ever  tried  to  bring  the  medical  men  to- 
igether  ? 


339 

A.  Yes,  sir,  and  there  is  a  meeting  tonight  of  one  of  the 
medical  schools  to  consider  that  very  question. 
Q.  Of  a  medical  school  ? 
A.  Yes,  sir. 

Q.  Have  you  been  successful? 
A.  I  would  not  like  to  say  I  have. 

By  a  Member  of  the  Committee : 

Q.  Are  you  on  the  staff  of  any  medical  school? 
A.  No,  but  I  have  been  on  the  staff  of  one. 

By  Mr.  McNichol: 

Q.  Which  institution  have  you  been  connected  with? 

A.  I  have  been  connected  with  the  LaFayette  College, 
which  does  not  receive  State  aid,  and  I  have  been  con- 
nected with  the  Presbyterian,  Blockley,  Pennsylvania, 
University,  and  various  other  hospitals,  some  eight  or  ten 
more,  I  believe,  and  therefore,  following  out  this  line  of 
argument  that  if  there  be  any  money  that  the  State  can 
appropriate  to  take  care  of  the  poor  in  Philadelphia,  that 
money  should  go  to  strengthening  these  institutions  such 
as  Blockley  and  the  Municipal  Hospital,  and  that  other 
money  should  go  toward  establishing  more  institutions 
throughout  the  State  of  Pennsylvania,  which  are  sadly 
needed,  and  that  money  should  be  used  in  some  such  man- 
ner by  the  State,  money  which  goes  to  the  schools  at  the 
present  time. 

By  a  Member  of  the  Committee : 

Q.  Do  you  believe  those  institutions  are  accumulating 
funds  at  the  expense  of  the  State,  by  fraud? 

A.  I  would  not  like  to  call  it  by  that  name.  It  is  done 
more  through  carelessness  than  anything  else. 

By  Mr.  McNichol : 

Q.  Do  you  mean  this  method  of  collecting  in  three  dif- 
ferent ways  for  that  endowment  bed  is  done  in  an  honor- 
able way? 


340 

A.  The  amount  of  the  State  appropriation  depends  upon 
the  number  of  patients  that  they  can  show  they  have 
treated.  If  the  patient  costs  twelve  dollars  and  if  the  pa- 
tient pays  five  dollars,  there  is  a  deficit  of  seven  dollars.  It 
is  a  question  of  bookkeeping  of  what  to  do  with  that  five 
dollars. 

Q.  That  fund  has  been  provided  for  by  this  endowment. 
You  would  not  say  a  business -man  would  be  justified  in 
charging  up  against  an  account  that  he  has  already  been 
paid  for? 

A.  If  you  do  not  keep  one  set  of  books  for  your  pay 
patients  and  one  for  your  free  patients,  I  do  not  see  how 
any  man  can  tell  how  much  of  that  has  been  used  for 
the  free  and  how  much  for  the  paid  patients.  When  the 
resident  physician  charges  up  his  dinner  and  that  is 
charged  up  to  the  maintenance  of  the  State,  then  you 
must  admit  that  they  are  not  charging  up  to  the  State 
the  care  of  the  poor.  Take  a  hospital  which  has  a  resident 
physician  entirely  devoted  to  the  pay  patients,  is  that  food 
which  goes  into  that  resident  physician's  mouth  charged 
up  to  the  State  or  not?  Those  are  things  I  believe  should 
be  looked  into  by  the  State. 

By  Mr.  Brown : 

Q.  Could  not  that  be  done  by  a  per  capita  charge  ? 

A.  Yes,  that  is  a  solution  of  the  problem.  There  should 
be  a  minimum  and  a  maximum  charge. 

Q.  Which  could  be  agreed  upon  between  the  hospitals 
at  the  beginning  of  the  year? 

A.  Some  of  us  are  agitating  at  the  present  time  that  the 
hospitals  get  together  and  promise  not  to  ask  for  any  more 
money  from  the  Legislature  than  the  State  Board  of 
Charities  themselves  suggest  the  hospital  should  have.  In 
other  words,  sometimes  the  State  Board  of  Charities  will 
recommend,  say,  $30,000,  and  then  the  influence  will  be 
such  that  a  hospital  will  get  $40,000  or  $50,000  or  $60,000. 

Q.  Is  it  your  idea  that  these  figures  or  accounts  are 


341 

juggled  in  such  a  way  that  the  hospital  shall  get  more  from 
the  State  for  what  purpose,  to  take  care  of  the  poor  or  give 
additional  comforts  to  the  sick  rich? 

A.  The  hospitals  are  unfortunately  at  times  run  for  the 
medical  staff  as  well  as  for  other  people. 

Q.  By  the  way,  who  does  run  the  hospital,  the  boards  of 
trustees  and  managers,  or  the  doctors? 

A.  Sometimes  the  doctors,  and  sometimes  the  others. 

Q.  Are  not  the  doctors  generally  the  overwhelming  in- 
fluence ? 

A.  No,  I  think  the  Boards  of  Managers  of  many  of  the 
hospitals. 

By  a  Member  of  the  Committee: 

Q.  Are  they  salaried?  The  statement  was  made  this 
afternoon  by  a  gentleman  whose  name  I  do  not  now  recall, 
that  to  his  knowledge  no  one  excepting  the  Secretary  to  a 
Board  of  Directors  received  a  salary? 

A.  Well,  I  have  heard  it  whispered  that  when  a  certain 
hospital  became  an  educational  institution  one  of  the  mem- 
bers would  then  ask  for  a  salary. 

Q.  There  is  no  such  case  that  you  know  of,  is  there,  of 
a  Board  of  Trustees  drawing  salaries? 

A.  I  do  not  know  of  any  case.  I  know  where  they  have 
asked  for  it,  but  I  do  not  know  where  they  have  gotten  it. 

By  Mr.  Brown : 

Q.  You  do  not  mean  to  intimate  that  there  are  any  im- 
proper methods  used  in  doing  these  things;  it  is  the  im- 
proper way  of  keeping  books  and  a  lack  of  judgment,  as  I 
infer  ? 

A.  I  would  not  like  to  accuse  anybody  specifically  of  any 
illegal  act  or  thing  in  these  matters,  unless  I  had  the  abso- 
lute proof  thereof. 

By  Mr.  McNichol : 

Q.  If  they  are  doing  what  you  charge  them  with  doing, 
they  are  doing  an  illegal  act.  They  are  not  using  the 


342 

money  for  the  purposes  for  which  the  Legislature  has  ap- 
propriated it,  to  wit,  taking  care  of  the  poor;  that  is  true, 
is  it  not  ? 

A.  Yes,  that  is  true. 

Q.  That  is  your  charge  ? 

A.  That  is  the  question  for  investigation  by  your  Com- 
mittee, or  any  other  committee  appointed  by  the  Legisla- 
ture. 

Q.  You  say  that  exists  in  Philadelphia? 

A.  I  say  it  exists  in  Philadelphia  to-day,  to  the  best  of 
my  knowledge  and  belief. 

By  a  Member  of  the  Committee : 

Q.  Do  you  know  that  notwithstanding  the  amount  of  an 
appropriation  made  for  the  purpose  of  maintenance  to  an 
institution  can  not  be  drawn  upon  in  excess  of  the  actual 
cost  of  maintaining  that  institution,  and  that  no  moneys 
can  be  taken  from  the  State  Treasury  until  after  the 
Auditor  General  has  audited  the  accounts  for  any  certain 
quarter,  and  that  it  would  be  impossible  for  an  institution 
to  accumulate  moneys — that  is,  an  institution  that  was 
receiving  State  aid  to  accumulate  any  money  beyond  the 
actual  cost  of  keeping  the  patient? 

A.  That  is  true,  indeed,  and  every  hospital  has  other 
sources  of  income  from  which  it  draws  the  interest,  and  you 
can  not  differentiate  between  .what  goes  to  the  free  and 
what  goes  to  the  pay  patient.  Suppose  the  accounts  are 
presented,  supposing  there  is  $200,000  appropriated  and 
$125,000  is  drawn  from  the  State.  The  bills  are  made 
out  so  as  to  show  the  $125,000  that  was  expended  from  the 
State.  These  others  are  mere  private  citizens. 

Q.  You  are  casting  a  reflection  upon  the  audit  made  by 
the  State? 

A.  It  is  a  reflection  on  no  one.  It  is  a  reflection  on  the 
loose  methods  in  vogue,  because  they  are  mxed  up  with 
the  pay  patients  and  you  can  not  differentiate.  It  is  utterly 
impossible. 


343 

By  Mr.  McNichol : 

Q.  It  is  not  the  loose  method  of  securing  the  appropria- 
tion, it  is  the  method  of  carrying  out  the  provisions  of  the 
appropriation  ? 

A.  Of  the  law. 

Q.  Your  idea  is,  boiled  down,  that  the  hospital  should 
keep  a  separate  account  of  the  State  appropriation  di- 
vorced entirely  from  any  private  funds  that  may  be  given 
to  that  hospital? 

A.  It  is  more  radical  than  that — the  hospital  not  con- 
trolled by  the  State  should  not  receive  anything  from  the 
State. 

Q.  It  practically  excludes  everything  except 

A.  Everything  except  some  two  or  three  teaching  hos- 
pitals, which  absolutely  require  the  State's  money,  and 
strengthening  existing  hospitals  for  the  poor,  which  are 
to  be  found  in  the  City  of  Philadelphia  and  elsewhere. 

Q.  You  would  enumerate  as  the  teaching  hospitals  which 
ones  ? 

A.  I  would  include  the  University,  Medico-Chi.,  Jeffer- 
son, Temple,  the  Samaritan,  and  the  Women's  Hospital. 

Q.  You  would  not  help  us  very  materially 

A.  I  would  reduce  its  medical  schools  to  two  or  three; 

I  would  have  Jefferson  and  Medico-Chi  unite,  and  go  right 

down  the  list. 

By  Mr.  Brown: 

Q.  Is  it  not  very  strange  that  after  all  these  years  and 
with  all  the  efforts  of  physicians  and  ministers  and  those 
especially  interested  in  this  work,  that  they  have  not  de- 
vised some  way  by  which  this  could  be  absolutely  and 
fairly  done  ? 

A.  No  more  strange  than  that  the  Sugar  Trust  and  the 
Standard  Oil  Trust  or  any  of  those  things  have  not  yet  de- 
vised means  whereby  certain  things  could  be  prevented. 

Q.  You  can  not  put  doctors  and  ministers  who  are  en- 


344 

gaged  in  the  distribution  of  sweet  charity  in  the  line  of  men 
who  are  managing  Standard  Oil  and  the  Sugar  Trust. 

A.  I  think  human  nature  is  the  same. 

Q.  I  can  not  understand  it.  These  men  and  women  do 
care  for  the  sick  and  the  poor,  and  are  engaged  in  the 
noble  work  of  saving  lives  and  fighting  disease,  and  are 
giving  up  hours  and  hours  of  their  time. 

A.  And  they  are  getting  their  money  out  of  the  private 
patients  in  the  rooms. 

Q.  And  the  students  get  the  benefit  of  their  clinical 
knowledge  from  that,  and  these  people  go  all  over  the 
universe  to  help  the  poor  sick? 

A.  I  firmly  believe,  as  I  stated  before  my  view  of  the 
teaching  hospitals,  but  the  number  of  teaching  hospitals 
should  be  reduced. 

Q.  What  about  the  people  who  can  not  come  to  the 
hospitals?  You  are  going  to  reduce  129  square  miles  of 
territory  for  miles  around,  where  there  is  no  hospital. 
Where  would  you  put  your  two  hospitals  to  serve  this  vast 
number  of  people? 

A.  I  suggested  there  should  be  eight  to  twelve  large  hos- 
pitals in  the  City  of  Philadelphia,  and  numerous  small 
hospitals  as  demanded. 

Q.  No  State  hospitals? 

A.  I  believe  they  should  be  under  State  control. 

Q.  What  do  you  mean  by  ' '  under  State  control, ' '  do  you 
mean  under  State  management  ? 

A.  Under  State  or  City  management. 

Q.  You  think  that  can  be  done  more  economically  than 
it  can  be  done  under  private  management  ? 

A.  Undoubtedly. 

Q.  Do  you  figure  voluntary  contributions  an  element  in 
this  problem? 

A.  There  will  always  be  hospitals  that  will  be  under 
endowment  and  private  gift,  such  as  the  Presbyterian, 
University  of  Pennsylvania,  Episcopal,  Pennsylvania  and 


345 

hospitals  of  that  sort,  which  will  take  care  of  the  people, 
so  that  there  will  always  be  a  number  of  pay  hospitals 
which  will  run 

Q.  You  think  under  the  adjustment  there  will  be  a 
survival  of  the  fittest? 

A.  There  will  be  a  reduction  in  the  number  of  hospitals ; 
say  there  are  52,  down  to  25  or  26  or  27,  and  the 
efficiency  of  the  25  or  26  or  27  that  remain  will  be  very 
largely  increased  over  the  efficiency  of  some  of  the  hospitals 
that  now  exist,  in  my  opinion. 

By  Mr.  McNichol: 

Q.  Your  Committee  are  anxious  to  have  your  inform- 
ation, if,  it  is  possible  to  secure  it,  as  to  what  channels  you 
consider  these  appropriations  have  been  secured  and 
the  graft  that  is  supposed  to  be  paid  in  securing  those 
appropriations.  If  you  do  not  want  to  give  it  publicly,  we 
would  be  glad  to  have  it  privately. 

A.  That  is  a  very  large  question  and  a  question  I  have 
given  due  consideration  to,  and  a  question  I  have  certain 
information  upon  that  I  should  be  glad  to  furnish  the 
Committee  either  publicly  or  in  private. 

Q.  We  would  be  glad  to  have  it  either  way  you  consider 
proper  to  give  it.  We  would  like  to  have  it,  if  it  is 
possible  to  get  it. 

A.  I  will  see  that  you  are  put  in  possession  of  certain 
abuses  that  have  crept  into  the  State  appropriation,  and 
what  I  mean  by  that  is  the  legal  evidence  in  regard  to 
the  matter.  I  would  consider  this  was  not  the  proper 
place  to  blast  a  reputation  or  make  political  capital  or  any- 
thing of  that  sort  out  of  any  statements  that  might  be 
made. 

By  a  Member  of  the  Committee : 

Q.  It  would  be  a  very  good  place  to  do  it,  doctor,  because 
you  have  made  your  charges  here. 

Mr.  McNichol :  No,  he  made  his  charges  elsewhere. 


346 

A.  Any  statement  I  have  made,  we  are  all  here  for  the 
common  interest  of  the  State  of  Pennsylvania  and  the  City 
of  Philadelphia,  and  whatever  we  may  think  differently  in 
regard  to  some  things,  we  want  to  do  the  right  thing  for 
the  State  of  Pennsylvania. 

By  Mr.  Brown : 

Q.  Suppose  we  put  it  in  concrete  form.     You  made  an 
address  before  the  Medical  Society? 
A.  Yes. 

Q.  Wherein  after  reading  a  paper  this  language  among 
other  was  used:  "For  the  guidance  of  hospitals,"  etc., 
"devote  10  to  20  per  cent,  of  any  appropriation  which 
you  may  receive  to  political  purposes  and  charge  the  amount 
so  expended  up  to  legal  and  miscellaneous  expenses.  Have 
plenty  of  private  rooms  and  permit  50  per  cent,  of  these 
to  be  occupied  free  of  charge  by  politicians  and  their 
friends,  and  allow  the  other  half  of  the  rooms  to  be  taken 
exclusively  by  the  pay  patients  of  the  medical  and  surgical 
staff  of  the  hospital  which  receives  the  appropriation." 
Now,  that  statement  was  made  before  a  large  body  of  medi- 
cal men? 

A.  Yes. 

Q.  "Who  certainly  would  be  the  leaven  which  would 
spread  it  throughout  the  Commonwealth  and  the  universe. 
It  seems  to  me  if  you  have  any  evidence  which  will  justify 
that  statement,  which  is  certainly  most  comprehensive,  that 
this  Committee  should  have  the  benefit  of  it.  I  do  not 
mean  to  say  that  if  you  knew  that  somebody  said  to  John 
Jones  or  to  me,  ' '  I  will  give  you  ten  dollars  to  get  an  appro- 
priation," that  that  means  that,  but  if  you  know  of  any 
system  that  is  so  pernicious  as  to  justify  the  use  of  that 
language,  I  think  this  Committee  ought  to  have  it. 

A.  I  have  already  told  you  I  would  be  glad  to  put  the 
Committee  in  the  way  of  getting  certain  information.  We 
all  understand  the  difficulty  we  have,  when  we  have  such 
able  lawyers  as  we  have  in  the  State  of  Pennsylvania,  to 
get  the  kind  of  knowledge 


347 

By  Mr.  McNiehol : 

Q.  You  say  you  will  put  us  in  the  way  of  getting  the 
information  ? 

A.  Yes. 

Q.  Aren't  you  possessed  of  that  information? 

A.  I  have  some  of  it  in  my  possession. 

Q.  Will  you  not  furnish  this  Committee  with  that  in- 
formation ? 

A.  I  will  furnish  the  Committee  with  it. 

Q.  We  want  what  you  have. 

A.  I  told  you  before  I  would  be  glad  to  furnish  you  that 
information  which  I  have  in  my  possession. 

Q.  Will  you  furnish  that  to  Mr.  Brown? 

A.  I  shall  be  glad  to  do  so. 

By  a  Member  of  the  Committee : 

Q.  Have  you  any  of  it  with  you  ? 

A.  I  haven't  the  information  in  such  shape  that  I  would 
be  prepared  to  furnish  it  at  the  present  time. 

By  Mr.  McNiehol : 

Q.  With  the  names  of  the  men  and  institutions  involved  ? 

A.  With  the  names  of  some. 

Mr.  McNiehol :  We  want  to  serve  notice  upon  you  that  we 
intend  to  furnish  them  with  the  information,  which  will 
require  you  to  substantiate  your  evidence. 

By  Mr.  Brown : 

Q.  Are  there  no  poor  served  in  Pennsylvania,  for  all  of 
our  millions? 

A.  There  are  many  served. 

By  Mr.  McNiehol: 

Q.  I  would  like  to  ask  the  doctor  what  type  of  politicians 
he  refers  to,  reformers  or  regulars  ? 

A.  Permit  me  to  simply  read  an  extract  from  the  report 
of  the  Pennsylvania  Hospital,  and  I  think  you  will  find 
it  there,  whichever  one  is  in  power. 


348 

Q.  That  is  hard  to  discriminate. 

A.  This  remark  is  taken  from  the  report  of  the  Pennsyl- 
vania Hospital  when  they  attempted  to  obtain  their  million 
dollar  endowment,  and  I  hope  the  Committee  will  ask  some 
of  these  gentlemen  also  to  give  information  as  to  where 
they  obtained  their  personal  knowledge  in  order  to  make 
such  statements. 

Q.  How  long  ago  has  that  been  ? 

A.  This  was  in  1907,  two  years  ago.  ' '  Theoretically,  the 
idea  of  receiving  State  appropriation  is  beautiful,  but 
practically  the  institution  is  called  upon  to  pay  in  one 
way  or  another  the  consideration  for  which  the  State  funds 
are  appropriated  to  it.  Failure  to  do  this,  or  political 
heterodoxy,  as  viewed  by  the  party  which  may  for  the  time 
being  hold  the  reins  of  government,  results  either  in  the 
curtailment  of  the  appropriation  or  in  its  entire  refusal, 
whilst  the  assertion  of  political  freedom  and  independence 
of  thought  on  the  part  even  of  a  single  member  of  the 
managing  body  may  result  in  the  harshest  criticism  and 
most  unjust  strictures  on  the  part  of  those  to  whom  is 
intrusted  the  supervision  of  State  appropriations  by  the 
institutions  to  which  they  are  given. " 

By  Mr.  Brown : 

Q.  Who  signed  that,  is  there  any  name  attached  to  that  ? 

A.  I  have  the  original  in  my  possession,  among  my  other 
papers. 

Q.  And  that  was  issued  for  the  purpose  of  soliciting 
private  contributions? 

A.  That  was  issued  for  the  purpose  of  soliciting  private 
contributions  of  a  million  dollars. 

Q.  The  Pennsylvania  Hospital,  was  it  not  ? 
A.  Yes. 

Q.  Was  it  upon  that  that  you  based  this  article  or  this 
criticism  ? 

A.  It  is  one  of  many. 


349 

Q.  That  is  the  kind  of  a  communication  upon  which  you 
based  that  declaration ;  is  that  all  ? 
A.  No,  that  is  only  one  of  many. 
Q.  Was  the  others  similar  to  that? 
A.  Some  of  it  was  a  great  deal  more  specific. 

By  Mr.  McNichol: 

Q.  Do  you  know  that  in  the  Pennsylvania  Hospital  that 
the  medical  men  are  required  to  take  a  residence  there,  even 
though  they  have  wives  and  children  residing  in  other  sec- 
tions of  the  town,  for  the  purpose  of  registering  and  voting 
in  that  particular  locality ;  do  you  know  that  that  exists  ? 

A.  No,  I  do  not. 

Q.  You  never  made  any  effort  to  investigate  that  ? 

A.  I  could  not  make  an  effort  to  investigate  something 
about  which  I  knew  nothing. 

Q.  You  are  familiar  with  Pennsylvania  Hospital  rules; 
has  that  condition  never  been  brought  to  your  attention? 

A.  I  know  some  of  the  rules  of  the  Pennsylvania  Hos- 
pital. 

Q.  Do  you  know  that  there  are  twenty-five  or  thirty 
votes  in  the  Pennsylvania  Hospital  from  all  sections  of 
the  town,  men  residing  in  the  northeast  and  northwest, 
that  are  you  voting  down  at  Pennsylvania? 

A.  I  know  more  about  the  conditions  down  at  Blockley. 

Q.  With  the  idea  that  the  doctor  will  furnish  Mr.  Brown 
with  those  facts 

A.  I  shall  be  glad  to  furnish  Mr.  Brown  with  everything 
I  have. 

Mr.  Brown:  I  want  to  say  you  will  have  to  bring  some- 
thing more  than  that  if  you  want  it  considered. 

Mr.  Cattell:  I  would  suggest  that  Mr.  Brown  be  put  in 
possession  of  the  names  of  the  people  who  signed  that,  be- 
sides my  own. 


350 


DR.  ALICE  M.  SEABROOK,  representing  Women's  Hos- 
pital, Philadelphia,  called. 

Dr.  Seabrook:  I  have  been  very  much  interested  in  all 
that  has  been  presented  to  you  to-day,  because  it  is  right 
in  the  same  line  with  our  own  work.  I  have  two  or  three 
things  I  would  like  to  present  to  you.  A  great  deal  has 
been  said  about  the  different  costs  per  capita  of  the  pa- 
tients, and  I  think  when  you  want  to  get  at  that  you  want 
to  take  into  consideration  the  fact  that  there  are  just  about 
as  many  different  ways  of  computing  that  cost  per  capita 
as  there  are  institutions.  Some  will  include  all  the  ex- 
penses, repairs  and  help,  heat  and  light,  and  everything 
of  that  sort  is  included  in  it,  and  so  if  you  want  to  get 
at  the  thing  definitely  and  accurately,  in  regard  to  the 
per  capita  cost  of  patients,  we  would  have  to  have  a  uni- 
form system  of  accounting,  in  which  every  institution 
would  include  the  same  things  in  the  cost  on  which  they 
would  base  their  charge.  I  am  not  recommending  anything, 
but  I  do  know  that  in  the  American  Hospital  Association 
that  question  has  been  discussed  and  threshed  out  a  great 
deal  during  the  last  few  years,  and  a  committee  was  ap- 
pointed to  draft  a  system  of  uniform  accounting,  and 
that  is  in  use  in  many  of  the  larger  hospitals  in  New 
York  City,  and  if  any  of  you  gentlemen  want  to  inform 
yourselves  upon  that,  a  note  to  the  Superintendent  of  the 
Presbyterian  Hospital,  Dr.  C.  Irvin  Fisher,  would  give 
you  the  result  of  a  great  deal  of  labor  that  was  put  upon 
that. 

Now,  personally,  from  my  experience  in  hospitals,  I 
think  I  should  like  to  have  the  appropriations  made  on 
the  number  of  days  that  we  treated  patients.  I  think 
we  would  like  to  stand  by  that  and  have  the  appropriation 
made  upon  that  basis. 


351 

By  a  Member  of  the  Committee : 

Q.  That  is,  the  number  of  days? 

A.  On  the  number  of  days  that  we  treat  free  patients  or 
part  pay  patients. 

Q.  At  so  much  per  patient? 

A.  At  so  much  per  patient,  yes,  sir. 

By  Mr.  McNichol: 

Q.  How  do  you  distinguish  the  partially  paid  patients? 

A.  In  our  hospital,  we  count  those  as  part  pay  who 
pay  anything  between  fifty  cents  per  week  up  to  the  cost 
of  their  maintenance,  which  is  about  twelve  dollars  per 
week,  the  actual  cost  of  their  maintenance.  All  those 
who  pay  what  it  costs  the  hospital  are  put  on  the  list  of 
full  paid  patients;  those  which  are  only  paying  part  of 
their  cost  are  put  on  the  list  of  part  paid.  I  have  been 
told — I  do  not  know  how  true  this  is — that  in  some  hos- 
pitals patients  that  only  pay  two  or  three  dollars  a  week 
are  not  counted  as  part  paid  patients,  that  they  are  counted 
as  free  patients,  and  the  amount,  whatever  they  pay  in, 
is  put  down  to  the  list  of  donations  or  contributions. 

By  a  Member  of  the  Committee : 

Q.  Do  you  know  of  any  institution  where  that  is  done  ? 

A.  I  do  not.  I  have  been  told  that.  I  say,  we  always 
count  it  as  being  credited  up  against  the  name  of  the 
patient,  so  you  may  know  exactly  whether  they  have  made 
any  return  or  not.  The  question  of  endowed  beds  coming 
in,  we  have  260  in  the  hospital,  and  we  have  about  98 
that  are  used  as  free  beds  often.  We  not  only  use  all 
these  endowed  beds  for  free  patients,  but  wre  see  to  it  that 
all  money  that  comes  to  us  from  the  State  and  contribu- 
tions for  that  purpose  are  used  for  the  people  who  main- 
tain them,  but  always  the  demand  for  help  outruns  the 
amount  we  have.  We  are  also  teaching.  We  have  public 
clinics  to  which  students  may  come,  and  we  have  a  class 
running  from  54  to  60  nurses  in  the  hospital,  who  are 
taught,  thoroughly  trained  and  sent  out. 


352 

By  Mr.  Brown: 

Q.  From  what  part  of  the  State  do  those  nurses  come  ? 

A.  We  have  them  from  Canada  to  Florida,  and  from 
Missouri  to  Massachusetts. 

Q.  Your  students  go  where? 

A.  Medical  students  are  from  the  "Women's  Medical 
College,  usually,  and  they  go  out  all  over  the  country. 
We  have  them  from  all  foreign  countries  as  well  as 
our  own  City  here  and  from  our  own  State.  Of  course, 
there  is  always  the  one  thing  that  is  looked  out  for  es- 
pecially, and  that  is  that  free  patients  are  not  from  out- 
side of  our  own  State.  There  is  a  good  deal  of  stress 
brought  to  bear  upon  us,  sometimes,  from  our  sister  State 
across  the  river.  People  over  there  often  make  strong 
pleas  to  have  free  patients  admitted,  but  unless  they  have 
some  one  to  come  forward  and  bear  their  expenses  we  do 
not  admit  them. 

Q.  Do  you  not  take  them  in  for  clinical  purposes  some- 
times ? 

A.  Not  if  they  are  free.  They  have  to  pay  something 
for  their  care.  There  is  an  exception,  we  have  one  or  two 
beds  endowed  by  people  outside  the  State,  and  it  is  defi- 
nitely stated  that  they  are  for  the  benefit  of  people  coming 
from  certain  sections  of  the  country,  and,  of  course,  those 
people  receive  that. 


353 


FRANCIS  A.  LEWIS,  representing  the  Episcopal  Hos- 
pital, called. 

Mr.  Lewis:  I  have  only  a  few  words  to  say.  The  Epis- 
copal Hospital  does  not  receive  State  aid,  never  asked 
for  it  and  does  not  want  it,  but,  on  the  other  hand,  if 
we  do  not  ask  for  appropriations  from  the  State,  we  do 
not  think  it  is  quite  right  that  we  should  be  asked  to  make 
appropriations  to  the  State,  and  what  the  Episcopal  Hos- 
pital wants,  and  I  believe  the  Pennsylvania,  although  I 
do  not  speak  for  it,  is  to  endeavor  to  draw  the  attention 
of  the  Committee  to  the  advisability  and  propriety  of 
abolishing  the  collateral  inheritance  tax  on  bequests  to  in- 
stitutions of  purely  public  charity.  You  exempt  their 
real  estate,  their  investments  are  exempted  from  the  State 
tax,  and  it  seems  hardly  fair  to  us  if  we  are  left  a  legacy 
of  a  couple  of  hundred  thousand  dollars,  as  we  were  last 
year,  and  obliged  to  pay  $10,000  to  the  State  of  Penn- 
sylvania, which  the  State  distributes  to  some  other  charity, 
which  the  testator  did  not  intend  should  be  done.  Now, 
if  that  money  were  needed  for  paying  the  expenses  of  the 
State  government,  I  think  it  would  be  one  thing,  but  I 
do  not  think  we  ought  to  tax  any  institution  of  purely 
public  charity — I  mean  the  University  libraries  or  any- 
thing now  exempt  by  law — that  we  ought  to  tax  the  be- 
quests which  are  made  to  us  and  take  the  money  out  of 
one  pocket  and  simply  hand  it  over  to  another.  That  is 
all  I  desire  to  call  the  attention  of  the  Committee  to. 

By  a  Member  of  the  Committee : 

Q.  Your  policy,  as  I  take  it,  would  be  to  reduce  the  rev- 
enue of  the  Commonwealth.  What  would  you  say  if  we 
took  it  off  of  that  and  put  it  on  coal? 

A.  You  know  we  are  always  in  favor  of  taking  it  off  of 
one  and  putting  it  on  another.    I  have  always  been  in  favor 
of  a  tax  on  coal. 
18 


354 

Q.  What  would  you  say  to  taxing  manufacturing  cor- 
porations ? 

A.  Well,  with  all  due  respect  to  you,  I  am  not  a  business 
man.  I  was  a  lawyer  once,  but  I  am  interested  chiefly  in 
the  charities  of  the  City  at  the  present  time. 

Q.  Well,  as  a  man  of  affairs? 

A.  I  should  think  it  was  very  doubtful  policy,  so  far  as 
I  have  been  able  to  look  into  the  matter. 

Q.  The  money  you  would  lose  by  taking  the  tax  off  of 
such  as  you  have  just  mentioned,  where  would  you  ex- 
pect to  make  up  that  deficiency  or  loss  which  the  Common- 
wealth would  suffer  thereby  ? 

A.  Well,  I  tried  to  get  some  statistics  as  to  what  it 
amounted  to.  I  do  not  believe  it  is  a  very  vast  sum,  and 
I  believe  if  you  could  not  tax  coal  or  anything  else  to 
make  it  up,  it  would  only  be  fair  not  to  have  quite  so 
much  money  to  appropriate  to  those  institutions,  because 
I  think  a  testator  ought  to  have  an  opportunity  of  giving 
his  money  to  whom  he  pleases,  and,  as  I  said  before,  if 
the  State  does  not  need  the  money  for  its  absolute  ex- 
penses, I  do  not  think  it  ought,  morally  speaking,  to  take 
money  that  is  left  to  the  Pennsylvania  Hospital,  and  give  it 
to  some  other  hospital  which  it  was  not  intended.  When 
it  comes  to  the  question  of  gifts,  I  think  the  intention  of 
the  donors  ought  to  be  preserved. 

By  Mr.  Brown : 

Q.  Mr.  Lewis,  the  fact  that  your  hospital  does  not  ask 
for  State  appropriations,  has  that  ever  been  the  subject 
of  discussion  by  you  and  your  officers  ? 

A.  Yes,  sir. 

Q.  Do  you  think  these  other  institutions  are  benefited 
by  State  aid,  when  you  have  been  able  to  operate  without 
State  aid  and  prosper  ? 

A.  Well,  in  the  first  place,  we  have  been  in  existence 
for  a  very  considerable  length  of  time.  The  Episcopal 
Hospital  was  founded  in  the  early  fifties,  and  a  great  deal 


355 

of  money  has  been  given  to  it.  The  endowment  fund  now 
reaches  $100,000  a  year,  and  the  expenses  of  the  institu- 
tion about  $160,000.  We  get  something  from  the  churches 
by  their  Thanksgiving  Day  collection.  We  get  something 
from  the  Board  of  Missions,  and  while  we  have  a  deficit, 
it  always  happens,  taking  five  year  periods,  that  we  al- 
ways have  more  money  than  we  had  five  years  before,  so 
we  do  not  worry  so. 

Q.  How  about  your  free  service? 

A.  The  service  is  mostly  free.  I  should  think  the  income 
from  patients  was  less  than  $20,000  a  year. 

Q.  When  you  speak  of  donations,  are  those  voluntary  ->r 
gotten  by  individual  effort? 

A.  You  mean  to  build  up  that  endowment  fund? 

Q.  Yes. 

A.  A  great  deal  was  given,  a  great  deal  more  was  left. 
It  is  an  institution  that  always  appealed  a  great  deal 
to  people,  because  it  is  right  up  in  the  middle  of  the  mill 
district.  We  have  more  dispensary  patients  there  than 
any  other  hospital  in  the  world,  except  Guy's  Hospital, 
in  London.  Of  course,  the  accident  cases  are  enormous. 
Those  young  surgeons  who  graduate  from  the  various  hos- 
pitals here  would  rather  get  into  the  Episcopal;,  because 
they  get  a  chance,  on  account  of  its  being  right  up  in  that 
district,  to  see  the  accident  cases. 

Q.  How  are  they  able  to  get  along  without  State  aid, 
and  the  other  hospitals  require  it  ? 

A.  I  say,  the  Episcopal  can  do  it  very  largely  by  reason 
of  its  endowment.  It  is  supported  in  a  very  great  measure 
by  the  wealthy.  I  think  there  are  too  many  hospitals  in 
the  City  of  Philadelphia,  and  I  think  if  the  State  is  going 
to  aid  them,  and  I  am  not  clear  on  the  question  of  policy 
at  all,  I  think  they  ought  not  to  aid  any  institution  that 
can  not  pay  at  least  two-thirds  of  its  expenses  from  other 
sources.  I  do  not  care  whether  it  is  by  endowment,  or  sub- 
scription, or  what  it  is.  Hospitals  are  like  churches — 
there  are  too  many  of  them — and  small  churches  and  small 


356 

hospitals  are  no  particular  good.  You  had  a  great  deal 
better  take  the  large  hospitals  in  Philadelphia,  and  situated 
in  different  parts  of  the  City,  and  if  people  want  to  get 
up  a  new  hospital,  then  let  them  add  a  ward  to  that. 
There  are  a  great  many  people  who  want  to  give  their 
names  to  an  institution,  and  when  they  give  their  name 
they  do  not  give  anything  else,  except  the  building.  We 
have  a  large  amount  of  territory  up  there,  a  large  amount 
of  ground,  and  they  expect  us  to  exist  in  new  buildings 
where  people  do  not  provide  sufficient  money  to  run  the 
building.  Somebody  wants  to  put  up  a  building  and  put 
his  name  on  it,  and  then  the  institution  gets  started 
the  best  way  it  can.  I  do  not  think  that  is  good  policy. 
I  think  the  State,  in  making  its  appropriations,  ought  to 
very  closely  draw  the  line  as  to  what  the  institution  does 
for  itself. 

Q.  Then  you  are  assuming  a  correlative  obligation  on 
the  part  of  those  interested  in  the  hospital,  an  obligation 
on  the  part  of  the  State  to  take  care  of  its  poor  or  sick  ? 

A.  Undoubtedly.  I  think  it  is  the  duty  of  the  neigh- 
borhood, of  the  City,  to  look  after  its  poor,  and  I  think 
it  is  also  possible — I  am  not  going  into  that  question- 
but  I  think  it  ought  to  be  very  carefully  done,  and  I  think 
it  ought  to  be  done  in  some  proportion  with  what  the  in- 
stitution does  for  itself.  I  came  chiefly  to  direct  the  affairs 
of  the  Legislature  to  what  I  think  is  an  injustice,  that 
those  institutions  that  receive  bequests  which  are  purely  of 
a  charitable  character  should  be  obliged  to  pay  out  some 
of  it  to  the  Commonwealth. 

By  a  Member  of  the  Committee : 

Q.  Would  you  exempt  savings  funds  from  paying  any 
tax? 

A.  You  exempted  your  savings  funds  from  the  State  tax, 
as  I  understand. 

Q.  Yes. 

A.  But  we  are  exempt  so  far  as — all  charitable  insti- 


357 

tutions  do  not  have  to  pay  the  State  tax.  I  have  not  given 
that  subject  any  very  great  thought,  but  I  am  very  much 
interested  in  the  charities  in  Philadelphia,  and  I  think 
perhaps  there  are  too  many  of  them,  but,  at  the  same  time, 
I  want  to  get  this  other  thought  in  your  minds,  that  where 
people  are  at  least  kind  and  willing  to  give  them  money 
in  their  wills,  that  they  may  have  the  benefit  of  it,  no 
matter  what  religion  or  denomination  they  belong  to,  or 
whether  they  do  not  belong  to  any  denomination,  if  people 
are  willing  to  leave  money  to  build  up  charities  and  insti- 
tutions of  this  City,  I  think  the  money  ought  to  go  where 
they  intended. 

By  Mr.  McNichol : 

Q.  Will  you  not  try  and  hand  up  some  paper  and  file 
it  with  us,  giving  us  your  ideas? 

A.  Yes.  There  was  a  bill  introduced  at  the  last  Legis- 
lature, at  the  instigation  of  the  Pennsylvania  Hospital, 
which  was  not  passed,  but  it  was  drawn,  and  we  did  all 
we  could  to  get  is  passed.  I  suppose  if  I  were  to  send  Mr. 
Brown  a  copy  of  that — 

Q.  That  will  give  us  an  idea  of  what  you  want? 

A.  Yes,  sir. 


358 


DR.  ROSENGARTEN,  representing  the  House  of  Refuge, 
called. 

Dr.  Rosengarten:  Ours  is  rather  an  exceptional  case. 
There  are  practically  but  two  institutions  of  the  kind,  one 
in  the  West  and  one  in  the  East.  The  one  in  the  "West 
was  the  outgrowth  of  this  one  of  ours,  which  is  eighty 
years  old.  It  is  a  public  institution,  and  it  is  cared  for 
under  that  head.  The  question  of  whether  institutions 
ought  to  be  State  or  semi-State  institutions  is  pretty  well 
exemplified  in  the  two  cases.  They  have  less  ground  than 
we  have  down  at  the  Mills,  and  their  cost  of  maintenance 
per  capita  is  about  53  per  cent,  more  than  that  of  the 
parent  institution  at  Glen  Mills.  The  difficulty  is  to  draw 
the  line.  The  old  House  of  Refuge  was  the  first  in  the 
State,  began  in  1826  or  1827,  and  then  the  City  contributed 
to  its  support,  and  then  the  State  gave  a  per  capita  al- 
lowance, and  then  there  were  changes  made,  and  for  a  long 
while  they  had  one-half  of  the  State  and  one-half  of  the 
City,  at  a  rough  estimate,  and  then  the  City,  only  a  few 
years  ago,  had  a  careful  estimate  made,  and  the  result  was 
that  the  Legislature  made  an  agreement  by  which  there 
is  a  per  capita  for  every  child  sent  to  the  institution. 
The  State  pays,  roughly,  one-half  of  the  maintenance. 

By  a  Member  of  the  Committee: 

Q.  Does  that  make  up  the  difference  in  cost? 

A.  Yes. 

Q.  As  against   the  amount  the  county  pays  ? 

A.  Yes,  practically.  It  has  been  suggested  that  the 
per  capita  tax  rule  is  the  best  for  both  State  and  counties, 
for  in  that  case  there  would  be  returned  and  charged  for 
exactly  the  number  of  beneficiaries.  As  it  is  now,  it  is 
only  up  to  the  county.  We  send  to  each  county,  Philadel- 
phia and  all  counties  in  the  Eastern  half  of  the  State, 


359 

we  send  a  statement  to  the  end  of  the  year,  showing  the 
per  capita  cost,  either  increased  or  reduced,  based  on  the 
cost  for  the  year.  If  the  State  had  a  similar  arrange- 
ment, I  think  it  would  be  much  better,  as  they  do  at  a 
great  many  institutions.  I  think  they  are  all  paid  a  per 
capita  allowance,  so  that  there  is  no  asking  for  any  sum 
other  than  just  what  you  are  entitled  to  on  that  basis. 
The  question  of  appropriations  for  buildings  is,  of  course, 
a  different  one.  The  large  advantage  I  think  it  is  fair 
to  claim  for  the  House  of  Refuge  in  the  East,  is  that  it 
has  been — easily  75  per  cent,  of  the  buildings  and  ground 
have  been  provided  by  private  gift.  When  the  House  of 
Refuge  was  removed  from  Twenty-second  and  Poplar,  the 
Boys'  House,  at  Twenty-first,  the  property  was  sold  and 
that  produced  a  considerable  sum,  and  from  the  accretion 
of  years — they  had  bought  additional  property,  and  finally 
they  got  in  all,  I  think,  $250,000  for  that  property,  and 
then  they  got  in  subscriptions  about  $500,000,  and  that 
has  all  been  expended  at  Glen  Mills,  and  there  is  now  about 
a  population  of  900  there,  and  we  are  still  like  Oliver 
Twist — asking  for  more.  There  is  need  for  more  build- 
ings. Then  the  girls'  house,  which  was  in  the  City,  has 
now  been  removed  to  the  country.  Alfred  C.  Harrison 
gave  us  a  farm,  roads,  power  plant,  just  as  he  gave  on 
the  other  side  of  the  road,  at  Glen  Mills,  a  gymnasium 
and  a  number  of  other  things  that  represent  a  very  large 
sum  of  money.  Indeed,  that  is  not  the  only  thing,  because 
when  he  gave  a  gymn.  he  added  to  it  a  liberal  endowment 
the  income  of  which  maintains  it,  so  that  the  gymn.  and 
swimming  pools  and  all  those  luxuries  do  not  cost  the  in- 
stitution, or  the  county,  or  the  State,  a  cent.  The  State 
exacted  from  us,  that  if  they  gave  us  $125,000,  that  we 
raise  a  like  amount,  and  that,  I  think,  has  been  more  than 
met.  We  are  still  needing,  of  course,  very  many  more 
buildings,  and  I  suppose  in  time,  just  as  at  Glen  Mills, 
some  will  be  the  gift  of  priviate  individuals,  just  as  the 
chapel,  work  house,  shop  and  hospital  and  things  of  that 


360 

kind,  were  really  the  gift  of  private  individuals.  That 
is  the  advantage  of  having  this  semi-private  management. 
You  can  interest  an  individual  in  an  institution  that  is  run 
by  individual  effort  and  management.  I  do  not  suppose 
there  is  any  case  on  record  where  a  State  institution  is 
receiving  a  benefaction  from  an  individual. 

The  appeal  we  make  to  your  gentlemen  is  that  the 
State  shall  be  liberal  in  its  gift  for  maintenance,  and  gen- 
erous in  its  gift  for  buildings,  and  we  will  try  as  far 
as  we  can  to  utilize  those  funds  and  do  the  best  we  can 
with  them.  I  think  your  own  knowledge  of  Morganza 
will  show  you  that  it  is  better  for  an  institution  of  this 
kind,  so  far  as  possible,  to  be  managed  by  individuals, 
rather  than  by  a  State  commission. 

By  Mr.  Brown: 

Q.  Such  an  institution  would  normally  be  under  State 
control;  is  that  not  so  in  other  States? 

A.  I  think  there  is  no  rule  on  the  subject. 

Q.  I  think  it  is,  to  a  certain  extent,  a  reformatory  in- 
stitution ? 

A.  It  is  that,  and  I  think  there  should  be  a  large  measure 
of  State  supervision.  I  welcome  it.  If  the  State  would 
take  it  out  of  private  hands  and  make  it  public,  I  think 
some  of  us  would  be  relieved  after  a  good  many  years' 
service,  and  more  or  less  gratefully. 

By  a  Member  of  the  Committee : 

Q.  Where  did  the  suggestion  come  to  you  from  that  you 
should  raise  a  like  amount  ? 

A.  I  think  it  was  made  in  the  Appropriation  Committee. 
We  went  there  and  asked  boldly  for  $150,000  to  begin  work 
at  Darlington. 

Q.  Wasn't  that  embodied  in  your  bill? 

A.  It  was  embodied  and  added  to  the  bill,  I  think.  It 
was  put  in  as  a  rider,  and  we  submitted  and  went  out  and 
did  it.  You  see  this  work  is  a  State  work;  the  children 
are  sent  to  us  by  the  judges. 


361 

By  Mr.  Brown: 

Q.  You  receive  no  pupils  except  those  sent  by  the  courts  ? 
A.  That  is  all. 

Q.  You  have  heard  these  gentlemen  express  their 
opinions  about  the  great  need  of  the  institutions  of  the 
State's  appropriation  to  those  institutions.  Do  you  share 
that  feeling? 

A.  Yes,  I  do,  very  strongly.  I  may  say  first  of  all  as 
to  State  aid,  it  does  seem  to  me  a  hardship  that  institu- 
tions which  are  purely  charitable  should  be  obliged  to 
pay  collateral  inheritance  tax. 

Q.  Assuming  that  these  appropriations  are  proper,  is  it 
your  thought  that  the  Legislature  would  be  justified  in  in- 
creasing the  revenues  of  the  Commonwealth  by  levying 
additional  taxes,  or  by  a  more  stringent  enforcement  of 
existing  laws? 

A.  The  purpose  of  taxation  is  the  distribution  of  money 
and  charity,  and  part  of  the  work  of  the  State  undoubtedly 
is  the  care  of  the  sick  and  poor  and  injured  and  de- 
fective classes. 

Q.  I  am  asking  you  now  because  I  know  of  your  large 
experience.  Have  you  given  any  thought  to  the  subject, 
for  instance,  of  our  State  roads.  There  was  a  bill  passed  at 
the  last  Legislature  at  the  request  of  the  Governor  for  five 
million  dollars  for  State  roads,  which  was  vetoed  because 
there  was  not  sufficient  money  to  give  to  the  institutions 
and  do  that  work,  too.  Is  not  such  a  demand  as  that  a 
reasonable  one  on  the  part  of  the  people  of  the  Common- 
wealth, and  ought  they  not  to  be  considered  in  the  dis- 
tribution of  the  State 's  money  ? 

A.  Yes,  but  should  they  not  be  based  upon  the  principle 
that  where  the  gift  was  so  much  the  county  and  the  in- 
dividual should  give  so  much  in  proportion? 

Q.  Assuming  that  there  is  not  enough  to  give  to  these 
hospitals — ten  million  dollars  were  asked  for  at  the  last 
session,  and  five  million  for  the  road — do  you  think  the 
19 


302 

Legislature  should  levy  sufficient  money  to  pay  for  these 
things? 

A.  It  is  a  very  difficult  question,  because  we  have  grown 
up  under  a  system  of  self-help.  So  many  of  our  institutions 
were  based  upon  gifts  and  grants.  The  State  has  come  to 
their  aid  later  and  that  is  a  very  difficult  question;  they 
have  come  only  to  supplement  the  individual  grants  and 
gifts.  Now,  the  rule  abroad  is  that  nearly  all  the  in- 
stitutions are  absolutely  State  institutions,  and  in  the 
Western  States  nearly  all  the  institutions  are  State  in- 
stitutions. 

Q.  You  are  a  member  of  boards  governing  such  institu- 
tions. Is  it  your  thought  that  the  State  could  do  any  bet- 
ter than  you  gentlemen  are  doing  it? 

A.  I  should  doubt  it,  although  I  would  be  very  glad  to 
see  a  representative  of  the  State — the  State  is  represented 
on  our  board  by  the  fact  that  three  of  the  representatives 
are  appointed  by  the  Board  of  Judges,  the  City  is  supposed 
to  be  represented  by  two  appointed  by  the  Mayor,  so  that 
in  that  respect  both  the  City  and  the  State  are  represented 
on  the  board,  and  the  others  are  represented  by  the  con- 
tributors. 


363 


MR.  JAMES  NOLAN,  representing  St.  Joseph's  Hospital, 
Reading,  Pa.,  called. 

Mr.  Nolan :  There  are  one  or  two  points  which  occurred 
in  this  morning's  testimony  which  I  wish  to  refer  to,  and 
one  was  that  Mr.  Brown  had  put  the  question  to  quite 
a  number  of  people  here  as  to  what  economies  could  be 
effected  by  the  State  buying  the  supplies  instead  of  the 
hospitals  or  their  management  contracting  them.  I  can 
not  talk  as  a  matter  of  course  for  the  hospitals  in  general, 
but  of  my  own  in  particular  I  am  satisfied  they  can  and  do 
buy  goods  cheaper  than  the  State  can  furnish  them.  The 
reason  is  obvious.  There  is  a  sympathetic  feeling  in  the 
hearts  of  the  store-keepers  for  the  hospitals  and  other 
charitable  institutions,  and  as  a  matter  of  fact  I  believe 
that  in  many  cases  they  sell  their  goods  to  those  institu- 
tions at  cost  and  below,  and  sometimes  almost  to  the  extent 
of  making  them  a  donation.  In  that  way  I  think  a  change 
to  the  State  furnishing  these  goods  would  work  a  hard- 
ship, and  I  think  it  would  be  to  the  injury  of  the  insti- 
tutions themselves. 

Now,  in  the  matter  of  the  need  for  more  revenue,  I  am 
satisfied  that  the  enforcement  of  the  four  mill  tax  rate 
in  the  proper  way  would  bring  a  great  deal  more  revenue 
to  the  State.  I  am  almost  sure  that  there  is  a  very  heavy 
percentage  of  that  four  mill  tax  that  is  not  collected. 

Q.  How  is  that  brought  about? 

A.  It  is  brought  about  by  people  evading  collection 
largely.  There  are  people  who  come  under  my  observation 
who  buy  bonds  in  other  states  and  neglect  to  make  a 
return. 

Q.  You  mean  they  deliberately  perjure  themselves? 

A.  Yes,  sir.  They  do  not  perjure  themselves  because 
they  do  not  make  any  return. 


364 

Q.  That  would  be  another  way  of  whipping  the  Devil 
around  the  stump? 

A.  That  is  about  it.  They  will  leave  the  assessor  find 
out  what  he  can  in  the  court  house  as  to  what  money  they 
have  and  then  he  assesses  the  usual  penalty  and  they  escape 
scotfree  on  a  great  deal  of  their  investment.  Often  lots 
of  people  the  assessor  does  not  reach  and  could  not  reach, 
and  they  purposely  do  not  make  any  return.  They  are 
never  called  upon  to  do  it.  I  think  a  strict  enforcement 
of  the  four  mill  tax  would  bring  an  increased  revenue  to 
the  State. 


366 


MR.  JOHN  T.  LEWIS,  JR.,  representing  the  Pennsyl- 
vania Hospital,  called. 

Mr.  Lewis:  I  represent  an  institution  that  was 
established  in  1851,  and  as  we  have  never  called  upon  the 
State  for  any  moneys  except  at  its  foundation,  two 
thousand  pounds,  and  a  few  years  afterwards  two 
thousand  pounds,  that  is  all  the  money  the  Pennsylvania 
Hospital  has  ever  received  from  either  the  State  or  the 
City,  and  all  we  are  interested  in  is  that  when  we  are  left 
contributions  or  legacies  from  our  friends,  those  legacies 
are  charged,  of  course,  five  per  cent,  collateral  inheritance 
tax,  and  the  hospital  would  be  very  much  relieved  if  that 
could  be  taken  off  or  the  hospital  relieved  of  paying  that 
money. 

By  Mr.  McNichol: 

Q.  That  is  similar  to  the  claim  of  the  Episcopal  Hospital  ? 

A.  It  is  very  much  the  same.  In  1909  we  received  a 
legacy  of  over  $200,000.  That  made  a  payment  of  some 
$10,000,  and  that  is  quite  an  onerous  charge  upon  us.  "We 
have  beds  for  nearly  three  hundred  persons  in  the  City 
Hospital,  and  we  take  care  of  450  insane  in  "West  Philadel- 
phia. The  expenses  of  the  hospital  are  something  over 
$400,000.  I  am  sorry  to  say  we  do  not  always  get  through 
at  the  end  of  the  year  with  any  sort  of  a  balance.  Last 
year  we  were  behind,  and  if  anything  can  be  done  to 
relieve  them  of  the  trouble  of  the  collateral  inheritance 
tax,  it  would  be  very  pleasant. 

I  should  like  to  say  another  thing.  A  moment  ago  it 
was  said  here  that  there  were  married  doctors  and  others 
in  the  hospital,  under  the  ordinary  term  called  coloniza- 
tion. There  are  no  doctors  living  in  the  hospital  except 
unmarried  doctors,  and  they  serve  there  for  two  years. 
They  are  young  men  who  have  just  graduated  from  the 


366 

University  or  other  medical  colleges  here,  and  they  are  re- 
ceived for  two  years  and  receive  no  pay.  They  are  boarded 
and  taken  care  of  and  they  live  there  all  the  time.  There 
are  eight  of  those.  There  is  one  what  we  call  a  chief  resi- 
dent physician  who  receives  a  salary.  There  are  one  or 
two  in  the  laboratory  receive  a  salary,  but  other  than 
that  they  do  not.  Of  course,  the  nurses  and  all  those  people 
receive  salaries. 

Q.  What  is  the  length  of  time  for  which  they  serve  ? 

A.  Two  years.  They  are  elected  every  three  months  in 
turn  and  they  eat  there. 

Q.  They  are  all  single  men? 

A.  They  are  all  single  men.  While  it  is  not  a  condition 
that  they  should  be  single,  it  is  a  condition  that  they 
should  live  in  the  hospital,  and  the  attending  physicians, 
of  course,  are  physcians  of  longer  standing  and  they  live 
at  home  and  attend  the  hospital  and  the  patients  there,  but 
they  only  come  at  certain  hours  in  the  day,  or  when  they 
are  sent  for.  There  are  some  ten  of  those  in  the  City 
Hospital  and  over  in  West  Philadelphia  there  are — 

Q.  You  have  eight  internes  and  how  many 

A.  Eight  internes  and  one  chief  resident.  None  of  them 
are  married. 

By  Mr.  Brown: 

Q.  You  have  never  applied  for  State  aid,  have  you  ? 

A.  We  have  never  applied  for  State  aid. 

Q.  Dr.  Cattell  read  a  paper  here  today,  which  appears 
to  have  been  issued  by  your  hospital. 

A.  I  heard  him  read  it.  There  was  a  paper  issued  some 
three  or  four  years  ago,  two  or  three  years  ago,  and  I 
cannot  say  whether  what  he  says  is  in  it  or  not.  I  do  not 
remember. 

Q.  If  you  have  never  applied  for  State  aid,  you  would 
not  know  what  was  necessary  for  such  an  application,  I 
presume  ? 

A.  No,  we  have  never  applied  for  State  aid. 


367 

By  Mr.  McNichol : 

Q.  Those  post-graduates  or  students  there,  are  they 
residents  of  Pennsylvania? 

A.  There  are  no  post-graduates ;  it  is  entirely  a  hospital. 

Q.  Well,  the  internes,  or  those  who  are  taking  care  of 
the  sick,  are  they  residents  of  the  State  of  Pennsylvania, 
or  from  outside  of  the  State? 

A.  The  internes? 

Q.  Yes. 

A.  They  may  be  either.  Most  of  them — they  are  nearly 
Pennsylvanians ;  very  often  the*  majority  of  them  are 
Philadelphians.  We  have  had  them  from  outside  of  Penn- 
sylvania. I  think  there  is  no  one  there  now,  though,  I 
am  not  certain.  In  running  over  the  names  I  am  not 
certain.  We  have  no  post  graduates.  These  men  are  all 
graduates. 

Q.  That  is  an  extraordinary  condition  to  have  twenty- 
five  or  thirty  men  registered  from  a  hospital? 

A.  No,  they  are  orderlies  who  are  there  to  assist  the 
female  nurses. 

Q.  It  does  not  exist  in  any  other  institution  outside  of 
Bloekley,  in  Philadelphia? 

A.  I  do  not  know  how  many  orderly  assistants  they 
have ;  they  are  for  certain  things  the  female  nurses  cannot 
attend  to  in  a  hospital. 

Q.  They  certainly  cannot  attend  to  having  their  votes 
registered? 

A.  No,  I  think  you  will  find,  and  if  you  wish  I  will  give 
you 

Q.  It  is  immaterial. 

A.  I  have  heard  it  before,  it  is  not  the  first  time  I  have 
heard  it. 

Q.  It  is  something  for  you  to  look  after? 

A.  No,  I  think  I  can  say  positively,  I  think  I  know 
how  it  is  managed :  I  have  been  there  a  good  many  years 
myself. 


368 

By  Mr.  Brown: 

Q.  Have  you  an  endowment  fund — you  have,  of  course  ? 

A.  We  have  an  endowment  fund. 

Q.  And  that  is  the  reason  why  you  have  not  applied  for 
State  aid? 

A.  That  is  the  reason  why  we  have  not  applied  for 
State  aid. 

Q.  And  your  hospital  is  practically  free,  too  ? 

A.  It  is  entirely  free.  "We  have  some  rooms  where  per- 
sons who  require  certain  conditions  and  medical  attend- 
ance can  have  it,  but  I*do  not  think  they  pay  for  what 
they  get,  I  may  say. 

Q.  The  difference  between  you  and  the  other  hospitals 
asking  for  State  aid  is  in  the  endowment? 

A.  I  think  it  is  on  account  of  the  endowment,  yes.  We 
would  like  to  have  more  money,  but  they  have  never  done 
it,  and  they  do  not  want  to  do  it.  They  would  rather  live 
on  their  own  fat,  if  there  is  any  fat. 

Q.  Are  you  connected  with  any  other  hospital? 

A.  No,  sir. 

Q.  How  much  experience  have  you  had  in  hospitals, 
how  many  years  have  you  been  connected  with  them? 

A.  About  twenty-two  years. 

Q.  Do  you  think  the  other  hospitals  could  do  as  well  as 
you  are  'doing  without  State  aid? 

A.  I  am  not  prepared  to  say  that.  I  do  not  know  the 
conditions. 

Q.  It  is  a  case  of  the  individual  after  all? 

A.  That  is  all. 

By  Mr.  McNichol : 

Q.  Will  you  have  your  secretary  file  with  Mr.  Brown 
some  information  in  regard  to  the  collateral  inheritance 
tax? 

A.  Yes,  sir. 


369 


MRS.  A.  C.  LACEY,  representing  Old  Ladies' 
Home,  called. 

Mrs.  Lacey :  I  only  have  to  say  for  our  institution  that 
it  is  non-sectarian;  we  take  in  all  denominations,  or 
whether  they  have  any  denomination  or  not;  we  draw 
the  line  simply  at  color.  We  existed  eleven  years  with- 
out State  aid,  but  it  was  very  poor  existence.  In  1885 
Governor  Pattison  gave  us  $2,5QO  to  pay  off  the  second 
mortgage,  which  I  myself  paid  off,  although  I  was  at  that 
time  secretary  and  am  now  treasurer  of  that  institution, 
and  have  been  all  the  years  since  it  has  been  in  existence. 
We  have  received  about  $62,000  from  the  State,  and  I 
can  safely  guarantee  that  it  has  all  been  accounted  for 
in  the  maintenance  of  our  home,  and  without  State  aid 
we  would  be  very  materially  crippled.  Still,  I  suppose, 
by  hard  work  we  could  probably  get  along  without  it, 
but  it  would  be  a  back-bending  expedition  all  the  time. 
We  have  been  very  kindly  taken  care  of  by  many  people 
who  have  left  us  money.  We  have  an  endowment  fund; 
my  books  will  show  there  probably  $70,000 ;  I  do  not  know 
exactly  how  muqli  it  is  without  looking  it  up,  but  we  have 
always  bid  the  auditor  welcome ;  he  has  had  access  to  our 
books,  and  at  any  time  the  Legislature  wants  to  send 
anybody  to  my  books,  if  they  will  come  to  my  house  they 
are  perfectly  welcome  to  see  how  we  dispose  of  the  funds 
they  have  given  us. 

By  Mr.  Brown: 

Q.  What  ages  do  you  take  in? 

A.  They  must  be  65  when  they  come  in,  and  we  now 
have  one  hundred  and  fifty-five  under  our  care.  With 
them  we  have  a  corps  of  employes  with  a  housekeeper 
and  night  nurse  and  helpers,  I  think,  amounting  to  about 
twenty.  There  is  no  one  paid  who  comes  there  to  do  any 


370 

work,  excepting  the  doctor;  we  pay  him  because  he  has 
to  be  called  very  frequently  to  see  old  people  who  have 
reached  sixty-five ;  they  are  not  well,  any  of  them,  and  he 
comes  at  any  time.  Other  than  that  there  is  no  officer 
paid,  unless  they  would  say  that  my  pay  of  $10.00  a  year 
for  my  car  expenses  there  to  the  home  came  under  that 
head.  I  have  been  treasurer  since  1894.  We  do  not  owe 
any  money ;  we  have  no  mortgage.  The  second  mortgage, 
that  money  was  gotten  for,  paid  that  off,  and  we  have  no 
debts  on  the  institution.  We  have  a  good  property,  well 
taken  care  of,  and  we  have  this  little  endowment  fund, 
not  very  much,  but  at  the  same  time  we  manage  to  get 
along  and  our  folks,  I  guess,  are  about  as  well  taken  care 
of  as  any  charitable  institution  in  the  City.  We  never 
hear  very  many  complaints.  It  is  hard  to  bring  together 
old  people  and  make  them  assimilate.  Last  year  we  had 
$10,000  and  this  year  $5,000,  and  I  think  if  the  Legislature 
looked  into  the  books  they  would  find  that  was  all  used  in 
maintenance. 

By  Mr.  McNichol : 

Q.  It  did  not  cost  you  anything  to  secure  that  appro- 
priation, did  it? 

A.  Not  one  penny.  I  have  always  had  the  greatest 
deference  paid  me.  The  account  goes  in  not  later  than 
the  twelfth  of  the  month.  I  wait  because  our  institution 
is  a  small  one,  and  I  have  received  my  money  returned 
to  me  in  thirty-six  hours,  and  I  have  no  complaint 
whatever  to  make.  Henry  F.  Walton  once  presented  our 
bill  for  us,  and  the  gentleman  who  represents  our  district 
from  Wissinoming,  and  we  had  no  trouble.  Once  I  went 
to  the  Committee  and  asked  them  and  they  gave  us 
$10,000  towards  building  an  old  building,  not  in  the 
regular  way,  and  they  gave  us  $10,000  and  that  we  ac- 
counted for  in  a  separate  way  to  the  Legislature.  We 
would  be  very  sadly  crippled  if  we  would  lose  the  appro- 
priation now. 


371 


DR.  J.  M.  BALDY,  representing  Gynecean 
Hospital,  called. 

Dr.  Baldy :  It  seems  almost  like  carrying  coals  to  New- 
castle to  say  anything  more  on  the  subject,  and  it  seems 
to  me,  as  a  general  proposition,  that  the  information  asked 
by  the  Committee  is  on  two  points,  first,  as  to  the  advisa- 
bility of  keeping  up  the  appropriations  to  the  State 
charities,  and,  second,  as  to  the  best  methods  of  doing  it. 
I  concede  in  answering  the  first,  that  it  is  a  great  moral 
question.  There  is  no  legal  obligation  on  the  State  to 
educate  its  citizens;  there  is  no  legal  obligation  that  it 
shall  take  care  of  its  sick,  but  I  cannot  see  the  good  of 
a  sick  or  dead  educated  man  or  woman.  It  seems  to  me 
if  it  has  a  moral  obligation  to  educate  its  citizens,  that 
the  State  has  a  moral  obligation  to  look  after  its  sick  and 
protect  its  well  from  infection  from  such  as  are  sick. 

There  is  a  small  coterie  of  men  in  the  profession  who 
are  opposed  to  the  appropriation.  The  vast  bulk  are 
almost  a  unit,  the  professional  men  and  hospital  managers 
are  in  favor  of  the  system  of  appropriation.  It  has  been 
said  that  hospital  managers  are  not  paying  much  atten- 
tion to  and  are  not  managing  the  hospitals  properly,  and 
I  have  noted  that  about  three-fourths  of  the  gentlemen 
here  are  among  the  better  class  and  busiest  and  most  in- 
fluential medical  men  in  the  city  of  Philadelphia,  and  that 
has  been  my  experience  for  some  twenty  odd  years ;  that 
is  the  class  of  men  who  manage  the  institutions.  There 
can  be  no  question  whatever,  that  in  the  general  statement 
it  is  perfectly  true,  that  there  is  a  most  careful  handling 
of  State  funds  in  all  these  institutions;  there  is  a  most 
careful  accounting  to  a  responsible  Board,  and  those 
Boards  do  overlook — maybe  they  do  have  a  superin- 
tendent who  takes  the  details  off  their  hands,  but  that 
superintendent  and  every  other  responsible  servant  under 


372 

them  reports  to  them  periodically  and  they  know  where 
the  money  goes  and  what  it  is  spent  for,  and  they  know 
also  that  not  a  penny  of  it  is  spent  in  any  way  except 
for  what  it  has  been  appropriated. 

By  Mr.  Brown : 

Q.  You  differ  from  Dr.  Cattell? 

A.  Absolutely;  flat-footedly.  I  have  heard  these 
rumors  of  graft  and  mismanagement  for  twenty  years, 
and  I  have  never  seen  any  foundation  for  it.  I  have  gone 
to  Harrisburg  for  twenty  years,  and  I  have  even  had  my 
friends  in  the  Legislature  refuse  to  dine  with  me,  and 
I  have  yet  to  hear  or  know  of  a  man  among  my  friends 
who  were  lobbying  for  hospital  appropriations  say  any- 
thing even  approaching  a  hint,  and  I  know  most  every 
prominent  medical  man  in  town  intimately. 

Q.  What  is  your  association  throughout  the  State, 
Doctor? 

A.  Almost  general.  My  practice  takes  me  almost  over 
the  State. 

Q.  What  is  the  opinion  of  these  men  as  you  go  from 
place  to  place,  in  regard  to  appropriations? 

A.  Many  of  these  institutions  could  not  live  and  never 
could  have  been  brought  to  the  perfection  they  are  today 
had  it  not  been  for  the  State's  generosity.  You  have  had 
a  speaker,  the  last  one,  in  which  State  aid  has  been 
absolutely  necessary  for  the  building  of  that  institution 
and  keeping  it  on  the  foundations  which  it  has.  Further 
than  that,  I  venture  to  say — and  I  will  make  the  statement 
well  within  the  limits — that  the  State  aid,  if  it  were 
withdrawn  today,  from  twenty-five  to  fifty  per  cent,  of 
your  hospitals  would  instantly  go  out  of  existence  for  lack 
of  support. 

Q.  Are  they  all  needed? 

A.  In  the  State  itself  generally,  yes.  There  are  some 
exceptions.  In  the  larger  cities  I  think  there  are  too 
many  hospitals.  That  is  well  indicated  by  the  fact  of  the 


373 

number  of  beds  that  are  vacant.  That  is  a  problem  that 
has  been  tried  to  be  dealt  with  by  several  gentlemen  on 
the  floor,  an  idea  it  is  almost  impossible  to  deal  with. 
Amalgamation  and  association  is  very  well  theoretically, 
but  you,  gentlemen,  are  faced  with  the  fact  that  here  are 
a  certain  number  of  institutions,  and  these  institutions 
have  been  established  for  various  sundry  reasons  and  to 
take  care  of  different  types  and  varieties  of  illness.  '  Some 
of  them  are  large  and  have  teaching  appliances;  some 
of  them  are  small  and  have  no  real  teaching  appliances, 
but  as  a  matter  of  fact  the  physicians  teach  in  all  the 
hospitals  so  far  as  they  are  able  to  do  it;  they  use  very 
largely  of  their  material  for  clinical  material.  I  do  not 
believe  you  can  get  medical  men  or  get  Boards  of 
Managers  to  wipe  out  of  existencxe  certain  types  of  insti- 
tutions. Take  the  "Wills  Eye  Hospital  and  Orthopedic 
Hospital  as  special  hospitals ;  take  the  Gynecean  Hospital 
for  gynecological  cases.  Take  the  Children's  Hospital  for 
children's  diseases,  and  I  could  go  on  and  enumerate  a 
dozen  others,  all  representing  different  types,  and  I  doubt 
very  much  whether  you  could  get  in  any  way,  shape  or 
form  the  gentlemen  who  have  devoted  their  lives  to 
building  up  these  institutions,  and  by  so  doing  educating 
the  profession,  not  only  of  Philadelphia,  but  of  the 
country  and  the  world,  in  the  advanced  practices  of  their 
specialties;  I  doubt  if  you  could  get  them  to  consider 
wiping  out  the  work  of  a  lifetime  by  consolidating  with 
some  institution  in  which  their  individuality  would  be 
wiped  out.  When  they  started  there  was  a  great  necessity 
for  such  work  in  the  community  in  the  teaching  of  the 
profession,  not  only  of  this  City,  but  of  the  country  and 
of  the  world.  Many  of  these  institutions,  take  the 
Gynecean  Hospital,  for  instance,  when  that  hospital  was 
instituted  there  was  no  special  hospital  in  this  State  for 
special  gynecean  work  and  the  mortality  was  from  30 
to  50  per  cent.  The  Gynecean  Hospital  was  the  first, 
and  was  quickly  followed  by  other  hospitals  of  a  like  type. 


374 

the  specialists  pushed  their  work  and  developed  it,  with 
the  result  that  with  the  aid  of  the  State  the  mortality 
is  down  to  2  or  3  per  cent.,  and  not  only  in  that 
institution  but  in  almost  all  other  institutions  in  the 
State.  In  other  words,  they  have  been  the  means  in 
fifteen  or  twenty  years  of  developing  a  branch  of  surgery 
which  is  the  most  important  of  all  the  branches  of 
surgery,  and  have  been  the  means  of  educating  the 
profession  to  a  standard  which  was  never  dreamed  of 
as  a  possibility,  and  never  could  have  been  done  without 
State  aid,  and  those  institutions  today  largely  are  still 
needed  for  the  greater  and  advanced  work.  You  have 
heard  Mr.  Walton  speak  of  the  bad  cases  sent  in  to  us 
from  the  country,  and  these  institutions  are  needed  for 
just  that  class  of  cases.  The  general  practitioner  can 
handle  the  majority  of  cases,  but  they  come  to  a  class 
of  cases  that  they  dare  not  touch,  that  they  want  to  come 
to  the  hands  of  men  who  are  experts  in  institutions  that 
are  devoted  to  that,  and  these  institutions,  all  of  them, 
have  their  necessity  and  their  use  in  those  directions. 

As  a  matter  of  fact,  that  brings  me  to  another  point, 
that  the  education  that  the  State  aid  has  given  by  the 
development  of  the  different  institutions  throughout  the 
whole  country.  Fifteen  or  twenty  years  ago  it  was  a 
rare  surgeon  in  the  State  of  Pennsylvania  who  could  even 
do  an  average  amount  of  modern  surgery.  Today  there 
is  not  a  community  that  has  not  an  expert,  or  two  or 
three  experts,  all  due  to  the  education  furnished  by  in- 
stitutions which  were  put  on  their  feet  and  allowed  to 
develop  their  work,  and  largely,  if  not  almost  altogether, 
by  State  aid,  and  it  would  have  taken  a  hundred  years 
to  have  accomplished  what  was  accomplished  in  fifteen 
or  twenty  years  had  the  State  not  stepped  in  with  its 
assistance.  Many  of  these  institutions  will  go  out  of 
existence  if  the  State  aid  is  withdrawn,  and  I  take  it  that 
the  community  is  warranted  in  taking  care  of  its  sick 
by  educating  its  physicians,  as  it  is  in  its  general  educa- 
tion. 


375 

Here  is  a  little  squib  I  wish  to  read,  because  it  brings 
out  four  things  the  State  has  developed  and  done,  and 
each  and  every  one  of  them  is  a  warrant  for  the  aid  the 
State  has  appropriated: 

"By  its  appropriations  to  hospitals  Pennsylvania  has 
aided  materially  in  placing  in  all  regions  prompt  medical 
and  surgical  relief  at  the  disposal  of  those  requiring  it. 
Rare  now  is  the  spectacle  of  a  crushed  and  dying  man 
being  carried  for  miles  in  a  jostling  wagon  or  freight  car, 
in  order  to  reach  a  place  where  an  appropriate  operation 
could  be  performed  or  the  merciful  ease  preceding  the 
longed-for  and  inevitable  death  obtained.  Good  nursing, 
good  physicians  and  surgeons  and  good  hospital  accommo- 
dations are  now  found  in  nearly  all  centers  of  population 
in  Pennsylvania.  The  rich  as  well  as  the  poor  receive 
benefit  from  this  improvement  in  the  local  appliances 
for  meeting  medical  emergencies.  The  local  practitioners 
of  medicine  have,  with  greater  opportunity  for  seeing 
unusual  cases,  become  more  advanced  thinkers  and  more 
experienced  operators  and  prescribers.  Even  laymen 
realize  the  change  and  expect  the  local  doctor  to  be 
familiar  writh  the  improvements  and  advances  of  modern 
medical  science.  The  charitably  inclined  have  been  in- 
creased in  numbers  and  greatly  broadened  in  view  by 
association  with  hospital  matters  in  their  own  towns." 

By  Mr.  Brown: 

Q.  From  your  observation  and  experience,  has  there 
been  any  improper  use  made  of  the  hospital  service?  I 
mean,  that  due  to  State  aid,  by  the  physicians  themselves? 

A.  Never,  that  I  know  of. 

Q.  I  mean,  have  they  used  those  institutions  for  the 
promotion  of  their  own  personal  interests. 

A.  Never. 

Q.  Directly  or  indirectly? 

A.  I  do  not  believe  they  have  done  it  directly  or  in- 
directly. I  have  known  physicians  to  do  this;  take  a 


376 

town,  for  instance,  where  there  is  a  quarrel.  The  doctors 
go  out  and  form  another  hospital;  that,  you  might  say, 
was  unnecessary,  but  as  for  using  the  money  for  improper 
purposes  after  they  have  gotten  it,  I  do  not  know  of  a 
single  instance  of  my  own  personal  experience,  nor  have 
I  ever  had  it  intimated  to  me. 

Q.  Do  they  take  these  things  and  use  them  for  their 
own  personal  use? 

A.  Almost  every  physician  has  a  private  room.  That 
is  an  aid  to  the  State.  Those  patients  get  the  benefit 
of  that  advancement  in  that  hospital  and  the  skilled  work 
that  can  be  given  to  them.  They  pay  more  in  dollars 
and  cents  than  would  doubly  support  them.  They  bring 
money  into  the  institution,  and  where  those  rooms  have 
been  used  in  that  way  it  gives  the  institution  an  addi- 
tional income  and  helps  to  pay  for  the  free  wards. 

Q.  What  is  the  reputation  of  the  physicians  for  using 
these  free  wards;  do  they  use  them  to  further  their 
own  interests? 

A.  If  any  of  them  did  and  it  was  known  to  the  Board, 
the  Board  would  report  them. 

Q.  Has  the  medical  profession  ever  considered  it  from 
that  point  of  view? 

A.  The  medical  profession  would  not  countenance  any 
such  man. 

Q.  Have  any  charges  ever  been  made. 
A.  Whisperings  have  not  been  considered  sufficient  to 
discuss. 

Q.  I  mean  these  doctors  prominently  connected  with 
our  hospitals;  have  they  been  charged  with  it? 

A.  None  that  I  know  of.  I  have  heard  whispers  under 
the  breath  in  one  or  two  cases  over  a  course  of  twenty 
years.  It  is  absolutely  absurd  to  say  that  because  there 
may  be  one  case,  or  a  dozen  cases,  that  the  general 
proposition  is  one  of  rottenness. 


377 

Q.  So  far  as  your  experience  has  gone,  the  whole  thing 
is  clean? 

A.  I  should  say  the  State  money  has  been  absolutely 
and  cleanly  spent  to  a  penny,  that  it  goes  back  to  the 
very  purpose  for  which  it  is  appropriated. 

ADJOURNED  until  Friday,  February  4,  1910,  at  11.00 
A.  M. 


378 


Public  meeting  of  the  Committee  held  at  Room  496,  City 
Hall,  Philadelphia,  Friday,  February  4,  1910,  at  11  o'clock 
A.  M. 

Present:  Hon.  James  P.  McNichol,  Chairman;  Gabriel 
H.  Moyer,  Vice  Chairman  and  Secretary;  Wm.  C.  Sproul; 
William  H.  Keyser;  James  F.  Woodward;  David  Hunter, 
Jr.,  of  the  Committee;  Francis  Shunk  Brown,  Esq., 
Counsel. 

THEODORE  M.  ETTING,  ESQ.,  Children's  Aid  Society, 

called. 

Mr.  Etting:  Mr.  Chairman  and  Gentlemen:  I  would  like 
to  say  a  few  words  as  to  the  general  purposes  of  the 
Children's  Aid  Society,  in  order  that  the  Committee  may 
be  fully  informed  as  to  that  subject.  Our  work  is  limited 
to  a  class  of  children  who  but  for  our  assistance  would 
become  a  direct  charge  upon  the  State,  and  would,  we  think, 
almost  invariably  drift  into  the  criminal  classes.  Our 
assistance  is  rendered  to  foundlings,  to  dependent  orphans, 
children  who,  through  the  cruelty  of  parents  are  having 
their  chances  in  life  blighted,  or  to  children  who  were 
abandoned  by  their  parents,  and  in  some  instances  through 
our  intervention  to  the  help  of  juvenile  delinquents,  all  of 
whom  are  removed  from  the  immediate  surroundings  with 
which  they  are  confronted  to  various  homes  scattered 
through  eastern  Pennsylvania.  We  operate  through  20 
counties.  The  furthest  county  west  at  the  present  time 
is  Huntington,  although  I  believe  we  have  had  and  have  at 
the  present  time  applications  as  far  west  as  Blair.  The 
same  work  is  in  a  general  way  done  for  Western  Pennsyl- 
vania by  a  society  of  the  same  kind  having  its  headquarters 
in  Pittsburgh.  We  have  been  working  since  1882  or  1883. 
We  have  during  that  time  expended  about  $875,000,  and 


379 

in  the  same  time  we  have  had  about  $175,000  from  the  State 
of  Pennsylvania. 

Our  system  of  operation  is  this,  that  we  have  homes 
selected  in  the  various  counties  through  rigid  investigation, 
and  the  children  as  fast  as  they  can  without  undue  expense 
be  transported  to  those  homes,  are  sent  there  and  are  treated 
just  as  other  children  are  in  that  locality.  They  are  not  al- 
lowed to  be  worked  in  those  homes  to  their  own  detriment. 
That  is  to  say,  the  person  with  whom  they  are  boarded 
(in  some  instances  they  are  kept  without  board)  cannot 
utilize  their  services  in  any  way  so  as  to  deprive  them  of 
the  advantages  of  a  public  school  education.  These  children 
are  all  compelled  to  go  to  the  public  schools,  and  we  receive 
constant  reports  from  the  superintendent  of  the  schools 
as  to  the  progress  they  are  making.  They  dress  like  other 
children.  They  have  no  badge  put  upon  them  which  pre- 
vents them  from  having  a  fair  chance  in  life,  and  their 
environment  is  changed  from  that  which  they  were  for- 
merly surrounded  with  to  one  that  gives  them  as  fair  a 
chance  as  any  other  boy  in  that  locality. 

The  society  is  absolutely  non-sectarian  and  the  only 
endeavor  in  that  respect  which  is  made  is  this,  that  the 
child  is  placed  in  a  home  where  the  religious  teaching  is 
that  under  which  the  child  was  born.  We  get  in  every  in- 
stance, at  intervals  of  time,  reports  from  the  teacher,  I 
mean  the  religious  teacher  of  the  child,  so  that  we  are  kept 
in  touch  with  both  phases  of  the  situation,  the  progress  the 
child  is  making  in  school  and  in  religious  development. 
Then  from  time  to  time  we  visit  the  children  through  our 
paid  inspectors.  In  a  general  way  that  is  the  scope  of  the 
work  in  which  we  are  engaged. 

Circumstances  have  within  the  last  two  or  three  years 
singularly  favored  development,  I  am  sorry  to  say,  at  am 
expense  which  has  compelled  us  to  spend  at  least  a  certain 
portion  of  money  which  we  had  laid  by.  The  situation  is 
this.  There  is  situated  at  1506  Arch  street  an  office  which 
is  known  to  all  of  the  poor  of  Philadelphia  coming  within 


380 

the  class  of  cases  of  which  I  am  speaking,  a  woman  who  has 
been  deserted  by  her  husband,  a  child  left  a  charge  upon  the 
community,  or  where  anyone  knows  of  cruelty  that  is 
practiced  upon  a  child,  or  various  cases  that  fall  within  this 
description.  There  is  an  office  which  is  practically  not 
only  our  office  but  which  is  a  clearing  house  for  cases  of 
this  kind.  That  is  technically  known  as  the  Children's 
Bureau.  It  is  maintained  at  the  cost  of  three  societies. 
One  is  the  Estate  of  Henry  Seibert,  who  left  a  considerable 
sum  of  money,  I  think  about  $1,000,000  or  more,  which  his 
trustees  are  devoting  to  the  establishment  of  a  village  in  one 
of  the  neighboring  counties  in  which  children  of  this  class 
are  taught  trades.  That  constitutes  one  factor  in  this 
Bureau.  Another  factor  is  the  Society  for  Prevention  of 
Cruelty  to  Children.  The  third  is  the  Children's  Aid 
Society.  Every  case  of  this  kind  can  be  investigated  at  that 
bureau.  It  is  in  touch  with  all  hospitals,  and  with  all  of  the 
child  saving  work  in  eastern  Pennsylvania.  If  the  child, 
after  full  investigation,  is  deemed  to  be  a  child  that  is 
worthy  of  this  assistance,  then  the  next  step  is  to  determine 
by  some  personal  investigation  of  the  child  itself  how  we 
can  best  utilize  the  advantages  which  are  within  the  control 
of  these  societies.  We  have,  in  order  to  make  this  effective, 
a  child's  shelter  which  is  situated  on  Fifteenth  street  near 
Pine,  in  an  office  adjoining  the  building  of  the  Society  for 
the  Prevention  of  Cruelty  to  Children,  which  accommodates 
a  certain  number  of  children.  Then  we  have  temporary 
shelters  in  selected  homes,  and  then  we  have  The  Seibert 
Institution.  In  that  way  during  a  period  of  30  or  60  days 
we  can  get  some  notion  of  the  child.  We  can  get  some 
notion  of  its  healthfulness  and  its  possibilities,  and  we  have 
the  child  inspected  by  a  doctor.  If  there  is  any  trouble 
about  its  teeth  affecting  its  health,  we  have  that  corrected. 
At  the  end  of  that  time  the  child  is  either  sent  to  the  Chil- 
dren 's  Aid  Society,  and  in  that  event  is  sent  to  one  of  these 
homes  scattered  through  the  eastern  part  of  the  State,  or  if 
it  is  not  fit  for  that  we  send  it  to  a  hospital  if  that  is  re- 


381 

quired,  or  if  necessary,  and  if  it  is  a  juvenile  delinquent  of  a 
very  extreme  class  we  send  it  to  an  institution  of  that 
nature,  but  in  a  general  way  our  effort  is  to  avoid  as  far  as 
possible  in  the  case  of  small  children,  institutions.  I  say 
this  in  no  spirit  of  hostility  to  any  existing  institution  for 
the  betterment  of  children,  because  we  believe  they  have 
their  usefulness,  but  in  a  general  Avay  we  believe  that  a 
juvenile  delinquent,  or  a  child  who,  through  misfortune, 
and  not  through  its  own  fault,  has  been  brought  into  this 
condition,  ought  to  have  just  as  fair  a  chance  of  moral 
training  as  your  child  or  mine,  and  we  think  it  ought  not  to 
be  condemned  and  thrown  amongst  a  class  of  children, 
many  of  whom  are  worse  than  itself,  and  thus  exposed  to 
that  kind  of  influence.  We  think  it  ought  to  be  given  a 
chance  in  another  environment,  and  the  children  grow  up, 
as  I  say,  in  these  homes.  The  success  of  the  endeavor,  which 
has  now  been  tested  for  some  30  odd  years  of  experience  or 
thereabout,  has  been  remarkable. 

As  an  illustration  (I  am  not  at  liberty  to  give  names), 
but  such  is  the  reputation  which  the  society  has  made  that 
within  the  last  eight  or  ten  years  we  have  had  applications 
of  a  nature  that  I  will  indicate.  For  example,  a  professor  in 
one  of  the  leading  universities  in  this  country,  a  university 
that  has  a  world-wide  reputation,  lost  a  child.  His  home 
was  so  saddened  by  the  want  of  child  life  that  he  desired  to 
have  some  child,  and  preferred  to  take  a  child  so  as  to 
associate  charity  with  it.  He  sent  to  us,  and  that  child  will 
now  grow  up  under  circumstances  and  conditions  that  may 
make  any  possibility  in  life  open  to  it.  That  is  only  one 
of  many  instances,  which  I  think  it  would  be  in  the  power 
of  our  society  to  furnish. 

I  would  like  to  say  something  in  connection  with  this 
Children's  Bureau  which  we  have  recently  established  here. 
I  am  informed  by  persons  who  were  present  (I  was  not  pres- 
ent myself)  at  a  meeting  held  in  Washington,  before  the 
end  of  Mr.  Roosevelt's  administration,  of  workers  from  all 
parts  of  the  country  interested  in  child  work,  and  which 


382 

met  at  the  White  House,  that  the  system  that  we  have 
established  in  Philadelphia  of  a  clearing  house  which  is 
conducted,  as  I  told  you,  at  1506  Arch  street,  was  regarded 
as  the  greatest  advance  in  that  kind  of  work  that  is  in  ex- 
istence anywhere  in  the  United  States. 

So  much  for  the  purposes  and  enlargement  which  has 
marked  the  progress  of  this  society.  We  have  generally 
1,500  to  1,800  children  in  our  care.  I  want  to  say  a  word 
on  the  general  subject  which  is  occupying  your  attention 
and  care,  and  which  is  most  interesting,  that  is,  the  extent 
to  which  aid  should  be  given  by  the  State  to  undertakings 
of  a  private  nature.  With  great  respect  to  your  opinion, 
and  with  great  deference  in  view  of  my  own  limited  knowl- 
edge of  the  subject,  I  want  to  give  you  a  thought  which  is 
present  in  my  mind,  because  I  have  thought  much  about  it, 
and  if  it  be  worth  anything  it  is  at  your  service.  My  own 
view  is  that  the  State  of  Pennsylvania  has  no  right  what- 
ever to  tax  its  corporations  or  private  citizens  for  any 
purpose  other  than  one  which  the  State  ought  to  under- 
take directly,  but  that  if  you  bring  any  particular  charity 
within  the  line  of  cases  which  the  State  ought  itself  to  take 
care  of,  then  you  are  far  better  off  if  you  can  utilize  private 
assistance  and  the  endeavors  of  private  people  to  supple- 
ment the  State  work.  By  way  of  illustration  I  take  our 
own  society,  and  I  hope  that  in  taking  our  own  society  as  a 
text  I  am  not  pleading  for  its  benefit  alone.  Its  work 
the  State  of  Pennsylvania  ought  to  undertake  without  the 
intervention  of  any  society,  were  it  not  for  the  fact  that  I 
think  it  can  be  readily  demonstrated  to  your  satisfaction 
that  if  the  State  were  directly  to  undertake  this  work,  the 
work  would  be  conducted  at  much  greater  expense,  and 
probably  not  so  well  as  it  is  when  conducted  through  pri- 
vate agencies.  I  mean  to  say  that  my  own  interest  in  this 
work  has  largely  grown  out  of  the  very  noble  administra- 
tion of  the  work  which  I  see  conducted  principally  by 
woman.  It  is  essentially  the  kind  of  work  that  a  woman  is 
much  better  fitted  for  than  a  man.  Our  board,  which  at 


383 

present  has  about  18  members,  is  mainly  composed  of 
women.  We  have  four  or  five  men  on  the  board,  who  take 
care  of  the  business  end  of  the  administration,  and  who 
are  there  to  advise  the  ladies  in  connection  with  that  work, 
but  it  is  a  kind  of  work  that  particularly  appeals  to 
feminine  instinct,  and  if  in  connection  with  that  you  utilize 
men  in  different  departments  ,then  you  do  it  much  better 
than  if  you  confide  the  entire  work  to  men.  If  this  society 
did  not  exist,  these  children,  instead  of  going,  I  think 
perhaps  to  the  extent  of  80  per  cent.,  into  the  useful  classes 
and  filling  your  work  shops  and  your  homes,  would  drift 
into  the  criminal  classes  almost  invariably.  They  come  to  us 
with  bad  blood  in  their  veins.  They  are  illegitimate  off- 
spring, or  come  of  unhappy  marriages,  desertion  on  the 
part  of  the  husband,  generally  accompanied  by  drink,  or 
else  they  come  as  chiudren  who  have  committed  petty 
crimes.  Those  children  would  first  be  a  charge  upon  their 
respective  communities,  and  in  the  second  place  by  heredity, 
if  it  were  not  for  the  change  of  environment,  they  would 
almost  certainly  eventually  fill  your  jails,  so  that,  in  as 
much  as  the  advance  of  thought  has  imposed  upon  the  State 
a  duty  of  this  nature,  the  State  must  of  necessity  take  care 
of  them.  It  must  take  care  of  them  either  as  youths  and 
give  them  the  chance  of  their  life-time,  or  it  must  take  care 
of  them  as  criminals  when  they  grow  into  manhood  or 
womanhood.  Therefore  I  say  that  this  class  of  cases  pre- 
sents a  work  which  the  State  ought  to  take  upon  itself 
directly,  were  it  not  for  the  fact  that  through  the  inter- 
vention of  individuals  in  all  large  communities  you  can 
obtain  very  material  assistance  in  money,  very  much  better 
assistance  through  private  efforts  than  you  could  through 
any  system  of  government  administration.  When  you 
come  to  administer  the  State's  assistance  then  my  thought 
is  that  you  must  first  select  not  necessarily  cases  in  which 
the  work  is  done  directly  by  the  State,  because  while  I 
have  not  the  slightest  intention  of  saying  a  word  in  dis- 
paragement of  the  way  in  which  State  work  is  undertaken, 


384 

it  may  easily  be  that  there  are  classes  of  cases  in  which  the 
State  has  not  directly  interested  itself  which  are  quite  as 
meritorious  and  which  ought  quite  as  much  to  be  a  charge 
upon  the  State  as  the  cases  in  whose  favor  the  State  has 
already  intervened. 

For  example,  take  the  case  of  these  children  as  opposed 
to  the  insane.  If  you  could  imagine  a  condition  of  things 
under  which  it  would  be  necessary  for  the  State  to  so 
husband  its  resources  as  to  say  that  it  would  give  to  neither 
class,  that  they  must  both  go,  or  else  that  one  or  the  other 
must  go,  the  economy  of  life,  the  protection  of  the  State 
from  invasion,  or  the  husbanding  of  its  resources  for  work, 
should  all  be  in  favor  of  the  child.  I  do  not  wish  you  to 
withhold  your  bounty  from  the  old  or  from  the  insane,  but 
if  you  had  to  choose  between  the  two,  as  a  practical  ques- 
tion, as  Judge  Johnson  said  to  me  some  time  ago,  the  last 
time  I  appeared  before  the  State  Board  of  Charities,  when 
I  said, ' t  The  great  advantage  that  this  society  has  in  coming 
before  you  is  its  hopefulness, ' '  and  he  said,  i '  Yes,  it  is  the 
only  hopeful  one.  The  rest  is  simply  a  question  in  my 
judgment  of  amelioration,  but  here  you  have  a  chance  of 
absolute  cure  in  the  great  majority  of  cases."  Therefore 
my  thought  is  that  you  should  not  ignore  existing  institu- 
tions, and  the  necessity  of  giving  them  aid,  but  if  they  come 
within  the  class  whose  work  the  State  ought  to  do  directly, 
of  course,  you  ought  to  take  care  in  giving  them  assistance 
that  the  assistance  which  the  State  gives  supplements  pri- 
vate efforts.  You  never  ought  to  give  them  so  much  money 
as  'to  deter  people  from  contributing,  or  allow  them  to  sit 
quietly  by  and  trust  to  the  State.  You  ought  to  compel  the 
people  in  all  instances  to  help  themselves. 

By  Mr.  Brown : 

Q.  "What  percentage  of  effort  do  you  think  private  parties 
should  make  in  proportion  to  the  contribution  of  the  State? 

A.  To  answer  that  would  require  someone  who  had 
studied  the  whole  subject  better  than  I  have.  Mr.  Carnegie, 


385 

who  has  studied  this  subject  very  carefully.  I  think  re- 
quires half.  The  State  ought  to  require  much  more  than 
half.  I  can  only  say  that  in  our  own  case  that  it  cost  us 
$100,000  in  round  numbers  to  maintain  this  work. 

Q.  You  get  $30,000  from  the  State? 

A.  We  get  $15,000  a  year  from  the  State,  but  I  want  to 
be  frank  with  you.  That  is  not  all  that  we  get.  We  get 
some  assistance  through  the  County  Commissioners,  the  ex- 
act amount  of  which  I  cannot  tell  you,  but  generally  it  is 
about  $1.50  a  week  for  each  child.  I  think  in  some  cases 
a  little  more  and  in  some  cases  a  little  less,  whereas  I  think 
we  calculate  it  costs  us  about  $2.50  for  each  child.  In  other 
words,  we  have  no  child  that  is  not  absolutely  maintained 
through  the  help  of  private  effort. 

Q.  What  is  your  limitation  as  to  age? 

A.  We  have  no  limitation  as  to  age. 

Q.  You  do  not  take  them  beyond  21  ? 

A.  No.  I  mean  no  limitation  of  age  less  than  that  of 
majority. 

Q.  Do  you  take  them  as  early  as  four  years  ? 

A.  Yes,  sir. 

Q.  Is  there  any  other  institution  in  Philadelphia  doing 
similar  work  ? 

A.  No,  sir,  not  that  I  know  of.  I  think  I  am  correct  in 
that. 

Q.  Do  the  societies  in  Pittsburgh,  Meadville,  Greensburg 
and  Chambersburg  do  work  similar  to  this? 

A.  The  society  in  Pittsburgh  does.  There  are  a  number 
of  county  societies  that  do,  so  far  as  their  means  and  op- 
portunities exist. 

Q.  You  have  spoken  about  supervision  of  these  children 
after  they  leave  your  care  ? 

A.  While  they  are  in  our  care. 

Q.  When  you  place  these  children  out  in  homes  you 
have  spoken  of  supervision.  What  has  been  your  experi- 
ence, if  any,  as  to  complaints  of  ill-treatment  of  the 
20 


386 

children,  or  anything  that  would  be  derogatory  to  their 
welfare  ? 

A.  I  could  not  give  you  absolute  figures.  They  are 
very  rare — so  rare  that  I  doubt  if  we  have  ever  tabulated 
them. 

Q.  You  applied  to  the  State  Board  of  Charities 
for  an  appropriation  of  $40,000  for  two  years,  $20,000  a 
year? 

A.  Yes,  sir. 

Q.  They  cut  that  down  to  $35,000.  What  reason  was 
given  you  for  that  reduction,  if  any?  Why  did  they  cut 
your  annual  appropriation  from  $20,000  to  $17,500  ? 

A.  They  said  they  had  to  endeavor  to  bring  their  recom- 
mendation within  the  amount  of  money  available. 

Q.  It  was  a  case  of  money  altogether,  and  not  a  case  of 
merit  ? 

A.  Not  at  all. 

By  Mr.  McNichol : 

Q.  How  much  salary  do  you  pay  out  yearly  to  officers  ? 

A.  We  have  a  superintendent. 

Q.  What  is  the  total  amount  you  pay  yearly  in  salaries? 

A.  This  gentleman  who  is  now  our  superintendent  we 
selected  after  going  all  over  the  county.  We  brought  him 
here  from  the  West,  and  the  society  as  a  society  has  never 
paid  a  penny  of  his  salary.  It  has  been  paid  by  friends 
of  the  society  who  guarantee  his  salary. 

Q.  I  understand  you  have  expended  in  30  years 
$875,000? 

A.  Yes. 

Q.  Of  which  the  State  gave  you  how  much? 

A.  $139,000  is  the  correct  figure. 

Q.  Then  in  point  of  fact  the  total  amount  received  from 
private  sources  was  in  the  neighborhood  of  $740,000? 

A.  No,  sir,  it  does  not  represent  so  much  as  that,  because 
we  have  received  through  the  Poor  Boards  of  these  various 
counties  some  money  which  could  be  worked  out. 


387 

Q.  Could  you  give  us  approximately  about  how  much  ? 

A.  In  no  instance  does  the  sum  that  we  get  from  the 
Poor  Board  pay.  It  is  not  enough  to  pay  for  the  child. 

Q.  I  want  to  get  just  what  has  been  the  real  private 
charity  you  have  received  during  those  years? 

A.  I  will  see  that  you  have  that. 

Q.  Is  it  less  than  $15,000  a  year.  I  am  talking  about 
private  assistance  you  receive  outside  of  the  State  and 
the  Poor  Boards? 

A.  No,  I  think  it  would  greatly  exceed  that. 

Q.  Say  $500,000  in  30  years? 

A.  Yes,  from  private  sources.     I  think  so. 

Q.  That  is  rather  a  limited  amount  of  charity  in  a  great 
city  like  this  from  the  potential  men  we  have  around  town, 
do  you  not  think? 

A.  It  is  so.  I  have  no  desire  to  say  anything  derogatory 
to  private  charity,  because  I  think  there  is  a  great  deal  of 
it  here,  but  if  you  will  look  over  the  list  of  persons  who 
give  to  private  charities,  apart  from  sectarian  charity,  you 
will  see  the  same  names  repeated  over  and  over  again. 

Q.  We  do  not  want  to  say  anything  slightingly  about 
those  people,  but  if  there  is  such  a  deficiency  in  the  giving 
of  this  money  for  charitable  purposes,  do  you  not  think 
the  Legislature  should  be  given  some  assistance  in  devising 
a  plan  by  which  they  can  be  made  to  give  what  they 
should  give? 

A.  I  think  so,  if  you  can  devise  such  a  plan. 

Q.  If  we  call  on  gentlemen  like  you,  who  are  familiar 
with  these  conditions,  to  give  the  information  you  desire, 
we  may  be  able  at  the  next  session  of  the  Legislature  to 
devise  some  plan. 

By  Mr.  Brown : 

Q.  That  is,  assuming  there  is  an  obligation  on  our  peo- 
ple to  take  care  of  their  helpless  poor,  whether  or  not 
if  that  is  not  voluntarily  done  it  should  not  be  done  by 


388 

the  Legislature  in  the  levying  of  a  fair  revenue  to  produce 
the  results? 

A.  I  think  it  should. 

By  Mr.  McNichol : 

Q.  In  your  experience  of  30  years  you  do  not  hesitate 
a  moment  to  say  the  State  should  take  care  of  her  poor, 
more  especially  children? 

A.  Not  for  a  instant.  I  think  there  is  necessarily  room 
for  improvement,  as  will  be  found  in  the  study  of  all  con- 
ditions. I  think  there  is  room  for  improvement  in  the 
administration,  as  to  selecting  between  something  Mr. 
Brown  is  interested  in  and  something  I  am  interested  in, 
but  after  considering  this  question  of  State  aid  very  care- 
fully I  give  my  opinion  for  what  it  may  be  worth,  that  I 
should  be  extremely  sorry  to  see  State  aid  withheld  from 
proper  subjects  for  bounty. 

Q.  You  are  also  extremely  interested  in  seeing  those 
people  who  have  been  shirking  their  responsibilities  in  that 
direction  forced  to  contribute? 

A.  Undoubtedly. 

By  Mr.  Brown : 

Q.  Has  your  society  made  any  investigation  as  to  the 
preventive  usefulness  of  this  society?  In  other  words, 
by  its  activity  to  what  extent  it  has  relieved  hospitals, 
asylums  and  so  forth,  of  boys  and  girls  who  would 
naturally  become  charges  if  it  had  not  been  for  the  efforts 
of  your  society  ? 

A.  In  almost  every  instance  they  would  be. 

Q.  Your  charges  would  ultimately  be  driven  or  would 
drift  into  those  institutions? 

A.  Undoubtedly. 

Q.  The  State  would  have  to  take  care  of  them  in  any 
event  ? 

A.  Undoubtedly. 

Q.  At  an  enlarged  expense,  besides  losing  their  useful- 
ness as  good  citizens  ? 


389 

A.  Undoubtedly.  We  get>  some  instances  to  which  I 
might  refer.  Children  come  to  us  through  the  courts.  We 
get  what  are  called  support  orders,  but  a  support  order  is 
rarely  worth  more  than  25  to  50  per  cent,  of  the  order  as 
given,  because  the  person  upon  whom  the  support  order 
is  made  loses  his  job,  or  is  a  worthless  fellow  generally, 
and  shirks  it. 

Q.  Has  your  investigation  shown  to  what  extent  these 
boys  and  girls  develop  and  get  on  as  citizens? 

A.  Since  I  have  been  president  of  the  society  there  has 
been  no  table  of  that  sort  compiled.  I  do  not  know  what 
opportunity  we  would  have  of  compiling  it,  but  Mrs.  James 
Biddle,  who  was  my  predecessor  as  president  of  this  so- 
ciety, and  who  understood  this  work  far  better  than  I  do 
and  far  better,  I  think,  than  any  person  of  my  acquaint- 
ance, gave  me  the  average  of  85  per  cent. 

Q.  85  per  cent,  developed  to  the  good? 

A.  Yes,  sir. 

Q.  And  15  to  the  bad? 

A.  Yes. 

Q.  Of  the  15  to  the  bad  have  you  any  idea  as  to  the  very 
bad,  I  mean  those  that  ultimately  go  into  the  criminal 
class  ? 

A.  I  have  not.  I  do  not  know  really  where  Mrs.  James 
Biddle  got  her  figures  from. 

Q.  It  would  be  very  interesting  from  a  sociological 
point  to  have  those  statistics. 

A.  Of  course,  it  is  very  difficult  to  keep  tabs.  The 
children  are  passing  in  and  out  of  our  care,  and  the  period 
when  a  woman  goes  to  the  bad  is  so  hard  to  fix.  We  lose 
sight  of  them.  We  have  had  numerous  successes  and  have 
sent  some  people  to  the  Legislature. 

Q.  You  have  had  considerable  experience  in  these  in- 
stitutions. What  is  your  thought  as  to  the  standard  of 
efficiency  of  these  institutions  as  compared  with  those  in 
the  conduct  of  ordinary  human  affairs,  business  matters? 


390 

A.  I  do  not  know  anything  about  institutions  other  than 
this.  I  am  very  much  more  interested  in  questions  of  the 
disposition  of  the  money,  I  mean  to  say  in  the  general 
thought  of  what  is  best  for  the  State,  than  I  am  about 
these  institutions. 

By  a  Member  of  the  Committee : 

Q.  The  Commission  would  like  to  know  just  what  the 
salary  list  is  of  this  society.  Give  it  to  us  in  total. 

A.  The  total  is  $11,000.32  out  of  a  total  batch  of  $95^339. 

Q.  How  is  the  batch  made  up  ? 

A.  Board  paid  out  for  children,  $51,000 ;  clothing, 
$13,000;  traveling  expenses  and  transportation  of  chil- 
dren in  placing  them,  $7,000.  We  have  no  building  to 
maintain.  The  other  items  are  rent,  light  and  heat.  It 
ought  to  be  stated  in  regard  to  this  salary,  that  the  fact 
that  the  society  cares  for  1,400  or  1,500  children  on  this 
plan  is  only  possible  because  we  have  a  corps  of  12  or  1-1 
trained  agents  who  travel  through  about  40  counties  of 
eastern  Pennsylvania,  finding  these  homes  and  selecting 
them  most  carefully.  Mr.  Brown  inquired  as  to  complaints. 
Our  safeguard  is  that  every  home,  before  a  child  goes  in  It, 
is  seen  by  a  trained  agent  who  goes  all  over  the  situation 
and  makes  out  a  report.  That  is  filed  in  the  office  in 
writing.  This  has  previously  been  covered  by  an  applica- 
tion blank  and  four  references  from  reputable  citizens 
of  that  county.  The  economy  of-  the  plan  is  that  we  do 
spend  something  for  salaries.  If  an  examination  is  made 
by  experts  of  the  placing  out  work  for  children  the  test 
of  efficiency  is,  do  they  have  a  corps  of  trained  agents 
to  make  the  plan  efficient?  There  ought  to  be  a  law  pro- 
hibiting the  placing  of  children  in  family  homes  except 
by  persons  who  are  making  a  special  study  of  it.  In 
other  words,  it  should  not  be  carelessly  done. 

Q.  How  many  trained  agents  have  you? 

A.  Fourteen. 

Q.  What  compensation  do  they  receive  ? 


391 

A.  An  average  of  $35  a  month  and  traveling  expenses, 
up  to  $50.  It  is  not  enough,  but  all  we  are  able  to  pay 
at  the  present  time. 

By  Mr.  McNichol : 

Q.  What  is  the  membership  of  your  society? 

A.  There  are  about  1,200  contributors,  and  they  give  a 
total  of  about  $17,000  or  $18,000  a  year. 

Q.  Out  of  the  1,200  you  get  $17,000  a  year? 

A.  Seventeen  thousand  dollars  a  year.  Then  we  get 
annually  money  from  other  sources.  For  example,  we  got 
$7,000  last  year  from  a  fair  that  was  held  for  our  benefit. 
Then,  so  far  as  our  experience  goes,  we  can  count  on  about 
$7,000  a  year  from  legacies.  We  have  never  been  able  to 
husband  our  legacies.  We  spend  them  as  they  come.  It  is 
the  only  way  we  can  live.  We  do  not  like  to  do  it. 

By  Mr.  Brown: 

Q.  Have  you  made  any  calculation  as  to  how  much 
money  would  be  required  to  allow  this  society  to  develop 
into  the  greatest  efficiency? 

A.  No. 

Q.  You  get  $35,000  from  the  State  in  two  years,  $17,500 
a  year.  How  much  could  you  use  a  year  ? 

A.  I  think  Mr.  Brown  has  raised  a  very  interesting 
question.  We  have  not  yet  covered  all  counties  in  Penn- 
sylvania. We  only  organized  in  Lebanon  a  week  or  two 
ago.  Country  counties  are  asking  us  to  organize  this  work. 
I  think  the  Commission  would  be  interested  to  know  that 
we  have  covered  eight  or  nine  new  counties  in  the  past 
two  years,  and  are  trying  to  develop  the  principle  of  self- 
support  in  every  one  of  those  counties.  A  gentleman  in 
Williamsport  has  contributed  several  hundred  dollars  to 
get  the  work  started  there.  They  are  raising  $3,000  in 
Williamsport  to  help  to  get  the  thing  started  there.  We 
feel  very  strongly  that  people  who  are  able  to  contribute 
ought  to  be  compelled  to  first.  State  aid  should  be  an 


392 

encouragement  and  a  supplement  to  private  charity.  I 
think  an  analysis  of  our  report,  which  we  shall  be  very 
glad  to  submit,  will  show  interesting  things  on  that  score. 
We  collected  last  year  $6,000  from  parents  in  support  of 
their  children.  We  try  to  be  very  careful  on  that  point. 

Q.  You  collected  from  parents  of  children? 

A.  From  parents  of  children  in  our  care. 

Q.  What  kind  of  parents  were  they? 

A.  They  are  men  who  have  in  many  instances  lost  their 
wives  by  death,  whose  wages  are  $8  or  $10  a  week,  who 
cannot  get  a  housekeeper  and  maintain  a  home,  and  who 
have  one  or  two  children.  They  do  not  want  to  give  up 
the  children.  They  come  to  us.  They  are  not  able  to  pay 
for  full  support  but  pay  $1.50  or  $1.75,  and  sometimes  only 
$1  a  week.  It  costs  us  about  $2.50. 

Q.  They  are  children  of  what  type  of  men? 

A.  Men  who  are  working  as  day  laborers. 

Q.  What  did  you  say  the  wages  of  a  day  laborer  were  ? 

A.  It  is  not  as  much  as  that  in  some  instances,  $7,  $8 
and  $9  a  week.  We  study  every  case,  go  over  it  with  the 
man  in  a  sympathetic  manner,  to  see  what  he  can  do.  I  am 
speaking  of  a  well  disposed  man  who  really  wants  to  keep 
his  children.  We  go  over  the  case  carefully  and  sympa- 
thetically to  see  wha*t  we  can  do,  and  we  do  not  make  the 
children  a  partial  charge  on  charity  unless  we  are  sure 
that  is  the  thing  to  do.  In  addition  to  that  they  have 
court  cases  in  which  a  judge  makes  an  order  against  a 
man  who  is  able  to  contribute  in  the  judgment  of  the  court. 
Those  cases  are  committed  under  order  of  court.  Those 
orders  are  almost  never  paid  in  full,  because  when  a  man 
is  in  court  and  an  order  is  made  he  is  not  usually  a  very 
hopeful  subject.  Our  figures  have  been  worked  out.  It 
runs  several  thousand  dollars  every  year  short.  Private 
charity  has  to  supplement  that.  An  analysis  of  our  figures 
would  show  that  we  try  to  put  the  support  on  the  parents 
or  relatives  when  there  are  any.  The  local  Poor  Boards 
in  cases  of  almshouses  children  pay  $1.75  a  week.  The 


393 


r  $.75  comes  out  of  our  general  fund,  so  this  appropria- 
tion is  distributed  over  25  or  30  counties.  It  is  not  a 
Philadelphia  matter.  While  I  am  on  that  point,  I  believe 
-Fiat  a  reform  in  this  direction  would  indicate  that  the 
appropriation  should  cover  a  larger  area.  In  other  words, 
the  children's  aid  societies  at  Franklin  County,  West- 
moreland County,  and  at  Meadville,  referring  to  what  you 
said  a  week  ago  about  the  possibility  of  consolidation, 
should  be  asked  to  join  the  Pittsburgh  headquarters,  which 
federates  25  counties  out  there.  The  counties  at  this  end 
should  come  in  the  eastern  society  of  Pennsylvania,  and 
then  the  Legislature  and  the  State  Board  of  Charities  will 
know  exactly  whom  they  are  to  hold  responsible  for  the 
placing  out  work  of  children  in  this  State. 

Q.  What  would  you  say  to  putting  the  institution  under 
the  supervision  of  the  State  Board  of  Charities  with  the 
right  to  employ  just  such  persons  as  you  have? 

A.  That  is  done  in  Indiana. 

Q.  Would  not  that  be  a  more  business-like  way  of  con- 
ducting a  matter  of  that  kind  ? 

A.  It  is  a  matter  well  worthy  of  consideration.  The 
Chairman  will  recall  this  was  up  at  the  last  session  of  the 
Legislature,  and  I  think  it  is  a  matter  very  well  worthy 
of  consideration,  how  there  might  be  more  concentration 
and  placing  of  responsibility  on  a  small  number  of  agents 
instead  of  creating  a  large  number  of  new  ones. 

By  a  Member  of  the  Committee  : 

Q.  Do  you  think  that  would  discourage  private  charity? 

A.  In  Indiana  private  charities  go  on  and  do  another 
class  of  work,  adapt  themselves  to  changed  conditions. 

Q.  In  harmony  with  the  State? 

A.  In  harmony  with  the  State. 

Q.  How  many  dependent  children  have  you? 

A.  1481  on  the  first  day  of  February. 

By  Mr.  McNichol  : 
Q.  In  eleven  counties? 
21 


394 

A.  In  the  eastern  district. 
Q.  How  many  in  Philadelphia? 

A.  I  suppose  about  two  thirds  of  the  whole  number.  We 
are  organizing  this  work  now  in  the  other  counties. 

By  a  Member  of  the  Committee : 

Q.  In  how  many  counties  is  this  work  organized? 

A.  21  or  22  at  the  present  time  is  the  number  for  whom 
we  actually  have  children.  Blair  County  has  recently 
applied.  The  whole  Juniata  Valley  district  is  now  in- 
cluded in  our  society.  We  are  trying  to  spend  the  money 
in  an  economical  way  by  drawing  on  local  resources.  I 
can  only  say  I  think  I  myself  sent  out  14,000  or  15,000  or 
perhaps  20,000  appeals  a  year,  which  I  sign  with  my  own 
name,  after  most  careful  selection  of  neighborhoods,  to 
get  aid.  It  is  pretty  difficult  to  get  any  more  money  than 
we  receive.  Several  thousand  letters  were  sent  out  to 
business  men  of  the  city  telling  them  what  we  had  in  the 
way  of  State  aid,  putting  the  problem  before  them.  We 
wanted  to  get  support.  The  State  appropriation  did  not 
cover  it.  We  try  to  be  very  frank  about  that  and  educate 
our  contributors. 

By  Mr.  McNichol: 

Q.  The  trouble  is  that  too  many  independent  organiza- 
tions are  embarked  in  the  same  mission. 

A.  That  is  one  reason  we  tried  consolidation. 

By  Mr.  Brown : 

Q.  Has  any  reason  been  given  to  you  why  the  philan- 
thropists of  our  district  should  not  appreciate  the  import- 
ance of  an  institution  like  this,  for  the  purpose  you  have 
indicated? 

A.  I  do  not  know  of  any.  We  have  been  in  successful 
operation  since  1883  and  can  show  most  hopeful  results. 
It  would  be  a  matter  of  great  gratification  if  any  of  you 
gentlemen  went  to  1506  Arch  street  and  saw  exactly  what 
the  system  is  there,  how  carefully  every  child  is  cared  for 
and  his  or  her  case  opened  to  inquiry. 


395 

By  Mr.  McNichol : 

Q.  If  we  had  fewer  coming  out  parties  and  things  of  this 
kind  and  more  attention  to  charity,  there  would  be  much 
more  efficient  results? 

A.  I  quite  agree  with  you.  There  is  one  thing  I  think 
ought  to  be  mentioned  at  this  point.  Our  society  and  the 
western  society  of  the  same  nature  would  welcome  a 
movement  on  the  part  of  the  State  Board  of  Charities  or 
the  Legislature  to  fix  a  high  standard,  below  which  no 
society  that  receives  children  is  allowed  to  fall,  to  know 
that  there  is  stricter  supervision  and  stricter  accounting 
on  the  part  of  every  institution  that  places  out  children, 
setting  a  standard  below  which  State  aid  would  not  be 
given.  There  is  an  opportunity  for  the  State  to  improve 
the  efficiency  of  the  agencies  by  making  that  condition, 
saying  to  them, '"  You  must  raise  a  certain  amount  from 
private  sources  or  we  cannot  give  you  this  donation/* 
That  would  put  a  spur  to  the  local  community.  They 
would  see,  as  some  philanthropists  have  done,  in  giving 
large  benefactions.  I  commend  that  thought  to  you  for 
what  it  is  worth. 

Q.  Will  you  have  that  thought  boiled  down  to  a  short 
brief  and  give  it  to  us? 

A.  Yes. 


396 


SAMUEL  M.  CLEMENT,  JR.,  Temple  College,  called. 

Mr.  Clement:  I  presume  you  gentlemen  sitting  here, 
constituting  the  Legislative  Commission,  are  after  know- 
ledge and  light  on  the  general  subject  of  the  State's 
revenues,  how  they  can  be  raised,  and  how  applied  after 
they  are  raised,  and  in  that  connection  I  would  like  to 
call  your  attention  to  an  institution  of  Pennsylvania 
which  has  never  been  recognized  by  the  legislative  powers. 
There  was  established  about  25  years  ago  in  Philadelphia 
a  brain  factory.  A  big,  broad  man,  who  was  a  humanitar- 
ian in  every  sense  of  the  word,  conceived  the  idea  that 
the  greatest  asset  that  this  Nation  had  or  this  Common- 
wealth had,  was  the  young  men  and  young  women  who 
were  growing  up  into  manhood  and  womanhood,  and 
his  thought  was  that  he  could  not  do  a  better  thing  for 
the  Commonwealth  than  to  start  a  series  of  educational 
courses  for  the  young  women  and  young  men  of  this 
Commonwealth.  As  I  say,  he  started  25  years  ago  with 
seven  men  in  his  own  study.  He  has  worked  from  that 
time  to  this,  untli  now  he  has  3,600  students.  He  has  252 
instructors.  He  has  grown  from  no  asset  to  assets 
amounting  to  almost  $1,000,000  in  property,  and  all  this 
has  been  the  work  of  one  big,  broad  man  in  Philadel- 
phia, and  not  one  dollar  of  aid  has  he  ever  received  from 
the  Commonwealth  of  Pennsylvania.  The  young  women 
and  young  men  that  he  undertakes  to  educate  are  the 
young  men  and  women  who,  by  reason  of  their  pecuniary 
condition,  have  been  unable  to  finish  their  courses  in  the 
public  schools  or  in  the  colleges,  young  men  and  young 
women  who  are  forced  by  the  necessity  of  their  families 
to  go  out  and  earn  a  living  for  their  old  mothers  and 
fathers,  for  brothers  and  sisters.  They  get  along  to  be 
17,  18  or  19  years  of  age,  and  they  realize  that  in  this 
age  of  competition  their  chances  are  not  as  good  as  those 


397 

of  young  women  and  men  who  have  been  well  educated, 
so  they  come  to  Dr.  Conwell  and  pay  to  him  what  they 
can  afford  in  order  that  they  shall  not  be  objects  of 
charity,  and  they  are  taught  not  only  the  elementary  rudi- 
ments of  education,  but  they  are  taught  the  higher  arts 
and  sciences.  We  have  a  medical  school  and  a  law  school. 
We  have  a  dental  school.  We  have  a  domestic  science 
school.  In  fact,  we  have  every  branch  that  can  be  con- 
ceived for  the  betterment  of  the  condition  of  the  young 
men  and  young  women  of  this  City. 

It  occurs  to  me  that  the  great  State  of  Pennsylvania 
should  realize  that  this  is  an  asset  that  they  can  well  afford 
to  invest  in.  There  is  not  anything  that  will  perpetuate 
the  great  name  of  Pennsylvania  better  than  to  educate 
young  men  and  young  women  so  they  can  go  out  and  be 
more  useful  to  themselves  and  to  their  Commonwealth. 
It  seems  to  me  that  it  would  be  very  appropriate  for  this 
Commission  to  go  back  and  to  report  to  the  House  of 
Assembly  that  if  we  have  not  revenue  enough  to  encourage 
the  education  of  the  young  men  and  young  women  in 
Pennsylvania,  then  we  should  raise  the  revenue.  If 
necessary  we  should  put  a  tax  upon  gas  companies  in 
Pennsylvania.  We  should  put  a  tax  upon  water  power 
companies  in  Pennsylvania.  We  should  make  corpora- 
tions that  receive  special  privileges  pay  for  them,  in  order 
that  the  State  might  have  money  enough  to  educate  the 
young  men  and  women  of  this  State.  We  might  put  a 
few  more  mills  on  the  brewers  and  a  few  more  mills  on 
the  distillers  and  so  on.  We  could  very  well  afford,  all 
of  us,  to  contribute  of  our  earnings  for  this  very  worthy 
purpose.  We  might  even  make  the  lawyers  pay  a  certain 
percentage  of  their  earnings  to  the  State  for  the  privilege 
of  practicing  here,  in  order  that  they  might  help  some  poor 
brother  who  has  not  money  enough  to  be  educated  to  be 
a  lawyer. 

I  call  your  attention  to  these  facts  because  the  man  who 
dropped  the  acorn  25  years  ago  from  which  has  sprung 


398 

this  magnificent  oak,  is  to-day  on  his  sick-bed  and  has 
been  for  many  weeks.  His  time  has  almost  worked  out. 
He  has  given  his  time  and  his  money  until  he  is  almost 
exhausted.  The  president  of  this  university  himself,  con- 
sidering the  money  that  he  has  given  and  the  interest  on 
that  money  in  the  last  25  years,  has  given  to  this  university 
himself  $1,000,000.  He  has  spent  one-half  his  time  in 
the  last  25  years  on  sleeping  cars,  going  about  in  this  great 
.United  States  lecturing  to  raise  money  for  this  university. 
It  is  hard  to  understand  in  these  selfish  days  how  a  man 
could  be  willing  to  give  up  everything  in  life  for  that 
magnificent  principle,  but  he  has.  I  heard  him  say  before 
the  Board  of  Directors  not  long  ago,  "Gentlemen,  I  want 
to  say  sincerely  that  if  I  could  lay  down  my  life  to-day, 
and  by  laying  down  my  life  I  should  insure  the  perpetua- 
tion of  this  magnificent  work  for  the  young  men  and 
young  women  of  this  Commonwealth,  I  would  be  willing 
to  die  to-day, ' '  and  I  believe  every  word  of  it. 

By  Mr.  Brown: 

Q.  What  is  the  difference  between  the  position  of  Temple 
University  and  the  University  of  Pennsylvania,  in  your 
mind,  as  respects  an  appropriation  from  the  State? 

A.  With  respect  to  an  appropriation  from  the  State,  I 
would  say  that  the  University  of  Pennsylvania  has  no 
greater  claim  upon  the  revenues  of  the  State  of  Pennsyl- 
vania than  has  the  Temple  University.  I  want  to  say,  with 
great  respect  to  the  University  of  Pennsylvania,  because 
I  graduated  there  myself  in  1897,  that  they  do  good  work, 
but  as  regards  the  poor  people  of  this  Commonwealth 
their  usefulness  is  infinitesimal  as  compared  with  the  great 
work  of  Temple  University,  and  the  Temple  University 
is  as  much  entitled  to  the  taxpayers'  money  for  their 
wonderful  work  as  is  the  University  of  Pennsylvania,  or 
the  State  College  at  Bellefontaine,  or  the  Western  Univers- 
ity in  Allegheny. 

Q.  What  restrictions,  if  any,  do  you  place  upon  admis- 
sion to  Temple  University? 


399 

JL.  We  place  no  restriction,  excepting  that  the  young  man 
OP  young  woman  who  applies  there  must  be  of  good  moral 
character. 

Q.  Earnest  and  honest,  I  suppose  1 

A.  We  want  to  encourage  industry  and  thrift,  and  we 
care  not  whether  it  is  Jew  or  Gentile.  We  care  not  for 
their  creed  or  their  race  or  their  politics.  We  ask  them 
to  go  there  and  come  within  the  influence  of  that  mag- 
nificent environment,  and  we  are  sure  that  they  will  go 
out  a  credit  to  their  university  and  to  their  State.  Among 
other  things  that  they  are  taught  there  is  a  reverence  for 
their  State,  respect  for  the  officials  of  their  State.  They 
are  taught  that  the  great  Commonwealth  of  Pennsylvania 
is  not  a  bad  place,  but  it  is  a  good  Commonwealth.  They 
are  taught  that  the  City  of  Philadelphia  is  not  a  sunken 
eity,  but  they  are  taught  that  Philadelphia  is  one  of  the 
most  magnificent  municipalities  in  this  great  country, 
and  when  the  boys  and  girls  leave  Temple  University,  they 
leave  it  with  great  respect  and  reverence  for  their  City 
and  their  State. 

Q.  What  has  been  the  outcome  or  result  of  the  activity 
of  Temple  University? 

A.  The  result  has  been  this:  That  in  25  years  we  have 
graduated  60,000  young  men  and  young  women. 

Q.  In  what  different  branches? 

A.  In  all  the  branches,  from  an  elementary  education  -ip 
to  doctors  of  philosophy,  ministers  of  the.  gospel,  doctors 
of  medicine,  dentists  and  lawyers.  There  is  not  any  branch 
you  can  think  of  that  we  have  not,  and  I  want  to  tell  you 
that  of  the  young  men  who  have  graduated  from  Temple 
University  in  medicine,  but  one  man  in  the  nine  years 
the  medical  school  has  been  in  operation,  has  failed  to 
pass  the  State  Board  examination,  and  I  want  to  know 
if  there  is  another  medical  school  in  all  these  United  States 
that  has  a  higher  average  than  that. 

Q.  Why  have  you  not  had  State  aid? 

A.  We  have  not  had  State  aid  because  Dr.  Conwell  is 


400 

one  of  those  men  that  would  rather  go  on  and  work  until 
he  died  in  the  cause  than  go  before  the  Legislature  and 
assert  his  rights.  He  is  a  modest  man.  «He  is  a  man  that 
is  unwilling  to  force  his  claims,  very  much  to  the  detriment 
of  the  University. 

Q.  Laying  aside  the  personality  of  the  founder,  do  you 
consider  the  institution  would  have  been  more  useful  if 
it  had  during  all  these  years  received  State  aid? 
.  A.  That  is  a  question  impossible  to  answer.  I  take  it 
upon  the  same  theory  that  a  man  who  has  earned  $1,000 
and  spent  $500  for  charity  would  have  done  better  if  he 
had  had  an  income  of  $10,000.  Then,  perhaps,  he  might 
have  spent  $5,000  for  charity.  It  all  depends  on  con- 
ditions. It  is  absolutely  impossible  to  take  a  retrospec- 
tive view  and  answer  a  question  of  that  kind  satisfactorily, 
I  think. 

Q.  Are  there  possibilities  for  usefulness  of  this  instti- 
tution  beyond  that  which  they  have  been  abl£  to  satisfy  ? 

A.  Yes.  We  have  to-day  about  3,600  sudents.  "We  have 
a  magnificent  property  that  we  have  bought  from  our 
collections,  at  Broad  and  Brown,  and  we  have  applications 
for  the  education  for  at  least  10,000  young  men  and  young 
women  a  year. 

Q.  Why  do  they  not  go  to  other  institutions? 
A.  Where  are  they? 

Q.  Are  they  of  sufficient  means  to  go  to  the  University 
of  Pennsylvania? 

A.  They  are  not;  because  the  young  men  and  young 
women  who  go  to  our  university  work  during  the  day  to 
support  their  families,  and  we  educate  them  at  night.  If 
you  know  of  any  other  university  where  they  do  like  work 
we  would  be  glad  to  send  them  3,000  students  a  year. 

Q.  How  do  results  from  your  institution  compare  with 
results  from  other  institutions? 

A.  I  would  refer  you  to  the  State  Board  of  Law  Exam- 
iners to  find  out  our  average  there.  It  is  as  high  as  any 


401 

law  school  in  the  country,  and  our  medical  school  is  higher 
than  any  other  medical  school. 

Q.  Do  your  other  departments  keep  apace? 

A.  Absolutely.  We  take  young  children  when  they 
are  hardly  able  to  walk,  in  the  kindergarten,  from  poor 
families  who  cannot  afford  to  educate  and  keep  them  at 
home.  When  the  mothers  go  out  working  all  day,  we  keep 
the  little  ones  in  there,  care  for  them  in  the  kindergarten 
and  nursery,  and  try  to  help  their  mothers  in  their  edu- 
cation and  in  a  moral  sense. 

By  a  Member  of  the  Committee : 

Q.  Coming  back  to  the  question  of  raising  revenue,  what 
would  you  say  as  to  taxing  manufacturing  corporations? 

A.  I  would  say  this,  that  if  it  is  necessary,  and  revenue 
cannot  be  raised  in  any  other  way,  I  would  say  tax  manu- 
facturing industries..  First,  I  would  exhaust  all  other 
means  of  taxation,  because  the  theory  of  not  taxing  manu- 
facturing companies  is  because  we  want  to  encourage  in- 
dustries of  this  kind  in  this  Commonwealth,  but  that  was 
the  old  theory,  and  I  think  now  that  the  manufacturing 
industries  are  developed  the  case  is  changed.  It  is  some- 
thing like  the  tariff.  There  was  a  time  when  it  was  neces- 
sary for  us  to  have  a  high  protective  tariff  to  build  up 
weak  industries.  Those  weak  industries  have  developed 
into  gigantic  trusts.  They  do  not  need  any  more  protec- 
tion, and  we  should  remove  the  tariff.  The  same  prin- 
ciple could  be  applied  to  manufacturing  industries.  No 
doubt,  when  the  framers  of  the  Constitution  said  manu- 
facturing corporations  should  not  be  taxed,  it  was  to  en- 
courage those  industries,  but  do  they  need  that  encourage- 
ment now?  Take  the  manufacturing  industries  of  this 
Commonwealth  and  you  will  find  that  they  are  wonder- 
fully rich.  Take,  for  instance,  the  steel  corporations.  Why 
should  not  the  Carnegie  Steel  Company,  and  why  should 
not  the  Cambria  Steel  Company  and  the  Pennsylvania  Steel 
Company,  and  other  manufacturing  corporations,  pay  their 
share  of  the  taxes  of  this  Commonwealth  ? 


402 

Q.  What  would  you  say  as  to  taxing  our  natural  re- 
sources ? 

A.  When  you  say  natural  resources — 

Q.  I  refer  to  coal,  for  instance? 

A.  Coal,  lumber  and  minerals  of  other  kinds.  Of  course, 
as  I  am  told,  lumber  is  becoming  very  scarce  in  Penn- 
sylvania, it  would  hardly  be  fair  to  tax  it  unless  it  is  upon 
the  theory  of  preservation,  but  it  seems  to  me  coal  should 
be  taxed,  because  I  believe  that  the  coal  in  the  earth  in 
the  first  instance  belongs  to  the  people  of  the  country. 
Someone  has  been  given  special  rights  and  special  privileges 
for  the  mining  of  that  coal.  That  is  all  right,  and  those 
vested  interests  should  not  be  disturbed;  but  those  vested 
interests,  when  they  can  afford  it,  should  give  of  their 
means  to  the  State,  in  order  that  the  State  may  extend  its 
arms  of  charity  to  the  people  in  the  Commonwealth  who 
are  less  fortunate. 

By  Mr.  McNichol : 

Q.  What  protection  would  you  give  to  the  consumer  if 
you  taxed  coal? 

A.  Natural  competition  is  the  only  protection  the  con- 
sumer has.  We  were  told  that  after  the  tariff  bill  was 
passed,  of  course,  poor  people  would  benefit,  because  the 
price  of  the  necessities  of  life  wou^d  be  less,  but  we  find 
they  go  steadily  'up. 

Q.  Will  you  give  us  any  data  on  that  that  will  be 
substantial,  except  newspaper  reports? 

A.  If  you  will  go  to  market  for  me  next  Friday  night — 

Q.  I  pay  a  market  bill  every  week. 

A.  The  trouble  is,  you  pay  it  without  investigating  the 
cost  of  it.  If  you  put  a  basket  on  your  arm  and  went  to 
market  as  I  do,  and  bought  eggs  and  butter  where  you 
could  buy  them  cheapest,  you  would  realize  that  every  day 
prices  are  going  up. 

Q.  We  are  forming  alliances  now  to  abstain  from  eating 
those  high  priced  articles  and  get  back  to  natural  con- 
ditions. 


403 

A.  We  have  to  eat  something,  and  I  am  tired  of  Mother 's 
Oats.  I  do  not  want  to  take  up  any  more  of  your  time. 
I  have  given  you  the  best  thought  I  had  on  this  subject. 

Q.  Will  you  compile  your  thoughts  into  a  brief  and  file 
them  with  Mr.  Brown  for  the  information  of  the  Com- 
mittee ? 

A.  I  will  be  very  pleased  to  do  that.  It  just  occurred 
to  me  you  might  be  interested,  especially  the  Chair- 
man, in  an  editorial  that  appeared  in  the  North  American 
011  January  29th.  Sometimes  the  North  American  does 
print  good  things.  I  do  not  know  whether  you  gentlemen 
read  it  or  not.  I  believe  your  distinguished  counsel  has 
at  times  read  it,  but  if  you  will  take  the  trouble  to  read 
the  editorial  of  the  twenty-ninth  of  January  in  the  North 
American,  which  is  entitled  "Philadelphia's  Best  Factory," 
you  will  have  a  great  deal  of  light  on  the  subject  that  I 
have  been  discussing,  very  much  better  and  very  much  more 
accurate  than  I  could  give  it  to  you,  and  after  having  read 
that  I  am  sure  you  would  go  back  to  the  House  of  Assembly 
fully  convinced  that  this  great  institution,  founded  by  Dr. 
Conwell,  is  the  best  asset  that  Pennsylvania  has,  and  you 
will  give  to  her  bountifully  from  your  treasury  every 
year. 


404 


DR.  W.  P.  WILSON,  Philadelphia  Museums,  called. 

Dr.  Wilson:  Mr.  Chairman: — I  represent  the  Philadel- 
phia Museums,  an  institution  which  is  somewhat  peculiar 
in  its  character,  not  a  private  institution,  as  it  has  on  its 
Board  the  Governor,  the  Superintendent  of  Public  In- 
struction of  the  State,  and  the  State  Commissioner  of  For- 
estry. At  least,  the  Superintendent  of  Public  Instruction 
and  the  State  Commissioner  of  Forestry  were  put  on  on 
account  of  the  educational  work  which  the  institution  was 
doing.  It  also  has  the  Mayor  of  Philadelphia,  the  Presi- 
dents of  Select  and  Common  Councils,  the  President  of 
the  Public  Board  of  Education,  and  the  Superintendent  of 
public  instruction,  active  on  its  board.  I  should  say  that 
the  President  of  the  Board  of  Education  and  Superinten- 
dent of  Schools,  also  the  Superintendent  of  Public  Instruc- 
tion and  Commissioner  of  Forestry,  are  frequent  atten- 
dants on  its  Board. 

It  is  a  peculiar  institution,  in  that  it  started  out  to  aid 
the  manufacturers  and  commerce  of  the  State,  and  to  do 
that  it  found  a  most  effective  way  in  lines  of  education, 
and  it  began  soon  after  its  organization  to  plan  out  a 
systematic  work  in  the  State  to  educate  the  children  in 
lines  of  commerce  and  the  industries,  and  this  is  the  only 
State  in  the  Union  that  is  doing  that  sort  of  work.  It 
has  been  for  a  number  of  years  circulating  collections  in 
the  State,  in  the  schools,  large  collections  in  the  higher 
schools,  to  stimulate  industry  and  stimulate  knowledge  of 
geography  and  commerce  in  general.  Large  collections  have 
gone  to  over  1,500  schools  in  the  State.  At  the  present 
time  it  is  circulating  smaller  collections,  with  cabinets, 
so  that  the  schools  are  not  compelled  to  provide  cabinets. 
It  has  already  prepared  300  of  these  and  sent  them  out 
and  is  preparing  600  more.  These  are  designed  to  reach 


405 

the  ungraded  country  schools  in  remote  districts,  and  there 
are  about  18,400  of  those  ungraded  schools. 

By  a  Member  of  the  Committee: 

Q.  How  much  State  aid  do  you  receive? 

A.  We  have  received  on  an  average  since  the  institution 
began  $20,000  a  year.  In  some  years  we  have  received  very 
much  more  than  that. 

Q.  How  much  from  the  City  of  Philadelphia? 

A.  On  an  average,  we  have  received  from  the  City  since 
our  organization  $75,000  a  year. 

Q.  How  long  is  that? 

A.  We  have  been  organized  about  13  or  14  years.  We 
have  had  from  private  individuals  since  we  have  been  or- 
ganized an  average  of  $35,000  a  year.  That  comes  from 
the  manufacturers  and  others  who  vigorously  use  the  in- 
stitution. 

Q.  Your  plea  is  that  this  aid  should  be  continued? 

A.  It  is  that  it  is  a  very  essential  thing  for  the  State. 

Q.  Do  you  receive  any  aid  from  the  United  States  Gov- 
ernment ? 

A.  At  one  time  we  received  $350,000  for  a  special  pur- 
pose. 

Q.  How  long  ago  was  that? 

A.  That  was  in  1897.  It  was  received  for  permanent 
buildings  for  the  museum.  Three  hundred  thousand  dol- 
lars of  it  was  asked  at  that  time  for  that  purpose,  and 
$50,000  for  putting  in  objects  which  would  be  interesting 
to  commerce. 

Q.  The  Commission  has  no  disposition  to  have  you  dis- 
continue your  argument,  but  in  as  much  as  no  special  plea 
is  made  for  discontinuing  the  aid,  the  Commission  feels 
perfectly  satisfied  with  what  you  have  said  and  has  no 
fault  to  find  with  the  work  you  are  doing. 

A.  I  ought  to  say  one  word,  that  the  output  of  the  manu- 
facturing interests  of  this  State  is  $2,000,000,000  annually 
at  the  present  time.  It  has  doubled  in  the  last  few  years. 


406 

This  line  of  education  has  its  greatest  importance  in  that 
way,  the  manufacturing  interest  being  four  times  what  the 
mining  interest  is  or  what  the  agricultural!  interest  is.  I 
want  to  say  just  one  word  further,  that  there  are  other 
States  agitating  this  method  of  procedure.  Illinois,  Ohio 
and  Wisconsin  are  all  considering  the  question  of  doing 
just  what  we  are  doing,  and  they  send  here  to  see  how  we 
are  doing  it.  Within  the  last  fifteen  days  I  have  been 
called  to  an  educational  conference  in  Massachusetts,  in 
which  the  Chamber  of  Commerce,  which  is  now  reorgan- 
ized and  has  over  5,000  members,  through  one  of  its  edu- 
cational committees  called  17  presidents  of  colleges  and 
universities  together  for  conference  with  the  business  men. 
The  whole  consideration  was  on  the  organization  of  an  in- 
stitution similar  to  the  Philadelphia  Museums,  to  do  edu- 
cational work  in  the  State,  industrial  education.  That 
continued  over  the  day  and  evening,  and  last  Friday  had 
a  second  session.  I  was  called  again.  That  is  the  most 
active  work  that  is  being  done  outside  of  the  State  of  Penn- 
sylvania. I  should  be  pleased  to  give  you  gentlemen  a 
report,  which  I  am  sure  you  have  no  time  for  here. 
Q.  File  it  with  Mr.  Brown. 

By  Mr.  McNichol : 

Q.  How  far  do  you  ascertain  the  condition  of  labor  in 
the  respective  countries  as  compared  with  the  condition  of 
labor  in  the  United  States? 

A.  We  have  never  specially  taken  up  that  question.  We 
have  taken  up  several  questions  of  investigation  in  foreign 
countries,  but  not  that. 

Q.  You  have  exhibits  from  all  over  the  world  ? 

A.  We  have. 

Q.  Manufactures  of  all  kinds? 

A.  Manufacturing  exhibits  and  others. 

Q.  Do  you  go  into  the  cost  of  those  particular  things  in 
those  countries? 

A.  Wherever  we  get  manufactures  we  get  prices  and 


407 

conditions  of  production ;  that  is,  the  price  it  is  sold  at  on 
the  market  or  that  it  is  exported  at.  That  we  have  to  get. 

Q.  What  is  the  cost  paid  to  labor  employed  in  putting 
together  that  particular  product? 

A.  That  we  have  never  gone  into. 

Q.  Do  you  not  think  that  is  essential  for  the  informa- 
tion to  the  general  public  ? 

A.  It  is  a  good  thing  for  the  general  public. 

Q.  Comparison  as  to  how  much  the  profits  of  our  manu- 
facturers are  as  compared  to  those  in  other  countries? 

A.  It  would  be  a  good  thing.  We  have  gone  very  exten- 
sively into  the  question  of  prices  which  the  Germans  and 
English  and  others  get  for  their  exported  products,  and 
labor,  of  course,  is  an  essential  part  of  that,  but  we  have 
not  gone  into  the  labor  detail  itself. 

By  Mr.  Brown : 

Q.  To  what  extent  does  the  United  States  Government 
do  this  work  ? 

A.  Very  little. 

Q.  Through  its  consular  offices? 

A.  It  is  very  limited  for  this  reason;  that  if  we  take 
such  a  country  as  Germany,  a  decree  was  published  in 
Germany,  four  years  ago,  to  give  our  consuls  no  informa- 
tion whatever  where  it  could  be  kept  from  them. 

Q.  You  think  this  service  can  be  done  better  by  an  in- 
stitution like  yours  than  by  the  State  directly? 

A.  If  an  institution  like  the  Department  of  Commerce 
and  Labor  wishes  to  write  to  anybody,  except  their  con- 
suls, to  get  information,  they  must  do  it  through  the  Sec- 
retary, and  it  becomes  a  very  formal  matter.  I  would 
like  to  state  that  I  have  had  an  appeal  within  the  last 
three  months  from  the  Department  of  Standards,  in  Wash- 
ington, to  get  them  wools  in  four  or  five  different  coun- 
tries that  they  might  standardize  them  for  the  benefit  of 
wools  coming  into  the  country.  They  did  not  choose  to  go 
out  through  the  Secretary  of  Agriculture,  because  it  would 


408 

become  a  formal  government  matter,  and  we  are  in  touch 
with  chambers  of  commerce  all  over  the  world,  and  could 
simply  write  to  Cape  Town  and  get  the  specimens  they 
wanted  from  there,  and  to  New  Zealand  and  get  them  from 
there,  and  from  Australia,  and  from  Argentina,  the  four 
or  five  places  where  they  wanted  them,  without  any  form- 
ality whatever,  because  those  countries  have  all  sent  us 
large  collections,  Argentina  250  fleeces  at  a  time,  to  ex- 
hibit for  the  benefit  of  the  wool  trade,  and  in  many  ways 
we  can  do  that  sort  of  work  in  a  way  that  has  no  official 
touch  to  it  whatever,  and  get  accurate  information.  We 
can  write  to  a  chamber  of  commerce  in  Germany,  and  get 
information  which  it  would  be  perfectly  impossible  for  the 
Government  to  do  without  detectives. 

By  a  Member  of  the  Committee : 

Q.  You  have  had  applications  for  those  educational  ex- 
hibits from  almost  all  counties  in  the  State? 

A.  We  had. 

Q.  Do  you  not  spend  quite  a  large  part  of  your  State 
appropriation  in  sending  out  those  educational  exhibits? 

A.  We  do. 

By  Mr.  McNichol : 

Q.  Does  the  United  States  Government  compensate  you 
for  securing  those  samples  they  ask  for  ? 

A.  They  pay  all  expenses.  We  charge  nothing.  We  have 
a  large  clientele  all  over  the  world  of  colonial  houses,  and 
we  do  all  services  for  nothing  for  those  colonial  houses, 
because  it  leads  them  to  come  to  us  for  all  kinds  of  manu- 
factures in  this  country,  and  we  can  tell  them  with  whom 
to  make  their  connection,  which  is  a  great  asset. 

By  a  Member  of  the  Committee: 

(^.  You  give  preference  to  Pennsylvania  institutions? 
A.  Always. 

By  Mr.  Brown: 

Q.  Have  you  any  data  as  to  the  educational  benefit  from 
the  circulation  of  those  exhibits  ? 


409 

A.  I  have  probably  200  letters  from  educational  people 
in  the  State. 

Q.  Showing  the  work  was  a  leaven  for  the  benefit  of  the 
institutions  ? 

A.  I  have  letters  saying  that  now  they  are  working  with 
them  they  could  not  do  without  them  in  the  schools.  I 
could  present  a  great  stack  of  letters  of  that  kind. 

By  Mr.  McNichol: 

Q.  What  would  be  your  thought  of  the  consolidation  of 
that  particular  feature  of  your  work  with  the  University 
of  Pennsylvania,  with  you  in  charge? 

A.  That  really  is  something  I  would  not  like  to  discuss. 

Q.  Have  you  had  your  mind  made  up  as  to  what  would 
be  the  result,  whether  beneficial  or  detrimental?  We  do 
not  want  you  to  say  anything  before  this  Committee  except 
merely  for  information. 

By  a  member  of  the  Committee : 
Q.  Eliminating  your  personality? 
A.  I  have  never  thought  of  the  possibility. 

By  Mr.  Brown : 

Q.  You  are  satisfied  with  your  present  boarding  house? 

A.  I  am.  I  have  never  thought  of  the  possibility  of 
the  University  taking  up  commercial  work  and  that  line 
of  education  particularly. 

By  Mr.  McNichol : 

Q.  In  the  next  two  or  three  months  will  you  give  it 
some  thought  and  let  us  have  your  views  on  it? 

A.  I  will  try  to  do  so  in  the  next  few  weeks  if  you 
desire. 

By   a  Member   of  the   Committee: 

Q.  In  that  connection  also  let  us  have  your  thoughts 
as  to  combining  it  with  the  Bureau  of  Industrial  Statistics 
in  the  office  of  the  Secretary  of  Interal  Affairs  at  Harris- 
burg. 


410 

A.  Yes,  sir.  It  is  something,  of  course,  I  have  not 
thought  of  for  a  moment. 

Mr.  McNichol :  Do  not  get  out  of  your  own  town.  Remain 
in  the  confines  of  Philadelphia. 

The  Witness :  I  have  had  overtures  recently  to  get  out, 
not  only  from  the  South,  but  from  New  York  and  Boston, 
but  I  believe  Pennsylvania  is  the  foremost  State  in  the 
Union.  It  is  the  largest  by  all  odds  in  manufacturing, 
and  I  have  had  a  feeling  that  we  have  helped  it  along  a 
great  deal  in  the  last  few  years. 


411 


DR.  GEO.  W.  MacLAUGHLIN,  Penna.  Seamens  Friend 
Society,  called. 

Dr.  MacLaughlin :  Mr.  Chairman,  we  do  not  like  to 
monopolize  your  time,  therefore  I  would  like  to  be  as  brief 
as  possible,  for  your  time  must  be  exceedingly  valuable, 
I  take  it.  I  represent  the  Pennsylvania  Seamen's  Friend 
Society,  which  was  organized  in  1843  and  incorporated 
by  the  Legislature  that  you  gentlemen  represent  in  1846. 
Some  of  the  grandest  men  Philadelphia  ever  possessed 
were  its  original  incorporators.  The  purpose  of  the 
organization  was  the  preservation  and  elevation  of  the 
men  of  the  ocean.  That  involves  millions  of  men  who 
have  no  similar  characteristics  in  the  world.  The  re- 
markable thing  is  that  greater  attention  has  not  been 
aroused  to  protect  the  carriers  of  the  cargoes  as  they 
sail  the  circle  of  the  globe.  The  revenues  of  your  country 
are  gathered  from  these  identical  men,  whose  exposure, 
both  physical  and  moral,  is  unequalled  by  any  other  class 
of  men  in  the  world.  The  society,  therefore,  started  in 
some  time  ago,  and  it  has  done  its  level  best.  Specifically 
it  organized  a  large  home  at  422  S.  Front  street,  a  very 
fine  building.  Dr.  Weir  Mitchell  was  down  to  see  us 
some  time  ago,  and  I  was  amazed  that  so  remarkable  a 
character  would  be  interested,  a  Philadelphia  man,  a 
man  of  high  intelligence.  He  said  he  came  to  view  our 
home,  which  he  did.  That  home  will  accommodate  40  to 
50  men  at  one  time.  Dismiss  from  your  minds  the  idea 
of  anything  contracted  or  small  or  indifferent  about  it. 
There  is  no  such  home  in  Philadelphia.  There  are 
plenty  of  homes  to  accommodate  sailors,  and  they 
are  accommodated  in  various  ways,  perhaps,  as  you  may 
readily  imagine,  in  any  direction  that  their  fancies  might 
lead  them.  Our  home  is  very  select  and  very  carefully 
conducted.  We  have  never  had  a  bar  connected  with  it  in 
66  years.  We  did  not  think  that  was  at  all  wise. 


412 

I  wish  you  could  be  there  and  see  those  good  fellows. 
If  a  shipwrecked  crew  is  brought  to  that  home,  as  I  have 
met  them  many  times,  I  do  not  profess  to  be  much  of  a 
woman,  though  a  fellow  is  liable  to  shed  a  tear  now  and 
then  when  he  is  not,  to  see  eight  or  ten  men  come  into  your 
office,  broken  all  to  pieces.  "Boys,  you  look  to  me  as 
though  you  were  wrecked  yourself."  Cowed,  broken 
in  spirit.  Oh,  how  touching.  What  do  we  do  ?  We  have  been 
doing  it  all  these  years.  I  challenge  any  organization 
in  Philadelphia  to  surpass  the  proposition  I  make  to  you 
now.  We  fit  them  out  with  warm  underclothes,  a  full 
suit  of  clothes,  shoes  and  stockings.  That  is  the  kind  of 
charity  that  is  wanting  nowadays.  Can  we  be  at  a  loss 
when  we  tell  you  that  the  home  has  accommodated  50,000 
men?  Think  of  that.  They  are  men  who  have  come  and 
gone  like  the  waves  of  the  sea.  It  is  an  institution  which 
contains  the  elements  of  a  hospital.  I  have  been  listening 
to  this  hospital  story.  It  was  a  very  worthy  one.  If  a 
seaman  is  taken  sick  in  that  home  we  have  a  visiting 
physician.  What  does  the  public  know  about  that?  We 
have  not  gone  to  the  house  top.  A  prescription  is 
furnished  by  that  physician.  We  pay  the  bill  and  take 
care  of  that  physician.  Can  you  think  of  anything  more 
complete  than  that.  This  has  been  done  for  60  years. 
How  much  do  these  gentlemen  know  about  our  Philadel- 
phia work  in  that  direction.  I  say  to  you  in  the  most 
positive  and  manly  way  that  the  overlooking  of  this 
important  class  of  men  is  a  thing  the  English  understand 
infinitely  better.  They  protect  their  sailors.  You  can  go 
over  the  globe  and  you  will  find  that  English  organizations 
are  in  the  large  ports  of  the  world.  New  York  has  come 
to  it  with  an  institution  that  has  cost  $450,000  or  $500,000. 
You  are  aware  of  that,  perhaps. 

By  Mr.  McNichol : 

Q.  Money  appropriated  by  the  State  of  New  York? 
A.  No,  sir.     I  am  not  sure  but  what  some  money  has 


413 

been  given  to  it,  but  there  was  a  very  nice,  handsome 
woman,  handsome  in  the  sense  of  the  gift,  that  handed 
over  several  hundred  thousand  dollars,  and  they  were 
worthy  of  it,  and  if  you  believe  me  I  have  been  in  the 
work  27  years.  I  have  a  passion  and  an  ambition  that 
Philadelphia  will  have  a  handsome  house  for  those  splen- 
did men  who  bring  in  the  cargoes  here  out  of  which  your 
Government  lives.  It  is  the  revenues  that  support  the 
American  Government.  You  know  that,  Mr.  President. 
Mr.  Sproul  knows  that.  He  belongs  to  that  valuable  port 
of  Chester.  He  ought  to  know  a  great  deal  about  the 
thing  I  am  talking  about  and  I  am  sure  he  does. 

Along  with  that  we  have  a  large  plot  of  ground  at 
Mt.  Moriah  Cemetery,  beautifully  enclosed  with  marble, 
and  all  the  requisites,  so  that  when  a  poor  fellow  dies  in 
our  home  or  in  a  hospital,  far  from  his  dear  friends,  it  is 
touching.  I  have  looked  into  the  coffins  of  those  men, 
and  said,  "Ah,  your  dear  friends  do  not  know  anything 
about  this,"  and  we  have  them  carried  and  placed  in  that 
large  and  valuable  piece  of  ground  conveyed  by  the 
Cramps.  They  did  the  handsome  thing  for  us,  and  I 
secured  it  all.  My  dear  Committee,  this  home  of  ours 
has  been  doing  a  splendid  piece  of  work  that  Philadelphia 
does  not  know.  I  venture  to  say  this  Committee  knows 
very  little  about  this  class  of  work.  I  am  sure  of  it, 
because  you  must  come  in  contact  with  it.  You  must 
make  yourself  conversant  with  the  facts.  These  men 
come  ashore.  They  are  boys,  and  yet  grand  fellows. 
They  come  ashore  here  and  will  be  taken  care  of  by  men 
and  women  without  any  embarrassment  at  all,  for  what 
they  are  worth.  We  propose  to  help  them  with  a  nice 
home,  handsomely  equipped  with  nice  rooms.  Any  one 
of  this  Committee  might  take  a  room  there.  We  have 
accommodated,  as  I  told  you,  some  50,000  men.  In  the 
past  year,  up  to  this  time,  I  think  it  is  658,  and  some 
hundred  lodgers.  It  is  something  different  from  anything 
in  Philadelphia,  entirely  different.  Along  with  this 


414 

arrangement  we  have  what  is  known  as  a  system  of 
libraries.  We  send  on  shipboard,  which  originated  about 
the  time  of  the  breaking  out  of  the  Rebellion,  and  these 
libraries,  some  30  volumes  in  a  case,  placed  on  ships, 
of  which  there  were  some  4,052,  containing  over  7,000 
volumes.  Have  we  not  been  spending  money?  We  have 
not  come  as  mere  beggars.  Oh,  no,  we  are  standing  up 
magnificently  for  a  class  of  men  that  the  public  seem 
to  know  little  about  and  care  less.  I  organized,  some 
eight  or  nine  years  ago,  a  free  school  for  instruction  in 
navigation  which  is  at  the  home  in  one  of  the  rooms, 
under  the  care  of  one  of  the  most  careful  teachers  of 
navigation  that  you  could  find  here  or  anywhere  else. 
I  went  to  Washington  and  consulted  with  two  of  the 
Secretaries  of  the  Navy.  They  were  delighted  with  the 
idea.  It  seemed  to  be  something  new.  You  may  know 
how  much  they  were  delighted  when  I  got  two  of  them 
at  two  different  times  to  come  to  Philadelphia  and  make 
addresses  at  our  anniversary.  I  am  sure  you  will  agree 
that  there  must  have  been  something  in  it  to  have  brought 
two  such  men  from  there. 

By  a  Member  of  the  Committee : 

Q.  What  State  appropriation  do  you  get? 

A.  I  am  almost  ashamed  to  tell  you,  it  is  so  small — 
$4,000  for  two  years. 

Q.  What  is  your  total  revenue? 

A.  We  have  revenue  coming  from  rentals  and  private 
subscriptions  and  all  that.  This  school  has  received 
within  eight  years,  I  think  it  is,  some  250  odd  scholars. 
Every  one  that  has  appeared  before  the  Government 
Inspector  at  Ninth  and  Chestnut  streets  has  passed,  and 
that  Government  Inspector  complimented  me  by  saying, 
"You  must  have  a  very  valuable  teacher.  We  have 
passed  them  all,  and  to  pass  the  examination  for  a 
Government  certificate  a  man  has  to  understand  his  sub- 
ject or  he  won't  get  the  certificate."  There  has  never 


415 

been  one  turned  down.     Can  I  say  anything  more  remark- 
able in  favor  of  one  feature  of  our  work  T 

I  could  wish,  indeed,  that  we  had  a  greater  amount  of 
money,  but  we  have  been  a  little  modest.  One  of  your 
legislators  said  to  me,  "Why  don't  you  apply  for  more 
money?"  They  might  have  thought  I  was  a  weak  fellow, 
but  I  think  it  was  more  modesty  than  weakness.  It  has 
occurred  to  me  that  a  little  more  openness  of  movement 
in  that  direction  might  be  beneficial  for  us.  I  want 
everyone  of  you  gentlemen  to  come  and  see  us  at  422  S. 
Front  Street,  an  elegant  building,  where  we  will  treat 
you  handsomely  indeed,  and  have  you  dine  with  us. 

By  a  Member  of  the  Committee: 

Q.  Do  you  take  care  of  any  others  than  sailors? 

A.  No,  sir,  it  is  absolutely  and  distinctly  a  sailor's 
house.  We  could  not  afford  to  open  the  house  for 
promiscuous  people.  It  would  not  be  safe.  I  think  you 
will  agree  with  me  on  that.  Would  you  like  to  have  our 
reports? 

Mr.  Brown :  Leave  those  with  me.  I  will  be  very  glad 
to  have  them. 

The  Witness :  I  am  so  proud  of  my  own  State,  in  which 
I  was  born,  that  I  do  not  like  anything  mean  about  it. 
I  would  like  to  have  a  sailors'  house  that  is  big. 

Q.  As  good  as  anybody's  else  or  better? 

A.  Yes,  sir,  just  as  big  as  you  are  and  everybody 
else  connected  with  you.  You  may  think  I  am  very  earnest 
and  intense.  If  you  think  so,  pardon  me.  It  is  the  inten- 
sity that  I  have  for  my  work. 


416 


DR.  N.  F.  MOSSELL,  Frederick  Douglass  Memorial 
Hospital,  called. 

Dr.  Mossell:  Mr.  Chairman,  I  am  very  pleased  to  have 
the  opportunity  of  speaking  with  your  permission.  I 
represent  the  Frederick  Douglass  Memorial  Hospital. 
We  represent  a  hospital  managed  largely  by  our  colored 
citizens,  the  first  hospital  in  Pennsylvania  that  our  people 
have  assumed  the  responsibility  of  directing,  and  the 
second  one  in  the  United  States;  in  fact,  the  largest  and 
best  equipped  hospital  now  managed  by  colored  people 
anywhere  in  the  world.  We  have  always  felt  that  when 
our  work  was  properly  presented  we  would  not  have  any 
serious  difficulty  in  having  aid.  Most  of  you  know  that 
we,  by  reasons  of  race  variety,  have  embarrassments. 
Our  nurses  who  wish  to  be  trained,  and  we  have  a  large 
and  increasing  number  of  intelligent  colored  women  who 
make  excellent  nurses,  find  it  practically  impossible  to 
get  in  other  hospitals — a  very  unfortunate  thing.  The 
same  thing  is  true  along  other  lines.  1  would  draw  m> 
lines,  either  in  race  or  religion.  We  would  feel  ashamed 
to  ask  for  State  aid  if  anybody  that  came  in  there  and 
needed  it  was  refused  by  reason  of  race  We  have  an 
institution  that  cost  us  $100,000  to  erect.  The  State 
Legislature  has  been  good  enough  to  give  us,  up  to  this 
time,  $8,000  on  that  building.  The  Legislature  was  kind 
enough  to  vote  us  considerably  more  than  that,  but  the 
Governor  in  his  judgment  decided  that  the  State  revenues 
would  not  permit  it,  and  we  were  cut  down. 

In  regard  to  the  effect  that  aid  has  on  people  that  give, 
T.  can  say  that  already  our  people  have  been  encouraged 
to  give  by  reason  of  the  aid.  Our  people  alone  have 
raised  in  the  neighborhood  of  $40,000  for  that  institution 
and  it  has  taught  them  to  give  in  lines  that  they  never 


417 

had  been  known  to  give  before.  It  has  taught  them  a 
lesson  of  giving  that  they  would  not  otherwise  have  had 
the  opportunity  to  learn. 

We  have,  in  connection  with  that  institution  and  hope 
to  develop  in  connection  with  it  in  the  next  year  a  post- 
graduate school.  We  have  numbers  of  physicians  here. 
We  have  probably  forty-five  in  the  town  here,  and 
numbers  of  them  come  here  from  the  southern  section  of 
the  country,  wishing  to  take  post-graduate  courses,  and 
cannot  be  admitted,  and  we  hope  to  be  able  to  give  them 
that  institution  we,  in  a  private  way,  might  have  been 
cause  physicians  are  broad-minded  gentlemen,  and  both 
white  and  colored  physicians  are  connected  with  .the 
institution. 

We  are  oppressed  considerably  by  reason  of  debt,  and 
it  has  been  a  matter  of  14  years'  hard  work  to  put  the 
institution  where  it  is,  a  matter  of  a  great  deal  of  personal 
sacrifice.  With  half  the  energy  expended  in  building 
that  instruction.  We  are  fortunate  in  that  respect  be- 
a  great  deal  better  off,  a  great  many  of  us  who 
are  associated  with  the  work.  I  do  not  wish  at  all  to 
make  a  long  speech  and  take  up  your  time,  because  most 
of  the  points  have  been  thoroughly  covered.  We  have 
been  treated  kindly  by  the  State  Board  of  Charities,  as 
a  rule,  and  I  have  always  felt  that  they  ought  to  be 
encouraged  in  their  work,  that  is,  the  State  Board  of 
Charities,  because  they  give  more  time,  and  I  am  glad 
to  see  this  inclination  on  the  part  of  the  authorities  of 
the  State  to  look  into  the  matter  so  that  they  can  give 
to  those  institutions  that  deserve  by  reason  of  really 
merited  consideration. 
By  a  Member  of  the  Committee : 

Q.  Is  there  any  distinctive  institution  in  the  country 
for  the  education  of  colored  men  as  physicians? 

A.  There  are  a  number  of  them,  one    in    Nashville, 
Tenn.,  one  in  North  Carolina,  and  there  is  the  Howard 
University  at  Washington. 
22 


418 

Q.  That  has  a  medical  course. 

A.  They  have  medical  departments.  Numbers  of  those 
men  finish  their  courses  and  want  post-graduate  courses 
and  cannot  get  them. 

Q.  Do  any  colored  men  attend  the  medical  schools  here  ? 
A.  Yes,  sir.     I  think  there  is  no  medical  school  in  town 
that  refuses  them  any  course. 

Q.  They  have' no  embarrassment? 

A.  They  only  have  embarrassment  in  post-graduate 
work.  There  is  an  institution  in  the  City  that  refuses 
them  admission  in  post-graduate,  the  only  one  here,  unfor- 
tunately. It  is  a  very  unfortunate  thing.  In  regard  to 
the  amount  of  aid  given  by  the  State  to  institutions  I 
think  that  the  amount  ought  to  be  governed  by  the 
ability  of  the  people  behind  the  institution  to  help  it. 
There  could  be  no  hard  and  fast  rule  that  the  institution 
shall  get  so  much  if  the  people  raise  so  much.  I  think 
their  capacity  to  raise  ought  to  be  considered. 

By  Mr.  Brown : 

Q.  What  would  be  your  idea  of  the  percentage  of 
relative  contribution  from  the  two  sources.  For  instance, 
you  asked  the  last  Legislature  for  $20,000  for  maintenance 
and  $60,000  for  building.  Were  your  people  in  condition 
to  have  raised  a  similar  amount  if  that  had  been  appropri- 
ated to  you? 

A.  We  did  raise  about  $35,000  of  that  building  money, 
but  that  was  a  special  effort.  We  raised  in  the  last  two 
years  that  much  money. 

Q.  W'hat  reason  was  given  for  disapproving  your 
application  for  maintenance,  or  reducing  it  from  $20,000 
to  $5,000,  and  your  building  from  $60,000  to  $10,000? 

A.  I  could  not  say  that.  Those  things  occur.  I  could 
hardly  say. 

Q.  Was  the  question  of  necessity  an  element  in  the 
consideration  ? 


419 

A.  I  presume  so.  I  did  not  go  into  that  matter.  I 
noticed  that,  but  I  could  not  say  exactly  about  that.  I 
presume  they  did  not  know  we  had  the  capacity  of  doing 
the  work  we  are  doing.  We  were  in  a  small  building. 
We  just  moved  out  of  the  small  building  about  eight 
months  ago.  They  did  not  suppose  in  that  building  we 
could  use  that  much  money. 

Q.  How  has  your  debt  been  accumulated? 

A.  By  reason  of  the  large  building  we  have  just  put 
up,  the  $100,000  building.  We  are  carrying  those  mort- 
gages now. 

Q.  Have  you  pressing  need  for  such  a  building? 

A.  Yes,  sir.  We  have  now  a  capacity  of  the  institution 
according  to  its  equipment  of  about  60  beds,  and  about 
40  of  those  are  filled  at  this  minute,  and  we  have  only 
been  in  the  new  building  a  short  time. 

Q.  How  much  of  that  money  have  you  raised  yourself? 
A.  Between  $30,000  and  $40,000. 

Q.  It  was  to  pay  off  the  balance  of  that  you  have  asked 
this  aid  from  the  State? 
A.  Yes,  sir. 

Q.  Are  you  growing  all  the  time? 

A.  All  the  time  growing. 

Q.  How  do  your  nurses  get  employment,  readily? 

A.  They  are  employed.  As  a  matter  of  fact,  we  have 
graduated  only  a  limited  number  in  those  14  years.  They 
are  in  demand  in  different  States,  in  charge  of  little 
institution  hospitals  in  the  South  and  different  places. 
That  robs  us  of  the  use  of  them  here  in  town.  They  go  to 
take  charge  of  institutional  work. 

Q.  Are  they  employed  among  your  own  people  and 
others,  too? 

A.  Others,  too. 

Q.  In  general  use? 

A.  In  general  use. 


420 

By  a  Member  of  the  Committee : 

Q.  What  is  your  view  as  to  raising  revenue  from  any 
source  if  it  becomes  necessary? 

A.  I  very  thoroughly  agree  to  take  your  time  in  going 
over  the  matter  with  the  gentleman  who  represented 
Temple  University,  and  who  spoke  about  his  ideas  of 
raising  revenue.  I  concur  exactly  on  the  lines  he  went 
over. 

Q.  A  wholesale  raise  all  along  the  line? 

A.  If  there  is  a  necessity  for  it.  Due  consideration 
ought  to  be  paid  as  to  not  giving  money  to  people  who 
have  large  resources  and  could  raise  the  money.  I  think 
the  whole  idea  is  to  help  the  poor.  We  use  that  system 
in  admitting  people  to  the  hospital.  We  do  not  take 
anybody  in  there  in  a  free  bed  if  they  can  pay.  A  lot 
of  them  can  pay  something.  We  let  them  pay  from  $2 
a  week  up  to  the  regular  $7  a  week,  and  we  ask  them 
what  they  are  able  to  pay.  If  they  belong  to  a  sick 
benefit  society  that  money  was  put  there  for  that  purpose. 
We  let  them  pay  some  of  it.  It  costs  us  $2  and  some  odd 
cents  a  day  to  maintain  a  patient.  It  has  been  costing 
that.  I  do  not  know  what  we  may  be  able  to  manage 
the  larger  building  for  because  we  have  not  been  a  year 
in  the  larger  building.  I  think  the  same  system  we  use 
in  the  hospital  ought  to  be  used  by  the  Legislature  in 
regard  to  giving  out  benefit  to  each  institution. 

By  Mr.  Brown: 

Q.  Are  you  familiar  with  the  other  institutions  of 
Philadelphia  where  your  people  are  exclusively  cared 
for?  Take  the  Old  Folks'  Home  on  Powelton  avenue  and 
institutions  of  that  character.  Have  you  visited  them? 

A.  I  have  been  here  28  years.  I  graduated  from  the 
University  of  Pennsylvania,  and  I  know  all  the  institutions 
in  the  City. 

Q.  What  is  your  opinion  as  to  the  use  of  the  State's 
money  in  those  institutions? 


421 

A.  I  do  not  think  the  Old  Folks*  Home  has  ever  asked 
for  any.  I  have  no  knowledge  of  any  institution  that  is 
receiving  State  aid  that  is  not  applying  it  properly. 

Q.  Are  you  speaking  for  your  people  now  as  a  repre- 
sentative man?  Have  you  any  thought  as  to  how  your 
people  can  be  benefited  in  any  way  through  these 
institutions  or  similar  institutions? 

A.  Just  as  I  have  described;  they  feel  that  their  work 
and  service  and  the  taxes  that  they  pay  entitle  them  to 
some  return.  They  feel  that  they  are  excluded  from  a 
number  of  institutions  which  have  appeared  before  you, 
and  still  their  moneys  are  used  as  if  they  pay  taxes,  and 
those  that  pay  rent  pay  taxes. 

By  a  Member  of  the  Committee: 

Q.  Do  those  institutions  get  State  aid? 

A.  Sure.  I  do  not  speak  with  any  feelings  against  any 
other  charity,  but  you  must  know  how  we  feel  on  a  matter 
like  that,  that  we  feel  keenly  that  we  are  constantly 
suffering  ? 

By  a  Member  of  the  Committee: 

Q.  You  have  referred  to  a  particular  institution  that 
refuses  admission  to  colored  men  for  post-graduate  work. 
What  institution  is  that? 

A.  The  Polyclinic  Hospital. 

By  Mr.  Brown: 

Q.  All  the  others  do  admit  them? 

A.  All  the  medical  schools.  There  is  but  one  post- 
graduate school  in  Pennsylvania.  It  is  a  matter  of 
hardship  because  the  same  thing  is  true  of  one  in  Chicago 
and  the  one  in  New  York. 

Q.  The  Polyclinic  is  the  only  one  here  that  has  a  post- 
graduate ? 

A.  It  is  the  only  one  here.  There  are  only  three  such 
schools  that  I  recall  in  the  United  States,  and  all  three 
of  them  refuse  them  post-graduate  instruction. 


422 

Mr.  Brown:  Suppose  you  submit  to  me  any  further 
thoughts  you  may  have  on  this  general  subject.  I  will 
be  very  glad  to  receive  it,  wherein  you  think  anything 
can  or  should  be  done  for  the  benefit  of  the  people  whom 
you  specially  represent  here  today. 


423 


DR.  M.  G.  LIPPBRT,  Phoeuixville  Hospital,  called. 

Dr.  Lippert:  Gentlemen  of  the  Commission:  You  have 
heard,  so  far,  chiefly  representatives  from  Philadelphia 
institutions.  I  appear  before  you  as  the  representative 
of  a  modest  country  hospital,  that  of  Phoenixville,  about 
28  miles  up  the  Schuylkill  River.  1  have  a  few  thoughts 
jotted  down  on  paper,  and  I  believe  it  would  be  best  for 
me  to  read  those  thoughts  and  will  not  consume  very 
much  time.  It  will  preserve  the  continuity  of  my  ideas 
better,  as  I  am  not  a  professional  speaker.  All  parties 
interested,  either  directly  or  in  a  general  way,  as  citizens 
seem  to  be  agreed  that  a  different  method  or  system  is 
indicated  in  determining  appropriations  for  State  aid  to 
hospitals  and  other  charitable  institutions  not  directly 
under  State  control.  It  has  been  suggested  to  base  the 
measure  of  this  support  on  the  amount  of  charity  work 
actually  done  by  these  institutions.  This  seems  to  me 
the  most  equitable  and  just  method  of  apportioning  the 
amount  at  the  disposal  of  the  State  for  charitable 
institutions.  Another  suggestion  made  here  last  week 
was  to  make  the  amount  of  State  aid  in  some  measure 
commensurate  to  the  amount  of  the  donations  received  by 
an  institution  during  the  biennial  period  on  the  ground 
that  such  voluntary  support  may  be  taken  as  the  measure 
of  confidence,  popularity  and  appreciation  which  the 
institution  enjoys  within  the  community.  This  sugges- 
tion, I  confess,  does  not  altogether  appeal  to  me,  for  the 
reason  that  it  -favors  the  institution  located  within  a 
wealthy  constituency  and  discriminates  against  that  in 
a  community  not  so  blessed.  In  other  words,  it  gives  to 
the  rich  and  withholds  from  the  poor.  To  illustrate:  I 
represent  an  institution  located  in  a  manufacturing  com- 
munity, where  by  far  the  great  majority  of  people  are 
wage  earners,  in  addition  to  which  we  draw  from  a 


424 

farming  population  for  miles  around.  Neither  of  these 
classes  is  among  the  wealthy.  In  fact,  we  have  only  a 
very  small  minority  of  well-to-do  people  among  our  con- 
stituents, who,  apparently  from  motives  of  selfishness,  or 
a  lack  of  liberality  and  charitableness,  fail  to  contribute 
to  the  extent  that  they  should.  For  this  reason  our 
donations  as  shown  in  our  maintenance  reports  may  not 
compare  favorably  with  those  of  our  more  fortunately 
haps  as  much  appreciated  as  any  of  them  and  has  the 
situated  sister  institutions,  although  our  hospital  is  per- 
moral  support  at  least  of  the  entire  community. 

That  our  people  appreciate  their  hospital  is  shown  by 
the  fact  that  our  Women's  Auxiliary  has,  during  the  last 
11  years,  raised  upwards  of  $24,000,  which  has  been  used 
for  improvements  and  extensions  as  well  as  furniture,  etc., 
but  this  strain  on  the  resources  of  our  people  on  the  other 
hand  has  told  on  the  contributions  for  maintenance; 
hence,  I  say,  our  reports  for  maintenance  do  not  show 
very  large  donations.  I  therefore,  contend  that  the 
amount  of  donations  received  by  an  institution  is  not 
necessarily  a  criterion  of  the  measure  of  its  appreciation 
by  its  constituents,  and  to  base  the  measure  of  State  aid 
thereon  might  work  great  havoc  and  injustice  to  the  same. 

Alleged  Graft.  Certain  charges  were  made  at  last 
week's  session  relative  to  graft  in  connection  with  ap- 
propriations to  certain  City  hospitals.  While  I  have  no 
knowledge  as  to  any  favors  asked  of  and  rendered  by 
City  hospitals  in  return  for  appropriations  made  to 
them,  I  will  say  that,  until  I  see  some  tangible  proof  to 
that  effect  I  should  be  inclined  to  doubt  said  statements. 
In  our  own  case,  that  of  a  country  hospital,  during  the 
10  years  that  I  have  been  connected  with  it  as  its  financial 
secretary,  handling  every  dollar  coming  in  and  going  out, 
there  has  never  been  the  slightest  misapplication  of  a 
penny  even,  nor  has  there  ever  been  the  slightest  sugges- 
tion from  any  source  of  any  fee,  political  tribute,  or  other 
graft  in  any  way,  shape  or  form.  This  statement  I  cannot 


425 

make  too  emphatic.  Nor  do  I  flatter  myself  that  our 
institution  forms  an  exceptional  case  in  this  respect,  but 
I  believe  that  the  great  majority  of  institutions  are 
honestly  managed  and  free  from  all  taint  of  graft,  the 
managers  or  trustees  as  a  rule  being  chosen  from  the  very 
best  and  most  representative  element  in  the  communities. 
If  any  criticism  attach  to  the  management  of  some  of  the 
country  hospitals  at  all,  it  may  be  due,  sometimes,  to  their 
mistaking  their  scope  and,  as  was  said  by  Dr.  Flick,  last 
week,  their  wanting  to  do  too  much,  or  too  many  things, 
and  thus  spending  money  unwisely,  but  there  is  even  in 
these  cases  no  suspicion  or  intimation  of  dishonesty;  at 
the  most  it  could  be  characterized  only  as  an  error  of 
judgment  and  mistaken  zeal.  In  order  to  counteract  such 
a  course  it  would,  in  my  opinion,  be  wise  to  place  all 
hospitals  receiving  State  aid  under  the  c  ontrol  of  a 
supervising  body,  which  by  personal  contact  with  and 
inspection  of  the  institutions  and  from  comparison  of 
their  work  and  expenditures  as  shown  in  their  reports, 
could  readily  see  where  one  or  the  other  of  them  goes 
too  far  in  one,  or  branches  out  in  the  wrong  direction, 
and  at  once  call  a  halt.  Advice  and  suggestions  from 
such  a  body,  if  properly  qualified,  would  be  invaluable 
to  these  hospitals  and  should  be  hailed  by  all  of  them. 
The  proper  body,  in  my  opinion,  to  have  this  supervision 
would  be  the  State  Board  of  Charities,  consisting,  as  it 
does,  of  men  who  have  through  long  years  of  service 
become  experts,  as  it  were,  in  this  particular  line  of  public 
service,  whereas,  i.  e.,  the  members  of  the  Legislature  are 
more  or  less  handicapped  by  the  diversified  character  of 
their  legislative  duties  and  business. 

It  might  be  necessary  to  enlarge  the  powers  and  the 
machinery  of  the  Board  of  Charities  in  order  to  enable  it 
to  perform  these  duties  efficiently  and  intelligently.  If 
additional  legislation  be  needed  to  that  end  it  should  by  all 
means  be  enacted. 


426 


DR.  ROBERT  C.  MOON,  Penna.  Home  Teaching  Society 
for  the  Blind,  called. 

Dr.  Moon:  Mr.  President  and  Gentlemen  of  the  Com- 
mission :  I  will  not  trespass  long  upon  your  time  in  making 
a  few  remarks  in  reference  to  the  institution  which  I  have 
the  honor  to  represent,  the  Pennsylvania  Home  Teaching 
Society  for  the  Blind.  On  Friday  last  I  had  the  pleasure 
of  listening  to  the  address  of  Mr.  John  Cadwalader,  in 
which  he  gave  a  most  interesting  account  of  the  history  and 
progress  of  the  Pennsylvania  Institution  for  the  Blind,  now 
located  at  Overbrook.  That  institution  and  the  State  Insti- 
tution for  the  Blind  in  Pittsburgh  provide  instruction  for 
about  450  young  blind  persons.  No  person  is  eligible  for 
admission  to  these  schools  if  over  21  years  of  age.  The  work 
of  the  Pennsylvania  Home  Teaching  Society  and  Free  Cir- 
culating Library  for  the  Blind,  which  I  have  the  honor  to 
represent,  is  the  complement  of  the  work  carried  on  in 
those  two  institutions,  as  it  deals  principally  with  the  adult 
blind  scattered  throughout  the  State. 

It  will  be  well  to  mention  that  the  blind  population  of 
Pennsylvania  is  about  6,000 — four-fifths  of  whom  are  over 
21  years  of  age  and  consequently  not  eligible  for  admission 
into  these  institutions.  Those  who  become  blind  in  adult 
life  have  no  means  of  receiving  instruction  in  reading 
excepting  through  the  teachers  provided  by  this  ''Pennsyl- 
vania Home  Teaching  Society  for  the  Blind, ' '  and  as  a  rule 
they  need  a  more  easily  felt  type  than  the  dotted  types 
taught  to  children  in  the  schools.  For  the  adult  blind  the 
type  invented  by  my  father,  Dr.  William  Moon,  of  Brigh- 
ton, Eng.,  is  the  most  simple  and  most  easy  of  acquirement. 

Upon  losing  his  eyesight  my  father  realized  that  the 
adult  blind  needed  such  a  type,  and  endeavored  to  provide 
it  for  them,  and  afterwards  lived  for  more  than  fifty  years 


427 

to  see  his  invention  in  use  in  every  quarter  of  the  globe. 
It  was  found  to  be  as  necessary  for  the  adults  as  the  Braille 
for  the  children. 

On  visiting  this  country  in  1882  my  father  introduced 
into  Philadelphia  the  plan  of  home  teaching  of  the  blind 
which  he  had  employed  successfully  for  27  years -in  London, 
for  he  had  found  that  most  of  the  blind  in  adult  life 
must  be  visited  in  their  homes  if  they  are  to  be  taught  to 
read. 

The  plan  thus  introduced  into  Philadelphia  of  providing 
teachers  to  search  out  the  blind  and  teach  them  to  read  in 
their  homes  proved  from  the  outset  very  successful,  and 
the  society  then  formed  also  provided  a  free  library  of 
embossed  books  for  the  use  of  its  readers. 

For  16  years  the  work  of  home  teaching  and  lending  of 
books  was  carried  on  by  Mr.  John  P.  Rhoads,  treasurer  of 
the  Bible  Society  in  Philadelphia,  but  in  1898  the  society 
was  reorganized  and  Judge  William  N.  Ashman  became  its 
president.  In  1901  it  was  incorporated  under  the  title  of 
Pennsylvania  Home  Teaching  Society  and  Free  Circu- 
lating Library  for  the  Blind.  From  the  time  of  reorgani- 
zation in  1898  it  has  enjoyed  the  cordial  co-operation  of  the 
Trustees  of  the  Free  Library  of  Philadelphia,  where  the 
books  of  the  Home  Teaching  Society  for  the  Blind  are 
deposited,  and  from  which  the  circulation  is  directed.  The 
Free  Library  bears  the  expenses  connected  with  the  cir- 
culation of  the  books  in  the  City  of  Philadelphia,  and  the 
Pennsylvania  Home  Teaching  Society  for  the  Blind  is  re- 
sponsible for  the  clerical  and  other  expenses  connected  with 
the  circulation  of  the  books  throughout  the  State  of  Penn- 
sylvania. 

Four  teachers  are  employed  by  the  Pennsylvania  Home 
Teaching  Society  for  the  Blind,  two  of  whom  are  totally 
and  one  partially  blind.  Three  of  the  teachers  are  located 
in  Philadelphia  and  one  in  Pittsburgh.  During  the  past  28 
years  hundreds  of  the  blind  in  Pennsylvania  have  been 
taught  to  read,  and  thousands  of  volumes  of  books  in 


428 

raised  types  have  been  loaned  to  the  blind  of  all  ages, 
many  of  whom  have  been  very  advanced  in  years.  During 
the  last  year  17,422  embossed  books  were  circulated,  and 
157  new  readers  were  enrolled.  Blind  persons  in  sixty-two 
of  the  sixty-seven  counties  of  Pennsylvania  have  at  some 
time  or  other  received  books  on  loan,  but  there  is  a  great 
need  of  more  teachers  and  more  books  in  the  various  types 
for  the  blind. 

The  Legislature  of  Pennsylvania  has  cordially  recognized 
and  approved  the  good  work  which  is  being  done  by  this 
society,  and  began  five  years  ago  to  extend  to  it  State  aid, 
which  has  been  generously  continued  until  the  present  time. 
Without  such  aid  from  the  State  so  much  could  not  have 
been  accomplished,  and  it  is  to  be  hoped  that  the  Legislature 
may  see  fit  still  further  to  increase  its  support  so  that  ere 
long  not  a  blind  person  in  Pennsylvania  may  remain  unvis- 
ited  and  untaught  if  he  be  capable  of  receiving  instruction. 
One  illustration  from  a  letter  may  show  you  the  appreci- 
ation which  the  blind  have  of  the  work  which  is  being  done 
for  them.  One  man  writes  from  Frankf ord,  ' '  I  want  to  ex- 
press my  gratitude  to  you  for  sending  Mr.  Moore  to  me  as  a 
teacher. ' '  I  may  tell  you  Mr.  Moore  is  a  blind  teacher  too. 
"I  am  blind  and  before  he  came  I  was  very  much  dis- 
couraged. After  learning  to  read  I  came  in  touch  with 
the  outside  world  again,  and  have  thus  been  enabled  to 
spend  many  happy  hours  which  would  otherwise  have  been 
gloomy.'7  In  another  note  he  says,  "Last  Thursday  even- 
ing I  read  the  Scriptures  at  the  watch  night  services.  I 
read  the  first  sixteen  verses  of  the  5th  chapter  of  Matthew. ' ' 

By  Mr.  McNichol : 

Q.  Do  you  not  think  this  work  should  be  incorporated  in 
the  school  work  of  Pennsylvania  ? 

A.  I  certainly  think  it  belongs  to  it.  If  it  could  be  incor- 
porated and  carried  on  in  the  same  direction  that  it  has 
been  carried  on,  I  think  it  would  be  an  excellent  thing. 


429 

Q.  It  should  be  part   of   the   educational   field  of   the 
State? 
A.  I  have  always  thought  so. 

By  Mr.  Brown  : 

Q.  Do  you  receive  money  from  private  contributions  ? 

A.  We  received  altogether  about  $4,000  a  year,  of  which 
now  the  State  is  giving  us  $3,000.  I  may  say  since  we 
have  received  assistance  from  the  State  we  have  been  more 
cordially  helped  by  the  community  generally,  and  I  am 
in  the  hope  that  the  proportion  given  by  the  charitable 
public  will  be  greater  and  greater  every  year.  It  has  been 
undoubtedly  a  strength  to  us  that  we  have  received  State 
aid. 

Q.  Do  you  not  think  that  the  care  of  it  as  part  of  the 
school  system  would  be  more  effective,  in  that  it  would 
be  more  thoroughly  done  because  there  would  be  no  limita- 
tion based  practically  upon  the  money  which  would  be 
used  for  that  purpose  ? 

A.  It  is  rather  different  in  some  respects  from  ordinary 
school  teaching,  because  the  teachers  must  be  sent  to  the 
houses.  Blind  adults  will  not  go  into  the  schools.  That 
has  been  tried,  and  they  will  refuse  to  go  out  of  their 
houses.  It  has  been  tried  for  the  last  50  years  and  it  always 
fails.  The  blind  must  be  reached  in  their  homes. 

In  conclusion  I  venture  to  say  that  there  is  no  work 
more  economically  conducted  and  none  is  yielding  more 
abundant  fruit  for  so  small  an  expenditure  of  money  than 
the  Pennsylvania  Home  Teaching  Society  and  free  circu- 
lating library  for  the  blind,  and  I  hope  that  the  State  will 
more  and  more  foster  the  work  which  it  has  helped  to 
care  for  during  the  past  five  years. 


430 


H.  FRANK  ESCHELMAN,  Lancaster,  Pa.,  called. 

Mr.  Eschelman:  Mr.  Chairman  and  Gentlemen  of  the 
Committee:  On  the  question  of  the  revenue  laws,  and  on 
how  to  make  the  revenue  go  as  far  as  it  can  possibly  be 
made  to  reach,  I  was  advised  by  counsel  for  the  Committee 
I  would  be  heard,  among  other  thing.  One  of  the  important 
points,  as  it  was  developed  in  the  county  of  Lancaster,  and 
which  came  under  my  notice  as  Controller  of  that  county, 
was  how  to  make  the  money  at  interest  pay  its  share  of  the 
public  revenues.  We  had  no  difficulty  in  taxing  land,  be- 
cause there  it  is  and  it  cannot  get  away,  and  a  man  can- 
not lie  about  it,  except  to  try  to  undervalue  it,  and  the 
assessor  has  his  opinion  as  to  its  value,  but  when  you  come 
to  the  question  of  money  we  experience  a  great  deal  of 
difficulty  concerning  certain  securities,  and  therefore  the 
Commissioners  of  Lancaster  county  took  charge  most  largely 
and  turned  their  attention  to  the  taxing  of  land  and  the 
proper  value  at  which  land  should  be  returned,  and  left 
to  the  controller  pretty  largely  to  devise  schemes  and 
methods  by  which  the  money  at  interest  could  be  brought 
forth  and  taxed.  The  chief  weakness  which  we  found  there 
was  that  those  securities  which  were  not  of  record  were  very 
poorly  returned  or  reported.  Of  course,  as  to  judgments 
-and  mortgages  of  record  our  system  of  bookkeeping  is 
quite  complete,  and  we  keep  very  careful  track  of  those. 
One  particular  branch  of  money  at  interest  which  we 
found  great  difficulty  with  was  certificates  of  deposit,  for 
two  reasons;  first,  that  considerable  doubt  existed  as  to 
their  taxability ;  secondly,  that  persons  who  carried  them 
returned  to  the  assessors  that  they  did  not  have  them. 
Therefore  we  devised  means  to  try  and  get  this  branch  of 
money  wealth  as  well  as  the  others,  because  we  took  the 
view  that  they  are  taxable. 


431 

By  Mr.  McNichol : 

Q.  You  refer  to  deposits? 

A.  Time  deposits. 

Q.  That  are  not  in  any  active  use? 

A.  Yes,  sir,  time  deposits — deposits  that  pay  interest. 
Trust  companies  issue  certificates  stating  that  you  will  be 
paid  4  per  cent,  interest  on  the  money. 

Q.  Suppose  a  business  man  has  an  account  in  a  trust 
company  and  that  is  an  active  account  on  which  he  gets  2 
per  cent.,  would  you  incorporate  that  in  the  computation? 

A.  We  have  not  been  collecting  taxes  on  that.  These  are 
investments  and  they  are  a  very  large  branch  in  Lancaster 
county.  The  first  thing  we  did  was  to  compel  the  assessors 
to  return  the  affidavits  which  they  took  from  the  holders 
of  certificates  of  deposit,  to  return  all  affidavits  they  took 
concerning  moneys  at  interest. 

Q.  How  are  your  assessors  appointed? 

A.  They  are  elected. 

Q.  By  the  people? 

A.  Yes,  sir. 

By  Mr.  Brown : 

Q.  When  you  say  affidavits  you  mean  the  Auditor  Gen- 
eral ?s  report  ? 

A.  Yes,  sir,  what  they  denominate  the  lilac  blanks,  so 
the  Auditor  General,  with  whom  I  have  had  considerable 
correspondence,  informs  me.  There  seems  to  be  no  law 
at  present  to  require  assessors  to  return  those  blanks,  those 
affidavits  which  the  taxable  is  supposed  to  sign  and  affirm 
to  before  the  assessor. 

By  a  Member  of  the  Committee: 

Q.  You  can  go  after  them  and  collect  them? 
A.  I  do  not  mean  that.     I  mean  to  say  there  is  no  law 
to  compel  assessors,  when  they  have  collected  them,  to  hand 
them  into  the  county,  and  the  only  way  in  which  the  Con- 
troller could  get  at  that  was  that  under  the  Controller's 


432 

Act  of  1895  he  is  first  given  the  powers  that  County  Au- 
ditors have.  That  gives  them  the  power  to  issue  subpoenas, 
but  he  is  given  power  in  a  certain  section  of  that  Con- 
troller 's  Act  to  require  such  testimony  as  he  may  desire 
in  auditing  the  bills,  and  therefore  I  found  it  wise  to 
isssue  a  circular  to  our  assessors  stating  to  them  that  I 
would  require,  as  part  of  the  testimony  and  as  part  of 
the  evidence  upon  which  I  would  approve  their  bills,  the 
production  of  their  affidavits. 

By  Mr.  McNichol : 

Q.  How  many  counties  in  the  State  have  Controllers  ? 

A.  Until  the  late  Act,  only  those  which  had  over  150,000 
people. 

Q.  In  those  counties  where  there  are  no  Controllers  the 
law  would  make  no  provision  for  the  returns? 

A.  No.  The  only  provision  it  would  make  would  be  such 
power  as  County  Auditors  would  have  to  compel  the  same 
thing.  There  is  now,  of  course,  a  county  controller's  Act 
relating  to  counties  havng  90,000  people.  To  go  back 
to  this  first  point,  it  seems  to  me  that  the  Legislature 
ought  to  help  out  and  pass  a  law  that  assessors  shall 
bring  ir  their  affidavits.  We  have  had  some  difficulty. 
A  few  of  the  assessors  declared  they  would  not  do  it.  They 
carried  out  their  declaration  until  it  came  to  the  point 
of  having  me  approve  the  warrant  for  their  money,  and  then 
they  gracefully  went  home,  got  them,  brought  them  back, 
and  I  approved  their  bills.  I  think  it  would  help  out  if 
the  law  required  them  to  hand  them  in.  I  do  not  suppose 
in  cities  of  the  first  class  it  would  be  necessary.  We 
found  that  a  great  benefit  for  this  reason.  The  assessors 
simply  did  not  take  them.  They  did  not  affirm  the  taxables 
and  largely  made  up  their  books  from  what  was  on  the 
former  book,  and  until  we  pinned  them  down  to  the  point 
of  disclosing  to  the  Controller  and  the  Commissioners  the 
affidavits  they  took  we  had  difficulty  in  getting  at  this 
money. 


433 

By  Mr.  McNichol: 

Q.  What  was  the  result  from  your  investigation  as  to 
increased  return? 

A.  In  a  minute  I  will  come  to  that.  That  is  one  neces- 
sity we  feel.  It  has  produced  a  good  result. 

Q.  Have  you  drafted  or  thought  of  any  draft  of  a  bill? 

A.  No,  I  have  not. 

Q.  Will  you  kindly  give  us  your  ideas  and  file  them  with 
as? 

A.  Yes,  sir,  I  will.  Now,  the  second  point.  What  I 
have  been  speaking  of  now  refers  to  all  taxable  moneys, 
but  comng  down  to  this  question  of  certificates  of  deposit, 
we  have  about  eight  million  dollars  worth  of  money  on 
certiorates  of  deposit  in  Lancaster  county.  It  is  a  large 
amount  of  our  taxable  money,  but  how  to  get  at  it  is  the 
question.  Trust  companies,  of  course,  say  that  they  are 
not  taxable  in  the  holders '  hands.  They  go  so  far  as  to  say 
they  make  a  return  direct  to  Harrisburg,  and  therefore 
the  assessor  is  not  permitted  to  ask  the  holder  of  the 
certificate  to  disclose  it.  I  will  try  to  show  to  the  Com- 
mittee a  minute  later  that  they  are  taxable,  and  what 
we  need  is  to  know  how  the  assessor  shall  get  knowledge 
of  where  these  certificates  are,  because  any  wealth  that  you 
can  wrap  up  into  a  little  wad  and  put  down  in  your  pocket, 
and  then  are  willing  to  tell  an  untruth  about,  the  assessor 
cannot  get  at.  I  suggest  that  there  ought  to  be  a  law  by 
which  trust  companies  would  be  required  to  keep  a  register, 
this  register  to  contain  separate  compartments  or  portions 
for  each  township,  and  the  name  of  the  person  to  whom  the 
certificate  is  issued  ought  to  go  under  its  compartment, 
under  the  proper  township,  and  the  assessor  of  that  town- 
ship should  have  the  right  to  go  in  and  look  at  that 
register,  and  there  he  could  see  how  many  residents  of  his 
township  held  such  certificates.  But  we  come  upon  a  great 
difficulty  there,  and  that  is  this.  The  assessor  would 
necessarily  be  compelled  to  take  an  obligation  against  dis- 
closing to  any  one  but  to  the  County  Commissioners,  or  the 


434 

proper  officers,  the  certificates  issued  by  those  trust  com- 
panies. 

By  a  Member  of  the  Committee : 

Q.  Do  you  not  think  it  would  be  a  very  much  easier  plan 
to  tax  the  banks  two  mills  say  upon  their  certificates  of 
deposit,  and  have  them  deduct  that  from  the  amount  paid 
in  interest  to  depositors,  and  prevent  having  in  Lancaster 
say  75  assessors  going  into  the  bank  and  monkeying  around 
in  there  ?  I  should  not  think  that  would  be  very  agreeable. 

A.  The  only  objection  that  I  could  find  to  that  was,  I 
presume  if  the  bank  or  trust  company  would  make  that 
return,  Harrisburg  would  get  it  all  and  the  county  would 
never  get  any. 

Q.  Make  it  returnable  the  same  as  personal  property? 

A.  If  that  were  true  it  is  a  much  better  plan,  but  if 
you  follow  up  nearly  all  the  laws  which  require  the  moneys 
to  be  accounted  for  directly  at  Harrisburg,  our  counties 
never  get  any  of  them,  while  the  State  graciously  gives  us 
back  a  large  part. 

By  Mr.  McNichol : 

Q.  That  four  mill  tax  you  would  collect  on  certificates 
of  deposit,  the  State  would  get  that,  would  it  not? 

A.  The  State  gets  it  but  returns  to  the  township  three- 
quarters. 

Q.  I  have  the  same  thought  that  Senator  Sproul  had  in 
mind,  that  an  account  should  be  returned. 

A.  That  would  be  much  superior  to  what  I  am  suggest- 
ing, but  I  nrnch  fear  the  county  would  not  get  it.  I  much 
fear  the  law  would  not  be  passed  that  way,  because  nearly 
every  one  of  those  laws  in  which  there  is  an  account  direct 
to  Harrisburg,  they  keep  it. 

By  Mr.  Sproul : 

Q.  You  are  representing  the  county  ? 

A.  I  am  representing  the  county  first  and  foremost.  So 
long  as  I  am  Controller  I  think  it  is  my  duty.  Another 


435 

thing  I  found  to  be  of  value,  and  that  was  that  I  required 
assessors  also  to  make  a  short  summary  of  their  work.  I 
addressed  to  them  a  circular  letter,  the  lower  part  detach- 
able, upon  which  I  asked  them  to  return  to  me  for  pur- 
poses of  auditing  (I  had  to  put  everything  under  that 
guise,  for  that  is  the  only  power  I  had)  the  amount  of  cer- 
tificates of  deposit,  the  amount  of  judgments  at  interest  and 
mortgages  at  interest,  foreign  stocks,  and  all  other  moneys, 
the  total  return  from  all  sources,  the  total  number  of 
persons  who  returned  money  at  interest,  the  number  of 
voters  in  the  district,  and  the  number  of  affidavits  or 
blanks  that  they  put  out,  and  sign  it,  simply  for  the 
purpose  of  classification  and  gathering  statistics,  and  of 
keeping  them  constantly  under  the  impression  that  we  are 
watching  and  trying  to  do  all  we  can  on  that  line.  I  found 
that  produced  very  good  results.  They  tear  that  off  and 
bring  it  in  filled  up,  and  tell  us  where  the  increase  had 
been,  and  so  forth.  One  more  thing  along  that  line.  We 
are  face  to  face  with  quite  a  serious  difficulty.  I  have 
just  stated  in  Lancaster  county,  where  we  have  about 
$27,000,000  at  interest  now,  $27,500,000  returned,  levied 
for  the  assessment  of  1910,  we  have  fully  $9,000,000  of 
certificates  of  deposit,  but  the  Act  of  1907  provides  that  if 
the  trust  company  shall  pay  a  tax  of  five  mills  on  the 
capital  stock,  the  surplus  and  the  undivided  profits  added 
together  and  divided  by  the  shares  of  stock,  that  the  shares, 
the  surplus,  the  deposits  and  the  undivided  profits  bear  no 
other  tax.  There  we  have  the  word  "deposits"  in  that  Act 
of  1907.  Therefore  it  would  seem  that  that  large  amount 
of  money  is  to  go  untaxed  because  the  law  provides  that 
the  trust  companies  shall  return  only  three  items,  capital 
stock,  surplus  and  undivided  profits.  I  took  that  up  with 
the  Auditor  General,  and  he  and  I  came  to  the  conclusion 
that  that  meant,  that  it  shall  not  be  taxed  in  the  hands 
of  the  trust  company,  but  did  not  mean  that  the  holder 
of  the  certificates  shall  not  pay  a  tax  on  that,  the  same  as  he 
pays  on  a  note  or  any  other  security  that  he  holds.  But 


436 

there  is  considerable  danger  in  that  thing.  Counsel  for 
some  of  our  trust  companies  advise  me  that  means  that 
neither  the  holder  nor  any  one  else  shall  pay  tax  on  that. 
Mr.  Hensel,  counsel  for  the  Lancaster  Trust  Company, 
advises  his  trust  company  it  means  the  view  we  take  of  it. 
I  submit  that  Act  ought  to  be  amended  so  as  to  drop  that 
disturbing  word  out  of  it. 

By  a  Member  of  the  Committee : 

Q.  You  say  Mr.  Hensel  takes  the  view  you  take  of  that? 
A.  Mr.  Hensel  takes  our  view. 

By  Mr.  Brown : 

Q.  It  has  never  been  legally  determined  that  they  were 
not  taxable  ? 

A.  No,  it  has  not.  The  only  distinction  is  that  which 
the  Auditor  General  draws.  It  means  it  shall  not  be  paid 
out  of  the  trust  company,  but  does  not  say  the  holder  shall 
not  pay.  I  have  looked  over  the  reports  of  the  Banking 
Commissioner,  and  there  a  special  deposit,  or  deposit  bear- 
ing interest  are  not  separated  from  deposits  generally,  and 
I  have  of  our  leading  trust  companies  just  these  few 
figures.  The  People's  Trust  Company  have  deposits  subject 
to  check,  $275,000,  but  deposits  drawing  4  per  cent,  in- 
terest, on  which  they  have  issued  certificates,  $2,209,000. 

By  a  Member  of  the  Committee : 

Q.  Time  certificates? 

A.  Time  certificates. 

Q.  Are  they  not  specified  in  the  trust  company 's  report  ? 

A.  They  are  not.  They  are  stated  just  as  deposits. 
Therefore  it  would  look  as  if  they  were  all  deposits  subject 
to  check,  which  of  course  is  not  the  fact. 

By  Mr.  Brown : 

Q.  They  return  generally  so  as  to  avoid  the  very  thing 
you  think  ought  not  to  be  avoided,  payment  of  taxes  an 
interest  bearing  deposits? 


437 

* 

A.  I  presume  so.  We  have  several  other  trust  com- 
panies. The  Lancaster  Trust  Company  has  a  capital  stock 
paid  in  of  $250,000,  undivided  profits  $255,000,  surplus 
$750,000,  making  $1,055,000  on  which  tax  is  paid,  but 
$3,186,462  of  these  certificates  on  which  no  tax  is  paid. 
The  result  is,  summing  up  all  our  trust  companies,  that  the 
five  leading  trust  companies  of  Lancaster  county  pay  taxes 
on  $2,640,000  and  do  not  pay  taxes  on  $7,639,000.  That 
great  sum  of  money  lies  there  not  taxed,  and  we  have  diffi- 
culty in  getting  holders  to  return  it. 
•  Q.  What  proportion  of  that  is  returned? 

A.  I  had  an  excellent  opportunity  of  determining  to 
what  extent  holders  of  certificates  returned  the  certificates 
they  held.  Our  City  Saving  Fund  and  Trust  Company 
failed  some  time  ago,  and  when  the  question  came  of  an 
audit  being  held  $450,000  worth  of  certificates  of  deposit 
were  handed  in,  on  which  the  holders  should  get  their 
dividends.  I  went  to  a  great  deal  of  trouble.  I  took  up 
every  one  of  those  certificates  and  traced  down  the  town- 
ship in  which  the  holder  lived,  and  I  found  that  $22,000 
is  all  that  had  ever  been  returned  by  those  certificate 
holders  out  of  $450,000,  5  per  cent. 

By  Mr.  McNichol: 

Q.  The  rest  of  them  were  wilful  perjurers  ? 
A.  The  rest  they  wrapped  up  in  their  pockets. 

By  a  Member  of  the  Committee : 

Q.  They  had  not  been  asked  by  the  assessors  1 
A.  That  is  true.  The  fault  is  not  altogether  with  the 
people.  The  assessors  were  never  required  heretofore  to 
account  for  those  affidavits.  Now  when  we  compel  them  to 
bring  them  in  and  lay  them  down,  and  count  them  over 
and  show  a  fair  proportion  of  taxables  in  the  township  have 
signed  affidavits  that  they  did  or  did  not  have  money, 
it  is  really  marvelous  the  result,  which  I  shall  show  in  a 
minute.  I  also  discovered  that  of  about  $8,000,000  of 
certificates  of  deposit  in  money  held  among  our  peopl«,  we 


438 

only  got  a  few  hundred  thousand  until  I  started  this  method 
of  trying  to  get  all  that  we  could.  The  result  of  this  was 
that  we  thought  we  were  the  richest  county  in  the  State, 
but  we  had  to  yield  to  Montgomery  as  to  money  at  inter- 
est. Of  course,  Montgomery  has  a  great  many  suburban 
Philadelphians  with  large  money.  I  think  they  have 
$35,000,000  to  $38,000,000.  We  have  only  got  up  to 
$27,500,000.  Lancaster  county  had  at  interest  in  1907, 
or  on  the  returns  f<$r  1907,  $21,966,000.  In  1908  it  had  only 
grown  a  little,  $22,400,000.  Then  I  began  this  work.  I 
came  in  in  1908  and  tried  to  find  additional  money  for  the 
special  purpose  of  saving  real  estate,  and  by  putting  in 
partial  operation  the  system  I  have  now  I  raised  it  from 
$22,400,000  to  $25,200,000  for  the  year  1909,  the  assess- 
ments taken  in  the  fall  of  1908.  While  the  figures  are  not 
entirely  compiled  for  1910,  yet  by  those  blanks  which  have 
been  returned  I  have  been  able  to  find  out  with  substantial 
accuracy  that  we  will  have  $27,500,000  in  1910. 

By  a  Member  of  the  Committee: 

Q.  That  represents  certificates  of  deposit  exclusively  in 
your  county? 

A.  Largely  so.  It  represents  all  mone}^  at  interest,  but 
I  find  that  as  to  judgments  and  mortgages  there  is  not 
very  much  increase,  because  Lancaster  city  has  taken  to 
building  a  great  deal  and  we  spend  $1,000,000  or  so  in 
building  every  year. 

Q.  Can  you  give  us  a  comparison  on  certificates  of  de- 
posit as  compared  for  three  years? 

A.  I  cannot  exactly  give  that,  but  I  can  say  in  a  general 
way  that  three-quarters  of  this  increase  of  $5,000,000  in 
two  years  came  from  certificates  of  deposit.  We  have  had 
a  very  general  return  of  them  this  last  year. 

By  Mr.  Brown: 

Q.  These  people  have  all  been  represented  by  counsel  in 
your  district? 

A.  A  good  many  of  them  have  and  a  good  many  have 


439 

not.  Those  two  ideas,  the  one  of  requiring  them  to  set 
forth,  as  the  lilac  blank  does  require  them,  and  return  to 
me  a  summarized  statement  of  certificates  of  deposit  set 
out  specially,  has  brought  them  out.  The  other  thing  was 
requiring  the  affidavits.  It  is  remarkable  how  lax  assessors 
were  as  to  having  the  man  sign  the  affidavit  that  he  did 
or  did  not  have  money.  Assessors  have  come  to  me  and 
told  me,  "Some  of  those  conscientious  people  we  have 
there,  who  do  not  take  an  oath  but  take  an  affirmation, 
come  to  them  weeping  and  crying  afterward.  One  as- 
sessor came  in  and  said  that  such  a  person  had  come  to 
him  and  told  him,  ' 1 1  thought  of  the  story  of  Ananias  and 
Sapphira.  I  could  not  sleep.  I  thought  I  would  come 
back  and  tell  you  I  had  $3,000  more,"  and  so  it  goes.  The 
result  of  this  is  I  have  in  a  corner  of  the  Controller's 
office  a  pile  of  those  lilac  blanks,  all  labeled  and  carefully 
tied  up.  We  have  looked  over  a  great  many  of  them.  I 
am  going  to  look  over  more.  We  have  left  them  under  the 
impression  that  we  are  going  through  the  whole  business. 
At  the  end  of  the  year  they  may  have  them  if  they  want 
them.  I  have  perhaps  half  a  ton.  The  Auditor  General 
said  he  was  sending  me  20,000  specially  this  year  because 
he  thought  we  would  need  more  from  what  we  were  doing. 

By  Mr.  Brown: 

Q.  Is  there  any  reason  known  to  you  why  any  other 
Controller,  or  any  other  County  Auditor,  or  any  other 
official  performing  a  similar  function  to  that  which  you 
perform,  should  not  do  the  same  thing  you  have  done  in 
this  direction? 

A.  No.  I  think,  as  I  understand  the  duties  of  the  office, 
it  is  the  duty  of  the  County  Controller  to  do  every  possible 
thing. 

Q.  There  has  been  no  attempt  by  anybody  to  restrain 
you  by  law? 

A.  No.  They  swear  a  good  deal  and  threaten,  but  there 
has  never  been  a  mandamus  or  anything  else  in  fact.  I 
usually  prepare  myself.  I  usually  am  ready  for  it. 


440 

By  a  Member  of  the  Committee : 

Q.  That  increase  from  $22,000,000  to  $27,000,000,  the 
increase  of  about  $5,000,000,  was  due,  you  think,  to  this 
system  of  inquiry  and  making  the  assessors  live  up  to  the 
letter  of  the  law? 

A.  Yes,  sir. 

Q.  That  $5,000,000  has  been  principally  gained  from  the 
return  of  these  certificates  of  deposit  ? 

A.  Yes,  sir,  and  any  other  unrecorded  securities.  That 
is  where  it  came  from. 

Q.  How  about  bonds  and  stock  certificates  of  corpora- 
tions outside  of  Pennsylvania  ? 

A.  We  are  doing  considerable  in  that  line.  They  are 
being  set  forth.  I  think  they  are  being  pretty  fairly  re- 
turned. Of  course,  there  is  not  such  a  large  number  of 
those.  Lancaster  county  took  a  spasm  of  investing  in 
gold  fields  in  the  western  part  of  the  United  States,  and 
they  usually  sign  the  form  on  the  back  of  the  lilac  blank 
now  which  says  they  are  worthless.  The  Auditor  General 
and  I  have  been  taking  up  between  ourselves  the  question 
of  what  shall  be  done  with  stocks  in  which  the  corporation, 
being  a  non-Pennsylvania  corporation,  does  part  of  its 
business  in  the  State  and  part  out  of  the  State,  has  one 
unit  as  they  call  it  operating  in  the  State  and  one  unit 
outside  the  State,  whether  it  shall  be  accounted  for  at 
Harrisburg  or  not,  and  we  promise  ourselves  we  shall  try 
to  take  up  that  question. 

Q.  You  mean  a  corporation  chartered  under  the  laws  of 
this  State? 

A.  No,  the  laws-  of  another  State.  If  it  is  chartered 
under  the  laws  of  this  State  we  have  no  trouble,  because 
that  is  attended  to  at  Harrisburg.  There  is  another  ques- 
tion. I  do  not  know  whether  it  is  desired  I  shall  speak 
upon  it,  touching  the  question  of  revenue.  It  is  not  a 
question  how  to  produce  revenue,  but  a  question  of  con- 
servation of  it  when  it  is  produced.  I  might  say  something 
that  could  be  done  by  the  Legislature  with  relation  to 


441 

dismissed  cases,  discharged  cases  by  magistrates.  There 
are  certain  things  there  by  which  considerable  money  is 
wasted.  I  do  not  know  whether  I  should  take  five  or  ten 
minutes  upon  that  or  not. 

By  a  Member  of  the  Committee  : 

Q.  That  is  a  county  matter? 

A.  Yes,  sir,  it  is  a  county  matter.  I  am  very  much  con- 
cerned about  that  Act  of  1907,  because  of  the  word  "  de- 
posits "  in  there.  There  is  strong  grounds  for  argument 
that  that  means  that  the  holder  shall  not  pay  a  tax  upon 
his  deposit,  and  that  would  knock  a  big  hole  in  our 
finances,  because  those  certificates  are  nearly  one-third  of 
our  whole  money  at  interest. 

By  Mr.  McNichol: 

Q.  You  think  that  act  should  be  either  amended  or  re- 
pealed at  the  next  session  of  the  Legislature? 

A.  I  think  if  the  word  " deposit"  was  amended  out  of 
that  it  will  be  fine. 

By  Mr.  Brown: 

Q.  Then  would  you  not  get  into  the  question  of  deposits 
which  were  used  by  the  company  in  its  own  business,  in 
the  way  of  discounts,  or  banking,  or  in  loans  where  it  goes 
out  again? 

A.  That  might  be  specified,  time  deposits,  deposits  bear- 
ing interest. 

Q.  In  active  accounts,  where  there  is  no  right  to  draw 
a  check  at  sight? 

A.  Yes,  sir. 

By  a  Member  of  the  Committee : 

Q.  You  live  in  the  interior  of  the  State.  What  is  the 
sentiment,  what  have  you  heard  and  what  are  your  views, 
with  reference  to  raising  revenue,  for  instance,  taxing 
manufacturing  corporations? 

A.  I  think  the  sentiment,  as  I  gather  it,  is  that  there 


-142 

should  not  be  much,  if  any,  additional  taxation  on  manu- 
facturing plants. 

By  another  Member  of  the  Com  m  ill  en: 
Q.  They  pay  nothing  but  local  taxation? 
A.  No. 

By  a  Member  of  the  Committee  : 

Q.  You  think  there  should  be  no  revenue  raised  by  that 
method  for  the  use  of  the  Commonwealth  ? 

A.  The  view  of  our  people  is,  I  think,  that  there  are 
sufficient  laws  now  to  raise  revenue,  so  far  as  we  are 
concerned. 

By  Mr.  Brown: 

Q.  Do  you  mean  sufficient  laws  to  raise  revenue,  or  laws 
to  raise  sufficient  revenue? 

A.  Sufficient  laws  to  raise  sufficient  revenue.  It  is  a 
question  of  carrying  them  out.  "We  are  getting  along  with 
a  two  and  one-half  mill  tax  very  nicely,  but  I  am  bound 
to  say  if  we  had  not  discovered  $4,000,000  or  $5,000,000 
extra  to  tax  we  would  have  been  compelled  to  go  back  to 
three  mills.  There  is  one  thing  I  very  much  hope  the 
Legislature  can  correct,  and  that  is  this.  On  the  question 
of  the  State  building  roads,  we  have  this  difficulty.  There 
were  built  in  Lancaster  county  some  $30,000  worth  of 
those  roads,  or  our  share  of  that,  and  two  of  the  town- 
ships refused  to  pay  their  share.  The  result  was  that 
when  we  went  to  Harrisburg  they  took  $10,000  out  of  our 
money  and  kept  it  there.  The  law  provides  as  to  the  State 
building  roads ;  the  State  pays  three-quarters,  the  county 
one-eighth  and  the  township  one-eighth,  but  it  provides 
that  if  the  township  refuses  to  pay  its  one-eighth  they 
may  take  that  one-eighth  out  of  the  county's  money,  any 
county  money  it  has  in  hand,  and  the  county  in  its  turn 
must  sue  the  township.  There  is  no  law  specifying  how 
that  shall  be  done.  We  presume  it  is  on  the  principle  of 
subrogation,  but  our  County  Solicitor  is  wrestling  with 


443 

that  question  as  to  how  to  sue  those  two  townships  for 
$10,000.  If  that  were  made  clear  that  the  county  shall 
then  have  recourse  to  the  township  to  recover,  it  would  be 
a  wise  think  and  would  help  us  out  of  some  difficulty. 

By  Mr.  Brown: 

Q.  You  said  there  is  no  law  compelled  the  assessor  to 
return  the  blank? 
A.  Yes,  sir. 

Q.  Does  not  the  Act  of  1889  provide  that  upon  failure 
or  refusal  of  a  taxable  to  return,  that  it  is  the  duty  of  the 
assessor  to  make  a  return  for  him  ? 

A.  I  did  not  mean  that.  I  meant  to  say  there  is  no  law 
which  requires  the  assessor  to  give  up  his  blanks  after  he 
has  them  and  leave  them  in  charge  of  the  County  Com- 
missioners. 

Q.  If  it  is  the  duty  of  the  taxable  to  make  a  return 
which  return  must  be  made  to  the  assessor,  and  it  is  the 
duty  of  the  assessor,  upon  failure  of  the  taxable,  to  make 
a  return  for  him,  both  should  go  to  the  County  Com- 
missioners ? 

A.  But  the  law  extends  only  so  far,  as  I  understand  it. 
After  the  assessor  either  takes  the  sworn  return  or  makes 
one  himself  for  a  person  who  refuses  to  make  it,  the 
blanks  are  legally  his  own  property. 

Q.  I  think  that  is  a  distortion.  Surely  the  law  does 
not  enact  a  vain  thing.  There  must  be  some  use  of  that 
blank  or  the  law  would  not  require  it.  After  the  County 
Commissioners  give  the  blank  to  the  assessor  and  the  as- 
sessor gives  it  to  the  taxable,  it  is  the  duty  of  the  assessor 
to  fill  that  up  if  the  taxable  does  not  answer  in  ten  days. 
It  is  his  duty  to  make  a  return  for  him  and  add  a  penalty. 
He  returns  them  to  the  County  Commissioners  for  inspec- 
tion to  see  whether  any  improper  return  has  been  made? 

A.  He  returns  his  book,  but  I  do  not  know  about  the 
affidavits.  At  least  they  have  never,  up  to  two  years  ago, 
been  handed  in  to  the  County  Commissioners. 


444 

Q.  There  has  never  been  any  legal  proceeding  to  compel 
them  to  do  it? 
A.  I  think  not. 

Q.  I  am  satisfied  they  could  be  compelled. 
A.  We  have  them  this  year. 

Q.  "When  County  Commissioners  turn  over  their  guide 
books  to  the  assessors,  those  guide  books  contain  lists  of 
judgments  and  mortgages  which  have  been  respectively 
returned  by  the  Prothonotary  and  Recorder  of  Deeds  for 
the  respective  counties? 

A.  Yes,  sir. 

Q.  What  is  done  to  check  that  up? 

A.  Our  clerks  in  the  County  Commissioner's  office  very 
carefully  make  out  the  book  which  you  have  spoken  of, 
and  I  send  one  of  my  clerks  to  make  a  list  of  them  also  for 
myself,  and  when  the  assessor  comes  back  with  his  affidavit 
I  compare  what  he  has  returned  with  what  stands  in  the 
book,  and  ask  him  to  explain  why  he  did  not  get  this 
one. 

Q.  He  is  charged  with  what  is  on  the  book  and  credited 
with  what  he  produces  ? 

A.  Yes,  sir. 

Q.  Suppose  he  does  not  return  according  to  your  book, 
what  further  investigation  is  made  to  ascertain  whether 
or  not  he  has  returned  all  taxables? 

A.  The  only  further  investigation  is  that  my  steno- 
grapher takes  testimony  in  all  these  matters,  and  when  an 
assessor  comes  in  and  I  find  there  is  $3,000  of  judgment 
or  mortgage  on  the  book  and  he  makes  no  return  of  it, 
I  put  him  on  oath  and  ask  him  why  he  makes  no  return. 
He  states  in  his  testimony  that  that  has  been  satisfied,  or 
that  half  of  it  has  been  paid,  or  whatever  explanation  he 
can  give.  I  keep  those  minutes  as  notes  for  my  annual 
audit  and  report  to  the  court. 

Q.  Are  taxables  ever  required  to  produce  any  receipts 
of  acquittances  for  any  part  of  judgments  or  mortgages 


445 

appearing  on  the  guide  books,  or  do  you  simply  take  the 
word  of  the  taxable? 

A.  He  takes  the  taxable 's  oath.    That  is  about  all. 

Q.  That  is  all  that  satisfies  the  record  against  him  of 
the  existence  of  a  judgment  or  a  mortgage? 

A.  Yes,  sir. 

Q.  Do  you  think  the  law  is  sufficient  in  that  respect  to 
protect  the  Commonwealth? 

A.  I  think  not.  I  think  there  might  be  something  done 
there,  requiring  those  who  hold  such  evidences  of  record  to 
put  partial  payments  on  record.  That  might  help  it  out. 
There  is  such  a  law,  but  there  is  no  law  to  compel  a 
mortgagor,  for  instance,  when  a  certain  amount  has  been 
paid,  to  put  a  note  on  the  margin  of  the  record. 

Q.  What  efforts  do  you  make  to  get  at  females? 

A.  The  same  efforts  as  to  the  males. 

Q.  The  assessors'  list  would  not  show  taxable  females 
in  every  case,  would  it?  In  collecting  the  personal  prop- 
erty tax  how  would  you  get  the  list?  There  are  wealthy 
women  in  your  community.  How  are  their  names  given 
to  the  assessor? 

A.  As  to  mortgages  and  judgments,  of  course,  they  are 
of  record.  As  to  the  others  they  do  the  same  as  they  do 
with  reference  to  men.  They  simply  must  go  around  with 
the  lilac  blanks,  and  put  them  on  oath  as  to  each  of  the 
items  that  are  set  forth  against  them. 

Q.  How  is  that  list  made  up!  How  do  you  include 
women  with  men? 

A.  There  is  no  such  list.  We  cannot}  get  at  an  un- 
recorded list.  There  is  nothing  to  show  such  a  list. 

Q.  Is  this,  which  appears  to  be  a  very  active  move- 
ment on  your  part  for  collection  of  State  revenue,  in- 
fluenced in  any  way  by  complaints  of  land  owners  ? 

A.  To  a  certain  extent.  It  was  prompted  primarily  by 
the  fact  that  prices  have  gone  up  very  much,  insanity  is 
growing  very  greatly,  and  we  found  we  needed  consider- 


446 

ably  more  revenue.  Then  we  cast  around  how  to  get  it. 
We  knew  very  well  if  we  added  half  a  mill  tax  it  would 
mean  our  heads  all  off. 

Q.  You  mean  on  land? 

A.  Land  tax.  We  were  not  willing  to  raise  the  county 
rates,  so  there  was  nothing  to  do  but  find  money  honestly 
somewhere  else.  That  is  what  prompted  me  to  go  into  it, 
and  the  County  Commissioners  approved  it,  and  that  is 
what  is  at  the  base  of  it,  aside  from  the  desire  to  do  our 
duty. 

Q.  You  compel  the  assessors  to  return  all  blanks? 

A.  Every  one,  yes.  I  do  not  approve  their  bills  unless 
they  return  about  four-fifths  as  many  blanks  as  there 
are  voters  in  the  district.  I  have  them  set  forth  in  this 
blank  the  number  of  voters.  They  have  a  number  of 
blanks.  The  law  perhaps  might  require  every  one  to  sign 
one  whether  he  has  money  or  not,  but  the  assessors  come 
in  and  say,  "I  have  been  assessor  ten  or  fifteen  years.  I 
know  those  fellows  do  not  have  any  money.  They  have 
not  anything."  So  we  make  a  little  lee-way  there,  but  I 
leave  them  under  the  impression  that  everybody  should 
return.  I  will  leave  with  the  Commission  if  they  desire  it, 
several  copies  of  a  circular  letter  of  eight  pages  which 
I  circulated  among  the  assessors,  also  of  four  pages  of 
instruction,  15,000  of  which  I  sent  around  at  my  own 
expense  to  instruct  the  tax-payers. 

Q.  Has  there  been  any  substantial  attempt,  either  in 
your  own  county  or  any  other  county,  so  far  as  you 
know,  to  enforce  the  penalties  which  the  law  provides 
for  failure  to  return,  improper  returns,  or  collusion  be- 
tween the  assessor  and  the  taxable? 

A.  Not  one. 

Q.  How  do  you  account  for  that? 

A.  I  have  set  it  forth  there  in  horrible  terms  in  that 
circular  to  the  assessors.  I  have  told  the  assessors,  which 
I  mean  to  carry  out,  that  if  they  will  report  any  genuine 


447 

case  to  me  I  will  report  it  to  the  District  Attorney  very 
quickly.    I  do  not  know  how  to  account  for  it. 

Q.  You  do  your  best  to  get  all  you  can,  and  let  the 
others  drop? 

A.  Yes,  sir.  You  can  create  too  much  antagonism. 
Here  is  a  copy  from  the  Auditor  General.  If  you  will 
notice,  under  "miscellaneous"  subhead  C,  that  instruction 
which  used  to  read  "certificates  bearing  interest,"  or 
something  of  that  sort,  is  changed  to  the  specific  state- 
ment of  "certificates  of  deposit  in  trust  companies."  He 
wrote  me  he  changed  that  on  my  suggestion.  I  am  glad 
he  did,  because  the  assessors  always  said  that  did  not  mean 
certificates  of  deposit. 

Q.  What  check  do  you  have  on  corporations  that  do  not 
report  to  the  Auditor  General?  Do  you  attempt  to  check 
them  up  in  any  way? 

A.  Not  particularly.  I  am  devising  ways  to  do  that  and 
hope  to  spend  time  this  year  on  that. 

Q.  What  they  do  not  report  to  the  Auditor  General  they 
ought  to  report  to  the  county? 

A.  That  is  the  law.    It  has  been  so  decided. 

Q.  There  is  sufficient  law  for  that? 

A.  Yes,  sir,  there  is  sufficient  law  for  that.  If  they  do 
not  report  to  Harrisburg,  then  the  assessor  goes  for  them. 

Q.  On  general  principles  they  must  pay  tax  in  some 
place  ? 

A.  Somewhere.  I  think  they  are  catching  them  pretty 
generally.  I  do  not  know  any  in  our  county  that  do  not 
report  except  our  traction  company. 

Q.  Are  your  people  generally  satisfied  with  the  present 
taxation  against  banks  and  saving  institutions  and  trust 
companies? 

A.  I  think  so. 

Q.  The  method  of  collecting  it  and  all? 

A.  I  think  there  is  no  complaint  as  to  that.  I  think 
that  is  quite  satisfactory  all  around. 


448 

Q.  Is  there  any  interchange  of  mortgages  between 
counties,  as  required  by  the  Act  of  1889,  where  County 
Commissioners  are  required  to  transmit  a  statement  of 
mortgages  owned  by  non-residents  to  the  Commissioners 
of  counties  where  the  mortgagees  are  domiciled  ? 

A.  I  think  that  is  pretty  generally  attended  to. 

Q.  You  receive  those? 

A.  Yes,  sir,  we  receive  them  from  various  counties. 

Q.  Have  your  trust  companies  ever  claimed  certificates 
of  deposit  to  be  in  the  ''bonds,  mortgages  and  certificates 
of  indebtedness "  class? 

A.  No,  they  have  not.  They  simply  have  said  that  they 
pay  the  tax  on  everything  and  that  is  the  statement  they 
used,  which  is  not  true. 

Q.  Without  specifying  items  of  everything? 

A.  Without  specifying.  They  forget  the  time  certifi- 
cates. Our  three  leading  trust  companies,  their  stock  is 
about  500  per  cent.,  and  they  are  not  old,  either. 

Q.  What  are  they  paying,  par  $100? 

A.  Yes,  sir. 

Q.  And  selling  at  500? 

A.  Yes,  sir.  Stocks  at  50  are  selling  at  250,  and  I 
thing  one  270. 

Q.  What  dividends  are  they  paying  ? 

A.  I  do  not  know  that  exactly. 

Q.  If  they  are  500  they  must  be  paying  20  per  cent, 
dividends  ? 

A.  They  are  paying  fine  dividends.  I  think  you  are 
about  right.  Of  course,  it  is  to  their  interest  to  tell  holders 
of  certificates  that  they  need  pay  no  tax  out  of  their 
interest,  because  the  minute  the  holder  knows  he  must 
do  that  he  has  so  much  less  interest,  and  he  takes  his 
money  out  of  the  trust  company  and  buys  stocks. 

By  a  Member  of  the  Committee : 

Q.  A  man  who  makes  a  misstatement  would  not  be  a 
very  loyal  citizen  of  his  State  ? 

A.  Decidedly  not. 


449 

Q.  They  know  that  they  are  placing  a  wrong  construc- 
tion on  the  word  "  deposits  "? 

A.  It  is  a  very  dangerous  word  in  the  Act  of  1907.  It 
gives  them  sufficient  to  stand  on,  yet  there  is  that  large 
sum  of  money  bearing  interest  that  is  not  taxed  anywhere 
if  that  construction  is  right,  which  amounts  in  Lancaster 
county  to  a  little  over  one-fourth  of  all  our  taxable  per- 
sonal property. 

By  Mr.  Brown: 

Q.  In  this  Commonwealth  there  are  a  large  number  of 
worthless  obligations  which  are  not  taxable? 

A.  Yes,  sir. 

Q.  Is  anything  done  in  your  county  to  see  whether  they 
are  worthless  or  not  ? 

A.  No,  there  is  not  up  to  this  time. 

Q.  Have  you  anything  to  suggest  in  that  line,  as  to 
how  that  could  be  done? 

A.  I  suppose  the  Controller's  office  could  increase  its 
activity  and  look  after  that  and  ascertain  the  truth. 

Q.  Do  you  know  what  amount  it  would  be  in  Lancaster 
county,  as  compared  with  the  general  return? 

A.  We  were  stung  pretty  hard  not  so  long  ago  in  in- 
vesting in  gold  mines  and  various  things  like  that  in  the 
western  part  of  the  United  States. 

Q.  You  think  there  was  a  fair  return  made  of  that? 

A.  Yes,  sir,  practically  all  worthless.  They  make  affi- 
davit on  the  back  that  they  are  worthless.  That  seems 
to  be  as  far  as  we  can  go  just  at  present.  The  Con- 
troller's office  can  be  made  an  office  of  wonderful  effici- 
ency, which  would  need  increased  force. 

Q.  Have  you  anything  to  suggest  to  ascertain  these 
taxable  securities,  moneys  at  interest,  promissory  notes, 
articles  of  agreement,  and  a  hundred  other  things  the 
law  covers,  besides  the  machinery  which  it  now  furnishes? 

A.  No. 
23 


450 

Q.  Some  States  have  people  out  specially  for  that  bus- 
iness, going  around  from  county  to  county,  trying  to  dis- 
cover these  things? 

A.  Of  course,  our  assessor  is  specially  for  that.  He  is 
specially  to  quiz  men  and  find  out. 

Q.  He  depends  largely  on  what  a  man  says.  He  does 
not  look  at  them  except  directly? 

A.  And  what  a  man's  neighbors  tell  him. 

Q.  Does  he  inquire  among  the  neighbors? 

A.  Yes,  sir,  he  inquires  among  the  neighbors.  In  a 
rural  place  that  is  pretty  generally  known.  I  can  under- 
stand in  a  big  city  that  one  man  does  not  know  another 
man's  business  and  it  would  be  hard  to  get  at.  I  think 
that  the  thing  which  would  work  more  good  than  amr- 
thing  else  would  be  three  or  four  genuine  prosecutions. 
That  would  bring  the  returns. 

Q.  To  what  do  you  attribute  the  fact  that  there  have 
not  been  any  in  this  Commonwealth  on  that  subject? 

A.  That  must  be  attributed  to  the  disclination  of  one 
man  to  sue  his  neighbor,  and  I  suppose  the  fear  of  action 
for  malicious  prosecution  if  the  case  were  not  made  out. 
We  have  this  condition  in  Lancaster  county.  There  is  an 
absolute  recklessness  with  regard  to  arresting  a  poor  fel- 
low in  the  gutter  and  our  magistrates  arrest  hundreds  of 
them.  We  had  in  1908,  when  I  took  office,  2,700  dis- 
charged cases. 

Q.  What  do  you  arrest  them  for? 

A.  They  arrest  them  for  anything.  I  cut  that  down  to 
about  1,900.  I  refused  to  pay  costs  in  those  cases.  There- 
fore magistrates  became  more  careful  as  to  taking  them. 
But  when  it  comes  to  arresting  a  man  of  means,  a  man 
who  has  money,  that  is  the  very  class  here.  You  would 
have  to  arrest  the  man  who  has  money  and  does  not  return 
it.  It  is  a  very  different  proposition.  One  neighbor  is 
not  going  to  do  it  to  another. 


461 

By  a  Member  of  the  Committee  : 

Q.  Probably  on  the  principle  that  people  who  live  in 
glass  houses  should  not  throw  stones? 

A.  Probably. 

By  Mr.  Brown: 

Q.  You  think  we  have  machinery  enough? 

A.  I  think  so.  The  fact  is  the  Lancaster  county  plant 
has  too  much  machinery. 

Q.  What  is  the  sentiment  with  respect  to  taxing  land 
and  taxing  mortgages  on  land  ? 

A.  There  is  a  great  deal  of  opposition  to  that.  They 
cite  it  as  the  most  virulent  kind  of  double  taxation,  which 
no  doubt  it  is.  We  cannot  get  along  without  it.  No 
doubt  that  is  odious,  where  a  man  has  a  $15,000  farm  and 
an  $11,000  mortgage  on  it. 

Q.  I  have  received  quite  a  number  of  letters  and  the 
Committee  have  received  quite  a  number  of  letters  pro- 
testing against  taxing  these  deposits  on  the  ground  that 
they  are  held  by  estates,  poor  people,  and  all  that.  What 
character  of  people  in  your  county  hold  certificates? 

A.  I  made  a  list  of  people  who  pay  taxes  on  money  in 
Lancaster  county,  and  in  1908  $25,000,000  was  all  held 
by  6,190  persons.  It  was  an  average  of  $4,000  each. 

Q.  It  would  not  be  the  very  poor? 

A.  No.  They  are  large  ones,  certificates  of  $15,000  or 
$20,000.  We  have  just  been  making  the  assessors  come 
in  and  show  me.  They  have  got  $40  and  $50.  It  does 
make  you  feel  a  little  ashamed  of  yourself,  but  at  the  same 
time  I  believe  young  fellows  who  have  saved  $100  or  $200 
like  to  see  it  in  the  book,  to  let  people  know  they  are  be- 
ginning to  earn  and  save  money  up.  There  are  others  who 
do  not  like  to  return  $40  at  interest,  or  $50  or  $100.  The 
tax  is  proportionate  and  it  sometimes  looks  hard  but  it  is 
the  law.  I  was  surprised  that  the  whole  $25,000,000  was 
held  by  6,000  people. 


452 

Q.  You  have  already  spoken  about  the  sentiment  of 
your  county  on  taxing  manufacturing  corporations? 

A.  Yes,  sir.  Manufacturing  corporations  are  received 
with  much  favor,  and  we  are  willing  to  do  everything 
we  can  for  them. 

Q.  Your  land  owners  are  entirely  satisfied  to  have  them 
exempt  ? 

A.  Our  land  owners  are  only  dissatisfied  with  one 
thing.  That  is,  that  in  Lancaster  City,  perhaps  three  or 
four  squares  from  the  main  part  of  the  city,  they  are  only 
taxed  for  about  one-fourth  the  value,  while  real  estate  in 
the  country  is  taxed  three-fourths.  "We  have  gone  up 
about  an  average  of  $500,000  in  each  ward. 

By  a  member  of  the  Committee : 

Q.  That  is  generally  true,  is  it  not? 

A.  Very  true. 

Q.  In  nearly  every  county? 

A.  Yes,  sir.  For  instance,  one  of  our  trust  companies 
had  $29,000  in  a  property,  and  I  spoke  to  the  County 
Solicitor.  He  forgot  he  was  a  County  Solicitor  and  said, 
"That  property  in  the  corner  there  we  have  $29,000  in, 
and  I  was  mortally  afraid  we  were  going  to  lose  it.  The 
other  day  I  was  offered  $82,000  for  that  property.'*  That 
is  a  fair  sample.  It  is  that  way  all  over  the  heart  of  the 
town. 

By  Mr.  Brown: 

Q.  How  are  your  people  on  the  mercantile  tax? 

A.  They  are  practically  indifferent  on  that.  I  think 
they  are  willing  to  pay  mercantile  tax.  I  do  not  find 
much  opposition  to  it.  While  there  is  every  consideration 
shown  to  manufacturing  business  concerns  most  of  our 
people  believe  the  mercantile  tax  is  right. 

Q.  Does  the  enforcement  of  the  law  have  a  tendency  to 
drive  tax  payers  out  of  your  county? 

A.  Yes,  sir,  it  has  had  this  tendency  to  make  those  who 


453 

had  large  moneys  on  deposit  buy  Pennsylvania  stock  that 
they  did  not  need  to  reckon  with  us. 

Q.  Has  it  caused  any  of  them  to  remove  to  other  coun- 
ties? 

A.  No,  you  could  not  get  a  Lancaster  county  man  to 
go. 

Q.  I  have  received  letters.  They  say  men  of  large 
wealth  have  migrated  from  county  to  county  for  the 
purpose  of  avoiding  this? 

A.  We  have  the  garden  spot  of  the  world  and  are  going 
to  stay  there. 

Q.  Suppose  you  had  a  lower  rate  than  four  mills,  would 
that  have  a  tendency  to  increase  the  income,  or  do  you 
think  four  mills  is  fair? 

A.  No,  four  mills  is  low  enough.  We  would  not  in- 
crease the  income  by  reducing  it.  I  am  sure  of  that. 

Q.  When  a  return  is  made  to  you  (and  when  I  say  you 
I  mean  a  County  Commissioner  or  any  official  in  Pennsyl- 
vania standing  in  the  same  position  as  you  are  in), 
which  you  are  satisfied  is  not  a  true  return,  what  is  done 
with  that? 

A.  I  send  him  back.  We  had  a  case  like  that  in  which 
a  doctor  of  some  prominence  had  been  returning  $33,000 
or  $34,000.  I  was  very  sure  he  had  over  $100,000  at 
interest.  When  the  assessor  came  in  with  that  I  sent  the 
assessor  a  special  letter.  I  told  him  I  wanted  to  find  the 
money.  The  doctor  refused  to  make  the  affidavit  and 
told  the  assessor  to  make  it  out  according  to  his  best 
judgment,  as  the  law  empowered  him  to  do,  and  he  came 
in  with  $77,000.  I  told  the  man.  The  man  never  ap- 
peared on  the  appeal  day  to  object  to  it.  There  is  $10,000 
or  $15,000  more  there. 

Q.  Do  you  have  many  of  those  cases? 
A.  Quite  a  number. 

Q.  The  presumption,  you  think,  is  in  favor  of  an  honest 
return. 


454 

A.  Yes,  sir.  The  people  of  our  county  that  hold  most 
of  this  money  are  Mennonites  and  Dunkers  and  other 
plain  sects,  because  the  other  class  of  people  have  their 
money  in  business.  Most  of  our  farmers  belong  to  those 
non-resistent  churches,  and  I  will  take  their  oaths.  If 
they  go  on  oath  I  feel  positive  it  is  about  right. 

Q.  What  is  the  sentiment,  if  any,  in  your  county  as  to 
the  local  taxation  of  corporations,  whether  or  not — I  refer 
now  to  public  utility  corporations? 

A.  Those  that  are  not  private,  you  mean? 

Q.  Not  private? 

A.  We  think  they  ought  to  be  taxed.  Our  county  has 
suffered  from  that  quite  considerably.  The  York  Haven 
Power  Company  escaped  local  taxation  and  the  township 
in  which  the  power  company  is  located  loses  a  great  deal 
of  money  for  its  road  and  other  local  purposes,  and  the 
McCall  Ferry  Dam  Company,  which  is  about  a  $20,000 
plant,  or  will  be  when  completed,  escapes,  and  our  senti- 
ment there  is  very  strongly  that  they  ought  to  contribute. 

Q.  What  about  the  time  of  the  return  to  the  Common- 
wealth? Is  that  complained  of;  that  the  time  of  the 
return  should  be  changed  to  the  end  of  the  year? 

A.  It  ought  not  to  be  changed,  I  think,  for  this  reason : 
It  will  give  the  assessors  an  opportunity  to  bring  in  more 
days.  When  I  first  took  office  I  thought  that  assessors 
were  overpaid.  I  am  since  of  an  entirely  different 
opinion. 

Q.  I  am  referring  to  corporate  returns? 
A.  I  know  of  no  complaint  as  to  that. 

Q.  What  becomes  of  the  time  money  at  interest?  When 
treasurers  of  corporations  return  now  their  money  at 
interest,  what  becomes  of  the  money  from  the  first 
Monday  of  November  until  the  31st  day  of  December? 

A.  Corporations  that  return  to  us  locally? 

Q.  Yes. 


455 

A.  The  treasurer  of  a  corporation  reports  on 
the  first  Monday  of  November  debt  of  the  corporation 
owned  by  residents  of  the  Commonwealth.  The  courts 
have  decided  the  settlement  is  made  for  a  year.  What 
becomes  of  the  difference  between  the  first  Monday  of 
November  and  the  31st  day  of  December? 

A.  We  do  not  find  that  that  question  arises,  because  all 
corporations  we  have  made  their  settlement  at  Harris- 
burg.  We  never  have  anything  to  do  with  it. 

Q.  Railroad  companies  do  not  pay  any  local  tax? 

A.  No.  We  get  practically  nothing  from  corporations 
because  they  are  nearly  all  Pennsylvania  corporations 
that  are  in  operation. 

Q.  Do  you  make  any  investigation  to  determine 
whether  or  not  the  property  of  corporations,  take  railroal 
companies  for  instance,  and  the  others,  electric  light  and 
trolleys  and  others  in  your  county,  are  using  properties 
purely  for  their  corporate  purposes? 

A.  Yes,  sir,  some  investigation.     I  think  they  are. 

Q.  You  keep  watch  on  them  to  see  that  they  are, 
because  otherwise  they  would  not  be  exempt? 

A.  No,  we  watch  that  too  closely.  There  is  only  one. 
It  is  our  largest  traction  company,  about  a  $12,000,000  or 
$13,000,000  concern.  That  we  want  to  take  up  this  year. 
It  is  our  whole  traction  system,  in  fact. 

Q.  The  same  answer  would  apply  to  water  companies 
and  all  that  sort  of  thing? 

A.  Yes,  sir. 


456 


WILLIAM  A.  MATTERN,  Reading,  called. 

Mr.  Matter:  I  am  not  here  with  any  statistics,  but  am 
ready  to  furnish  any  memoranda  as  desired.  I  did  not 
know  I  was  to  go  until  last  evening  about  five  o'clock 
the  Controller  told  me  to  make  the  trip  to  Philadelphia 
this  morning.  Then  I  had  to  hurry  up  and  come  down 
here,  but  our  predicament  is  on  the  same  line  as  Mr. 
Eschelmann  's. 

By  a  Member  of  the  Committee: 

Q.  "Who  is  the  Controller  of  Berks  county? 

A.  A.  L.  Rhoads. 

Q.  You  are  clerk  to  the  Commissioners? 

A.  I  am  clerk  to  the  Commissioners  and  have  been 
working  in  that  office  for  the  last  five  years.  In  regard 
to  catching  people  that  move  from  one  district  to  the 
other,  since  I  am  chief  clerk  of  the  office  I  have  devised 
a  plan  I  think  works  all  right.  As  long  as  they  live  in 
the  same  district  the  assessors  know  them,  but  after  they 
move  from  one  district  to  the  other  I  tell  the  assessor 
to  report  to  me  into  what  district  they  moved.  Then  I 
take  up  that  report  and  send  the  sheet  to  the  assessor 
in  the  district  to  which  the  party  had  removed.  In  regard 
to  checking  up  those  lilac  slips  we  check  up  every  slip  that 
comes  to  our  office.  We  require  the  stubs  and  require 
the  blanks  and  the  others  to  be  returned  by  the  local 
assessor  to  our  office  and  check  them  up.  We  do  that 
before  the  assessor  leaves  the  office.  The  only  trouble  we 
have  is  we  have  some  kick  coming  from  those  people  that 
deposit  money  in  banks  on  books.  That  comes  under 
accounts  and  it  is  taxable. 

By  a  member  of  the  Committee: 
Q.  Subject  to  check? 
A.  Not  subject  to  check. 


457 

Q.  You  mean  time  certificates  of  deposit? 

A.  Time  certificates  of  deposit.  The  banks  advise  them 
not  to  return  them. 

Q.  You  have  the  same  difficulty  Mr.  Esehelman  com- 
plained of? 

A.  Precisely.  We  cannot  get  the  information  from 
the  banks  and  trust  companies  that  do  it.  They  say  they 
protect  their  depositors;  it  would  spoil  their  business  if 
they  let  us  know. 

By   Mr.    Brown : 

Q.  Do  you  know  of  any  reason  why  they  should  not 
return  the  amount  of  money  so  on  deposit,  pay  the  tax 
themselves,  and  deduct  it  from  the  interest  which  they 
pay  the  depositor,  the  same  as  is  done  in  every  other  case  ? 

A.  Not  at  all.  That  is  the  instruction,  that  any 
individual  that  can  tell  them  the  bank  in  which  he  had 
a  deposit  deducts  the  State  tax  from  his  interest,  he 
was  exempt  from  it,  otherwise  he  had  to  make  a  return 
to  the  local  assessor. 

Q.  None  had  it  deducted? 

A.  None  had  it  deducted.  In  most  cases  we  have  not 
so  much  difficulty  in  country  districts  as  we  have  in  the 
city  where  they  are  in  close  contact  with  banks  and 
lawyers. 

Q.  Is  your  experience  similar  to  that  of  Mr.  Esehelman 
in  all  respects  of  which  he  spoke? 

A.  Yes,  sir. 

Q.  Have  you  any  other  suggestion  to  make  than  he 
has  made,  to  try  to  remedy  conditions  or  help  out  the 
situation  in  the  collection  of  these  taxes  ? 

A.  I  know  we  had  trouble.  We  had  a  woman  there 
that  did  not  make  any  affidavit.  Then  we  had  to  put  50 
per  cent.  on.  We  did  that  the  first  year,  and  she  would, 
not  make  affidavit  the  next  year.  I  told  the  assessor, 
"You  had  better  make  your  estimate  higher. "  Then  it 
ran  up  to  $601,000  for  one  year. 
•  24 


458 

Q.  What  did  it  commence  with? 

A.  He  commenced  with  $100,000. 

Q.  And  ran  up  to  $600,000,  and  then  the  return  was 
made? 

A.  Yes,  sir.  The  next  year  I  told  him  he  had  better 
make  the  estimate  higher.  Then  he  made  it  $400,000. 
The  next  year  she  swore  to  $601,000. 

Q.  Have  you  many  of  those  in  your  county  who  do 
not  make  out  a  return  ? 

A.  I  have  50  in  one  ward.  I  have  50  papers  that  did 
not  make  a  return.  I  do  not  know  what  to  do  with  them. 
By  a  member  of  the  Committee : 

Q.  Your  city  assessors  are  appointed  in  Bucks  County? 

A.  No,  sir,  they  are  elected  by  the  people. 

Q.  All  assessors  are  elected? 

A.  Yes,  sir.  I  had  a  controversy  with  one  of  them 
that  refused  to  go  after  secret  societies.  I  gave  instruc- 
tions that  orders  of  that  class  should  make  return  the 
same  as  individuals.  He  said  he  had  a  letter  from  the 
Auditor  General's  department  making  is  discretionary  for 
him  to  do  it  or  not  do  it.  I  told  him  I  could  not  see  that 
the  State  Department  leave  this  for  one  man  and  make 
all  the  others  do  it. 


459 


H.  FRANK  ESCHELMAN,  recalled. 

By  a  Member  of  the  Committee : 

Q.  Before  you  leave  the  room  I  should  like  to  know 
what  success  you  met  with  in  having  moneys  returned  held 
by  secret  organizations  in  your  county? 

A.  We  have  not  raised  that  question.  They  have  been 
returning  them  pretty  generally.  We  have  not  had  any 
difficulty  in  that  line. 

By  Mr.  Brown: 

Q.  Is  there  any  reason  why  these  banks  and  trust 
companies  should  not  make  returns  of  all  these  moneys 
on  certificates  of  deposit,  and  themselves  deduct  the  State 
tax  from  the  interest  which  they  pay  the  depositor? 

A.  I  think  not. 

Q.  And  directly  account  to  you? 

A.  I  have  just  cited  that  their  stock  is  away  up  at  500 
per  cent.  I  have  suggested  to  them  that  that  looks  to  me 
as  if  they  could  pay  4J  per  cent,  and  then  deduct  it. 

Q.  Have  you  ever  made  such  a  suggestion. 

A.  Yes,  sir,  I  have  made  the  suggestion. 

Q.  Has  there  been  any  objection  on  account  of  the 
exposure  of  depositors  or  interfering  with  business  in  any 
way  ? 

A.  Yes,  sir,  they  are  very  jealous  as  far  as  that  is 
concerned.  The  plan  suggested  by  Mr.  Sproul  is  a  good 
one.  The  county  needs  it  three-fourths. 

Q.  Suppose  the  treasurer  of  a  trust  company  reports 
on  oath  that  there  is  so  much  money  on  certificates  of 
deposit  of  his  company,  why  would  not  that  be  about  as 
near  as  you  can  get  to  it?  That  would  not  require 
exposure  of  depositors? 

A.  No,  and  then  settle  direct. 


460 

Q.  Settle  direct  and  deduct  the  tax  from  the  interest? 

A.  It  is  the  very  best  plan.  I  have  always  been  very 
fearful  that  the  Legislature — that  the  county  would  not 
get  back  its  three-fourths  of  this  tax  on  stock,  and  all  that 
sort  of  thing.  When  it  is  sent  to  Harrisburg  that  is  the 
last  of  it.  We  only  get  three-fourths  of  what  we  collect. 

Q.  If  it  is  of  such  advantage  to  the  county,  why  not 
have  a  provision  that  the  county  would  collect  it?  Let 
the  treasurer  of  the  corporation  pay  it  to  the  county, 
instead  of  the  depositor  doing  that? 

A.  That  would  be  very  good. 

Q.  You  are  trying  to  get  all  the  personal  property  you 
can  so  as  to  lighten  the  land  tax? 

A.  That  is  it  exactly.  That  is  what  my  circular  states. 
Land  ought  to  be  relieved,  especially  when  there  is  a 
mortgage  on  it  and  there  is  a  tax  on  the  mortgage  and 
the  land  both. 


461 


WILLIAM  A.  MATTERN,  recalled. 

By  Mr.  Brown: 

Q.  What  is  your  experience  about  the  sentiment  of  your 
people  on  the  exemption  from  taxation  of  public  utility 
corporations? 

A.  We  are  getting  some  tax  from  railroad  and  other 
corporations  that  do  not  use  it  for  special  purposes.  We 
had  trouble  with  the  traction  company.  They  usually 
hire  it  out  to  some  employe  and  say  they  do  not  get  any 
rent.  I  do  not  know  for  what  purpose  it  is,  but  that  is 
the  case. 

Q.  Why  do  you  not  tax  that?     That  is  not  exempt? 

A.  We  had  it  taxed,  and  then  they  made  an  appeal. 
Lawyers  came  and  finally  one  property  I  allude  to  was 
exonerated.  We  had  it  taxed  and  tried  to  hunt  them 
up  all  we  possibly  can. 

By  a  Member  of  the  Committee : 

Q.  Was  the  appeal  made  to  Court  ? 

A.  No,  sir,  only  to  the  County  Commissioners  at  the 
time  the  Tax  Collector  wanted  to  make  settlement. 

Q.  The  County  Commissioners  exonerated  the  Com- 
pany? 

A.  Yes,  sir. 

Q.  Are  they  of  the  same  political  party? 

A.  No,  sir,  a  different  political  party.  I  can  say  for 
the  County  Commissioner's  office  of  Berks  county  that 
very  little  politics  is  played  in  it.  It  is  fair  and  square. 
The  result  of  my  stand  with  that  assessor  was  that  $80,000 
were  returned  to  me  in  the  office  in  one  day  of  secret 
societies.  After  he  had  received  a  second  instruction 
from  the  Auditor  General  he  said  he  was  guilty  and  had 
to  go  out,  and  I  had  $80,000  returned  in  one  day. 


462 

By  Mr.  Brown: 

Q.  Do  you  think  the  present  laws  are  sufficient  for 
the  collection  of  taxes? 

A.  If  properly  enforced,  with  the  exception  of  some 
words  that  would  make  it  more  plain. 

Q.  What  do  you  mean  by  that? 

A.  The  same  way  Mr.  Eschelman  said,  in  the  Act  of 
1907,  they  are  not  quite  as  plain  as  they  ought  to  be  You 
have  a  shield  behind  some  of  the  words. 

Q.  What  do  you  do  to  take  up  your  guide  books? 

A.  We  take  the  lilac  slips  as  they  are  returned  by  the 
assessors  and  check  them  off  in  the  transcript  books. 
After  that  we  take  the  mortgage  book  and  check  them 
up  and  make  the  assessor  account  for  any  difference 
right  in  his  presence. 

Q.  As  to  insolvent  and  worthless  obligations? 

A.  They  usually  return  them  on  the  back,  as  Mr. 
Eschelman  said,  make  the  statement  on  the  back  without 
any  further  investigation. 

Q.  Do  you  think  further  investigation  would  develop 
that  they  were  not  so? 

A.  In  some  instances  it  might;  in  other  instances  it 
might  not. 

Q.  How  do  land  owners  in  your  county  feel  on  this 
subject  ? 

A.  In  some  districts  they  complain.  My  study  of  the 
method  of  taxation  is  this:  I  believe  our  assessment  is 
not  quite  what  it  ought  to  be  in  regard  to  land.  I  base 
it  on  local  taxation.  In  some  townships  the  tax  rate 
is  high.  With  about  the  same  expenditure  at  other  places 
it  is  low.  Where  there  is  a  high  valuation  of  land,  the 
tax  rate  is  low.  Where  there  is  a  low  valuation  it  is  high. 
Therefore,  I  say  in  some  parts  the  taxation  is  not  what 
it  ought  to  be. 


463 

By  a  Member  of  the  Committee : 

Q.  How  does  the  assessed  valuation  in  country  districts 
on  farms  compare  with  city  valuations? 

A.  I  think  on  an  average  it  is  higher  than  city 
property.  The  oath  binds  the  assessors  to  assess  them 
at  what  they  think  it  would  sell  for  at  a  bona  fide  sale 
with  full  public  notice.  Properties  are  sold  away  up. 

By  Mr.  Brown : 

Q.  What,  from  your  experience,  are  the  usual  methods 
of  avoiding  a  proper  return  for  payment  of  tax? 

A.  I  had  an  experience  just  the  other  day.  A  fellow 
came  in  and  said  to  me,  "I  have  money  on  deposit.  Must 
I  pay  tax?"  I  told  him,  "If  you  get  interest  on  it  and 
have  it  in  on  time  you  have  to  pay  tax.  If  you  have  it 
subject  to  check  and  draw  a  check  sometimes  you  do  not 
pay  tax  on  it."  He  said,  "I  will  get  my  certificate  of 
deposit  and  deposit  it  subject  to  check."  That  is  what 
he  told  me. 

Q.  Deposit  it  subject  to  check  and  never  use  the  check? 

A.  He  never  uses  a  check.  He  gets  2  or  3  per  cent, 
interest.  When  you  come  to  those  banks  and  ask  them 
they  say  they  have  to  protect  their  depositors. 


464 


H.  FRANK  ESCHELMAN,  recalled. 

By  Mr.  Brown : 

Q.  We  have  received  a  number  of  letters  on  the  subject 
of  taxing  inheritances.  Has  there  been  any  discussion 
in  your  county  on  that  subject?  I  mean  direct  inheri- 
tances. 

A.  That  subject  has  not  been  raised  in  our  county, 
though  I  have  heard  some  not  inconsiderable  sentiment  in 
favor  of  its  being  done.  Our  Orphans'  Court  business  is 
very  large  and  it  would  amount  to  considerable  money. 


WM.  A.  MATTER,  recalled. 

By  Mr.  Brown : 

Q.  Have  you  any  suggestion  to  this  committee  as  to  how 
the  law  could  be  bettered  in  any  respect,  either  as  to  the 
class  of  subjects  to  be  taxed  or  the  class  of  subjects  to  be 
exempt,  or  the  method  of  collection  or  exemption? 

A.  The  only  thing,  I  think,  perhaps,  might  be  bettered, 
of  which  I  heard  a  good  bit  of  talk  in  our  neighborhood, 
was  those  small  depositors  that  simply  put  in  their 
savings.  Limit  that  to  a  certain  amount  and  exempt 
that,  and  after  they  get  up  to  a  certain  amount  let  them 
pay  tax  on  it. 

Q.  Have  you  anything  else  to  suggest? 

A.  No,  sir. 

By  a  Member  of  the  Committee : 

Q.  Your  city  is  quite  a  manufacturing  district? 
A.  Yes,  sir. 


465 

Q.  What  sentiment,  if  any,  is  there  with  regard  to  tax- 
ing manufacturing  corporations? 

A.  I  think  they  are  satisfied.  People  at  large  are  satis- 
fied with  the  tax  they  pay. 

Q.  Manufacturing  corporations? 

A.  You  hear  some  kick  and  some  are  complaining  about 
ills,  but  they  are  not  ready  to  give  a  remedy  to  cure  those 
ills. 

Q.  What  I  meant  was  this.  What  would  you  say,  as  a 
man  of  affairs  in  your  county,  taking  into  consideration 
the  fact  now  that  we  are  endeavoring  to  raise  more  revenue 
in  the  Commonwealth?  What  would  you  say  as  to  taxing 
manufacturing  corporations  as  a  method  of  raising  addi- 
tional revenue? 

A.  I  have  not  given  that  any  thought,  and  really  do  not 
know  what  manufacturing  concerns  pay  to  the  State. 

Q.  They  pay  tax  for  local  purposes  but  pay  nothing  to 
the  Commonwealth? 

A.  They  should  be  on  an  equal  footing  with  an  indi- 
vidual to  my  estimation. 

By  Mr.  Brown : 

Q.  Is  there  any  agitation  or  any  talk  in  your  community 
on  that  subject  ? 

A.  About  railroads  you  hear  some. 

Q.  They  want  railroads  taxed  locally  on  property  in  the 
district  ? 

A.  Yes,  sir. 

Q.  But  not  manufacturing  corporations? 

A.  I  do  not  hear  much  along  that  line.  The  only  thing 
you  hear  about  railroads  running  through  townships  and 
not  paying  local  tax. 

Q.  How  about  the  mercantile  tax  there? 

A.  I  do  not  hear  very  much  about  that. 

Q.  There  is  no  objection  to  that  law? 

A.  No. 


466 

By  a  Member  of  the  Committee : 

Q.  The  merchants  are  all  prosperous  and  willing  to  pay 
their  share  of  taxes? 

A.  Some  go  out  of  business,  then  they  do  not  come 
around  any  more. 

By  Mr.  Brown : 

Q.  Do  you  have  any  false  returns  of  personal  property? 

A.  Not  that  we  find  out. 

Q.  What  do  you  do  when  you  find  a  flagrant  case? 

A.  We  investigate  and  try  to  find  out.  We  had  some 
cases. 

Q.  Suppose  you  found  a  case  that  you  knew  was  not 
true,  what  would  you  do? 

A.  We  ought  to  prosecute. 

Q.  What  do  you  do? 

A.  We  have  not  done  anything  in  that  line. 

Q.  Do  you  not  think  one  prosecution  in  five  years  would 
work  wonders? 

A.  Sure,  it  would  bring  the  others  to  terms  certainly. 

Q.  Suppose  you  prosecuted  one  man,  what  would  be  the 
result  of  it? 

A.  I  think  it  would  bring  the  others  to  terms. 

Q.  You  mean  all .  taxables  ?  It  ought  to  be  notice  to 
everybody  and  they  would  have  to  make  return  and  get 
some  result? 

A.  Yes,  sir.  A  letter  I  received  from  Harrisburg 
worked  wonders.  I  simply  published  my  letter  in  the 
paper.  Not  being  personal,  I  took  out  names.  I  wrote  to 
Harrisburg,  and  put  my  answer  that  I  got  from  the  State 
Department,  and  gave  my  suggestion,  and  that  worked 
wonders  in  the  line  of  secret  societies  making  their  return. 

Q.  There  is  not  much  use  of  printing  these  dire  threats 
unless  something  is  done? 

A.  Surely  you  have  to  act. 

Q.  It  is  fair  to  assume  that  in  all  the  thousands  of  tax- 


487 

ables  in  every  community  somebody  does  not  make  a  true 
return,  but  makes  one  which  is  palpably  untrue? 
A.  Yes,  sir. 

Q.  Yet  so  far. as  you  know  none  have  been  prosecuted? 
A.  Not  in  our  county  that  I  know  of.     I  am  connected 
with  the  office  there  for  five  years. 

By  a  Member  of  the  Committee: 

Q.  Would  this  have  any  effect  upon  a  prosecution?  For 
instance,  if  you  had  say  12  or  15  cases  before  you  of  that 
character,  and  you  were  to  arrive  at  the  conclusion  that 
some  one  of  those  15  should  be  prosecuted,  to  set  an  ex- 
ample, would  the  fact  that  the  party  in  question  might  be 
of  the  same  political  party  as  the  Commissioners  have  any 
effect  in  bringing  such  a  prosecution? 

A.  I  do  not  think  it  should  have. 

Q.  But  would  it  have  ? 
A.  Not  in  our  county. 

Q.  You  think  not? 

A.  No,  sir,  not  under  the  present  Board  of  Commission- 
ers. I  can  say  that  for  them.  I  am  there  to  abide  by  my 
oath,  and  am  a  respecter  of  every  one  that  comes  in,  no 
matter  what  party  he  is. 

Q.  Under  those  conditions  would  it  not  be  a  good  thing 
to  give  it  a  trial? 

A.  Certainly  it  would. 

Q.  Supposing  you  try  it? 
A.  I  did  not  find  such  a  case. 

Q.  Do  you  mean  to  say  you  have  not  such  a  case  existing 
in  the  county? 

A.  Not  to  our  notice. 

Q.  Have  you  been  active  in  trying  to  find  out  whether 
there  is  such  a  case? 

A.  I  think  as  active  as  any  other  county  in  this  State. 


468      , 

By  Mr.  Brown : 

Q.  Do  you  make  any  effort  to  find  promissory  notes,  arti- 
cles of  agreement  and  other  things  not  reported? 

A.  Yes,  sir. 

Q.  How  do  you  do  that? 

A.  Articles  of  agreement  and  such  things  are  reported 
to  us  from  the  Prothonotary  's  office. 

Q.  I  mean  unrecorded  articles? 

A.  We  have  to  go  on  the  person's  affidavit,  otherwise  we 
cannot  find  them  unless  we  get  it  from  hearsay.  We  got 
$7,000  for  hearsay  the  other  day.  A  woman  bragged  to  a 
neighbor  she  did  not  pay  any  tax  on  $7,000,  and  we  just 
notified  the  assessor  and  he  went  and  hunted  it  up,  and 
we  got  a  return  of  $7,000. 

Q.  Could  similar  information  from  other  people  be  ob- 
tained by  any  official  employed  for  that  purpose? 

A.  Undoubtedly.  They  could  keep  tabs  on  it  and  get 
information  sooner  than  others  could  if  they  would  make  it 
a  business. 

By  a  Member  of  the  Committee : 

Q.  The  trouble  is  in  country  districts  assessors  are  fear- 
ful of  being  ousted  from  office  at  the  close  of  their  term 
when  they  are  candidates  for  re-election.  That  is  the 
reason  they  do  not  do  their  full  duty.  Is  not  that  the 
fact? 

A.  My  experience  is  assessors  will  always  try  to  take  the 
triennial  assessment  for  fear  at  the  next  election,  and  in 
nine  cases  out  of  ten  it  holds  good,  if  they  make  a  slight 
mistake  this  will  work  against  them. 

By  Mr.  Brown: 

Q.  Do  you  think  it  would  better  collection  if  the  State 
appointed  an  official,  some  stranger,  to  go  into  the  dis- 
trict? 

A.  I  believe  it  would. 


469 

Q.  He  could  get  personal  advice  from  the  County  Com- 
missioners ? 

A.  From  the  County  Commissioners'  office,  with  the 
papers  and  other  credentials  on  file,  and  from  personal 
investigation. 

By  a  Member  of  the  Committee : 

Q.  What  would  you  say  as  to  the  method  of  electing 
assessors  or  having  them  serve?  Do  you  think  it  would 
change  conditions  if  they  would  be  appointed  instead  of 
being  elected?  If  the  Judge  were  to  appoint  assessors  in 
your  county  would  that  change  conditions,  do  you  think? 

A.  Perhaps  they  would  not  be  so  fearful  to  avoid  their 
duties  and  come  nearer  to  the  standard.  I  know  in  some 
townships  of  our  county  the  woodland  was  not  assessed  up 
to  two  years  ago.  They  had  the  acres  down  but  no  valu- 
ation to  it,  only  two  townships  in  the  county. 

Q.  Are  you  as  strict  in  your  supervision  of  assessors  as 
Mr.  Eschelman  says  he  is? 

A.  I  require  every  name  the  law  requires  me  to  get.  I 
wiU  not  accept  their  books  and  do  not  pay  them  in  full 
until  I  have  it.  We  have  two  assessors  now,  in  the  Fifth 
and  First  Wards.  We  tabbed  up  with  the  tax  collector. 
One  of  them  had  omitted  40  properties  and  some  papers, 
and  we  just  sent  the  book  back  and  have  $137  of  his  money 
until  we  get  it  correct.  The  other  one  omitted  120. 


470 


WILLIAM  M.  HAGGINBOTHAM,  Norristown,  Pa.,  called. 

By  Mr.  Brown : 

Q.  You  heard  Mr.  Eschelman  testify? 

A.  Part  of  it. 

Q.  Are  your  thoughts  similar  to  his  on  the  general  sub- 
ject? 

A.  On  the  general  subject,  yes.  As  far  as  Montgomery 
county  is  concerned,  it  is  perhaps  a  little  different  from 
Lancaster  county,  as  the  Commissioners  have  the  control, 
and  whatever  the  Treasurer  does  he  does  through  the  Com- 
missioners. In  other  words,  the  Commissioners  dump  their 
duplicates  over  on  the  Treasurer,  charge  them  up  to  him, 
and  it  is  up  to  him  to  collect.  We  have  no  Controller  in 
Montgomery.  Of  course,  we  hear  people  say  different 
things  at  different  times. 

Q.  What  do  they  do  in  the  way  of  filling  up  the  guide 
books  ? 

A.  That  question  comes  directly  under  the  head  of  the 
Commissioner's  office.  We  do  not  bother  much  with  that. 
I  hear  a  great  deal  of  complaint  from  assessors.  I  hear  a 
great  deal  of  complaint  from  common  people,  or  what  I 
term  the  working  classes,  people  who  say  they  are  paying 
the  bulk  of  the  tax,  and  I  believe  they  are. 

Q.  Do  you  know  what  is  done  in  that  county  for  the 
collection  of  tax  on  money  at  interest  ? 

A.  No,  that  is  not  under  my  charge  at  all.  The  Com- 
missioners have  all  of  that.  The  only  thing  I  know  about 
it  is  what  is  charged  to  me.  The  Commissioners  have  ab- 
solute control  of  that. 

Q.  How  is  the  sentiment  in  your  county,  on  the  general 
subject  of  taxation,  as  to  additional  articles  which  should 
be  taxed  or  those  exempted? 


471 

A.  The  sentiment  so  far  as  I  can  ascertain  is  this,  that 
the  corporations  should  pay  their  pro  rata  share  of  tax. 

Q.  Do  you  mean  manufacturers  of  all  kinds? 

A.  All  kinds  of  corporations.  That  has  come  to  me  in 
the  last  few  days,  and  I  find  that  the  sentiment  is  running 
that  way.  To  what  extent  I  cannot  say  because  I  have  not 
got  out  far  enough  on  the  subject. 

Q.  You  do  not  know  the  proportion  of  personal  property 
in  your  county  as  compared  with  realty? 

A.  No,  I  have  not  got  that  point. 

By  a  Member  of  the  Committee : 

Q.  What  have  you  got  to  say  regarding  equalization  of 
taxation  in  your  county? 

A.  It  is  not  equal  at  all. 

Q.  What  do  you  mean  by  that? 

A..  I  mean  that  the  average  workman  who  owns  his  prop- 
erty, and  perhaps  has  paid  $1,600  to  $1,800  for  that 
property,  is  assessed  from  $1,600  to  $1,800  for  that  prop- 
erty. We  go  down  the  road  a  little  further  and  find  a 
property  perhaps  is  classed  at  $100,000,  and  they  are  as- 
sessed from  $18,000  to  $25,000. 

Q.  And  cost  how  much  to  build? 

A.  Take  the  ground  alone  without  any  building  and  it 
is  worth  all  of  $100,000.  I  can  name  several. 

By  Mr.  Brown: 

Q.  Why  have  not  the  assessors  returned  that  properly? 
A.  That  is  a  question  I  am  unable  to  answer. 

By  a  Member  of  the  Committee : 

Q.  Are  your  assessors  appointed? 

A.  They  are  elected. 

Q.  What  would  you  say  if  your  assessors  were  appointed 
by  the  courts  of  your  county,  would  that  make  a  change? 

A.  I  am  not  able  to  answer  that.    I  do  not  know. 

Q.  Is  it  not  a  fact  that  elective  officers  in  many  instances 
fail  to  do  their  duty  because  of  the  fact  that  they  are 


472 

afraid  that  they  will  be  removed  from  office  and  may  not 
be  re-elected? 

A.  That  is  correct.  Very  often  people  in  their  own  lo- 
cality are  not  careful  enough  in  the  selection  of  their  can- 
didate. 

By  Mr.  Brown: 

Q.  Why  could  not  this  service  be  done  better  by  State 
officials  without  any  connection  whatever  with  the  locality? 
They  would  not  have  local  knowledge  that  local  men  would 
have,  but  acting  in  concert  with  the  County  Commissioners, 
why  could  not  a  State  official  do  the  work  more  effectively  ? 

A.  I  cannot  agree  with  you  on  that.  I  do  not  believe 
there  is  a  locality  in  the  State  of  Pennsylvania  or  the 
county  of  Montgomery  that  has  not  good  people,  competent 
to  do  it,  provided  the  people  will  elect  them. 

Q.  A  man  from  outside  the  county  could  certainly  see, 
without  any  local  knowledge,  that  a  property  worth 
$100,000  was  worth  more  than  $18,000? 

A.  Yes,  sir. 

Q.  It  does  not  require  any  special  skill  for  that,  and  if 
money  at  interest  was  reported  direct  from  trust  com- 
panies and  banks  there  would  not  be  any  difficulty  there? 

A.  I  do  not  believe  there  would. 

By  a  Member  of  the  Committee : 

Q.  To  whom  are  these  assessors  responsible? 

A.  To  the  County  Commissioners  only. 

Q.  Are  they  here? 

A.  Yes,  sir.  I  would  also  say  while  here,  as  far  as  the 
mercantile  tax  is  concerned,  we  believe  that  is  about  as 
equal  a  tax  as  we  have,  and  there  is  very  little  complaint  on 
that,  only  by  a  small  minority  of  poor  shopkeepers.  I  do 
not  think  there  is  anything  to  be  improved  on  the  mercan- 
tile so  far  as  our  office  is  concerned. 

By  Mr.  Brown : 

Q.  How  about  the  property  of  public  utility  corpora- 
tions, what  is  the  sentiment  of  your  county  on  that? 

A.  I  cannot  answer  that. 


473 


JAMES  KREWSON,  called. 

By  a  Member  of  the  Committee : 

Q.  What  have  you  to  say?  You  heard  what  Mr.  Hag- 
ginbotham  said  with  reference  to  returns  made  by  your 
assessors  of  property  owned  by  wealthy  residents  of  your 
county. 

A.  I  live  in  one  of  the  wealthiest  districts  of  Montgomery 
county,  that  is  Cheltenham.  We  have  properties  or  pal- 
aces there.  I  suppose  they  cost  considerably  over  half  a 
million  dollars.  You  would  naturally  say  a  house  that  has 
cost  $500,000,  and  I  know  some  of  them  cost  a  great  deal 
more  than  that,  should  be  assessed  at  $300,000.  Does  that 
strike  you  as  being  the  right  figure,  Mr.  Brown? 

By  Mr.  Brown : 

Q.  You  assess  for  three-fifths? 

A.  Something  like  that. 

Q.  Sixty  per  cent,  to  75  per  cent.? 

A.  Seventy-five  per  cent.  When  one  of  those  wealthy  gen- 
tlemen comes  from  Philadelphia,  as  they  do  come  out,  in  my 
neighborhood  they  buy  a  farm  that  has  had  a  nominal  value 
as  a  farm  for  a  number  of  years.  They  spend  an  immense 
amount  of  money  on  that  place.  If  later  on  the  head  of 
that  family  dies,  or  they  lose  a  portion  of  their  wealth,  and 
that  estate  is  brought  under  the  hammer,  it  does  not  bring 
half  and  in  some  cases  only  25  per  cent,  of  what  was  orig- 
inally expended  on  it.  I  could  give  you  one  instance  half 
a  mile  above  me,  where  I  was  told  a  man  had  made  an  out- 
lay of  $400,000,  and  it  was  sold  not  a  great  while  ago  for 
$100,000.  That  is  an  example.  I  contend  that  the  wisest 
man  in  every  township  should  be  assessor,  or  one  of  the 
wisest  men.  Too  often  he  is  a  political  follower  or  hanger- 
on.  I  think  in  my  own  township  of  Cheltenham  we  have 
one  of  the  most  just  assessors  that  there  is  in  the  whole 


474 

State  of  Pennsylvania.  I  have  done  all  I  could  in  my  weak 
way  at  various  times  to  have  him  reinstated,  and  yet  he 
increased  the  valuation  of  my  little  farm  $150  an  acre  this 
year.  That  does  not  look  as  if  he  were  inclined  to  favor 
those  who  boost  him.  There  is  one  thing  about  assessors' 
pay  I  think  you  gentlemen  should  take  up  Take  our  first- 
class  townships  in  the  lower  end  of  Montgomery,  which 
really  is  a  suburb  of  Philadelphia.  Those  men  are  getting 
$5  a  day.  All  through  the  upper  end  of  the  county  in  the 
poor  districts  they  are  getting  $2  a  day. 

By  Mr.  Brown : 

Q.  The  present  law  is  $2.50  a  day,  is  it  not? 
A.  They  were  all  elected  under  the  old  law. 

Q.  Is  it  not  a  fact  that  the  last  Legislature  raised  the 
salary  of  assessors  to  $2.50  a  day? 

A.  Yes,  sir.  Does  it  seem  reasonable  to  you,  gentlemen, 
that  for  an  important  position  like  that  you  want  a  $2  man. 
He  has  to  take  a  horse  or  hire  a  horse  and  drive  out  through 
these  various  townships.  My  idea  of  an  assessor  is  that  he 
should  receive  just  compensation.  Near  the  City  proper- 
ties are  constantly  fluctuating  in  value.  In  our  large  and 
wealthy  township  it  takes  good  care  to  assess  them  prop- 
erly. In  the  upper  township  where  there  is  but  little 
change  in  land  values  the  time  of  the  assessing  should  be 
limited.  There  should  be  a  law  not  only  to  increase  the 
pay  of  those  assessors  in  the  outlying  townships,  but  also 
to  limit  them  according  to  the  mileage  of  the  roads  or  ac- 
cording to  the  value  of  those  townships.  It  has  been  said 
that  the  rural  districts  are  assessed  higher  than  those  near 
the  cities.  I  think  you  all  agree  to  that.  My  friend,  Mr. 
Saylor,  comes  from  the  upper  end  of  the  county.  I  believe 
there  are  farms  assessed  there  for  more  than  they  would 
bring  under  the  hammer.  It  is  too  often  the  case. 

Q.  Let  us  come  down  to  the  tax  on  personal  property. 
How  many  taxables  are  there  in  your  county? 

A.  I  could  not  tell  you  that. 


475 


Q.  About  how  many? 
A.  I  have  no  statistics. 


Q.  How  do  you  know  how  many  blanks  to  get  from  the 
Auditor  General? 

A.  "We  have  a  bookkeeper  there. 

Q.  Your  bookkeeper  figures  those? 
A.  Yes,  sir. 

Q.  You  are  supposed  to  get  a  blank  for  every  taxable 
in  the  county? 
A.  Yes,  sir. 

Q.  Including  women? 

A.  Those  who  have  property,  yes,  sir. 

Q.  Those  blanks  you  get  and  you  turn  them  over  to 
the  assessor  with  a  guide  book  showing  the  judgments 
and  mortgages? 

A.  They  are  issued  from  our  office. 

Q.  Those  are  given  to  the  assessors? 

A.  Yes,  sir. 

Q.  What  do  you  do  to  check  up  the  assessors  in  the 
performance  of  their  duties? 

A.  You  mean  as  to  mortgages,  bonds  and  so  on? 

Q.  Mortgages  and  bonds  and  bringing  back  those  blanks 
sworn  to? 

A.  That  is  a  difficult  matter.  It  may  surprise  you 
gentlemen  to  know  that  I  asked  a  question  only  this 
week  of  a  man  who  has  been  identified  with  our  court 
house  for  a  number  of  years.  I  said,  "What  percentage 
do  you  suppose  we  get  of  the  actual  moneys  that  should 
be  returned  on  bonds,  mortgages  and  such  things  ? ' ' 
He  said,  "I  doubt  if  we  get  over  25  per  cent." 

Q.  Why  not? 

A.  How  are  you  going  to  get  at  it? 

Q.  What  do  you  do  with  the  returns?  Do  you  compel 
each  assessor  to — you  give  him  a  blank  for  every  taxable  ? 

A.  Yes,  sir. 


476 

Q.  It  is  his  duty  either  to  return  that  blank  or  account 
for  it,  is  it  not? 

A.  I  believe  in  many  cases  they  simply  ignore  it. 
Q.  He  has  to  return  that  blank? 
A.  Yes,  sir. 

Q.  If  the  taxable  does  not  return  it,  it  is  his  duty  to 
make  a  return  for  him,  is  it  not? 

A.  That  is  his  duty. 

Q.  "What  do  you  do  if  he  does  not  return  them? 

A.  I  will  tell  you  what  the  assessor  does  in  my  district. 

Q.  Do  not  take  your  district  particularly.  Take  your 
practice  as  County  Commissioner.  What  is  the  practice 
in  your  county  as  to  supervision  of  the  County  Commis- 
sioners over  your  assessors? 

A.  I  could  only  speak  of  our  local  affairs. 

Q.  Take  your  county? 

A.  I  will  take  my  township. 

Q.  Take  the  blanks  that  are  given  to  each  taxable  in 
Cheltenham  Township? 

A.  If  our  assessor  thinks  a  man  has  not  given  him  a 
just  return,  or  makes  no  return,  I  have  known  him  in 
some  cases  to  put  down  $100,000.  If  that  man  does  not 
make  a  kick  next  year  he  added  $50,000  more  on. 

Q.  If  he  puts  $100,000  on  a  man  in  Cheltenham  Town- 
ship, whom  you  know  from  ordinary  reputation  is  worth 
$5,000,000,  why  does  he  not  put  him  down  for  $5,000,000? 

A.  I  cannot  tell  as  to  that. 

Q.  Suppose  you  have  men  in  Cheltenham  Township  that 
are  worth  millions,  multi-millionaires.  What  is  the  use 
of  putting  them  down  at  $100,000  as  a  starting  point? 
Why  not  put  a  sum  something  near  what  you  have  every 
reason  to  believe  is  their  limit? 

A.  I  will  give  you  an  instance.  There  is  one  wealthy 
man  living  near  Ogontz,  who  lives  in  one  of  our  so-called 
palaces.  I  doubt  whether  any  of  you  gentlemen  know 
his  name.  Of  course,  I  would  not  mention  it.  He  claims 


477 

a  residence  and  all  property  interests  in  Philadelphia.  He 
claims  he  makes  a  return  in  Philadelphia,  yet  he  lives  there 
summer  and  winter. 

Q.  Do  you  return  him  to  our  Board  of  Revision  of 
Taxes? 

A.  I  want  to  know  what  to  do  in  a  case  like  that? 

Q.  The  law  says  you  must  transfer  them  if  you  know 
of  mortgages  and  things  like  that. 

A.  How  should  we  compel  an  investigation  to  be  made  in 
Philadelphia  ? 

Q.  The  law  does  not  compel  you  to  do  that.  It  does 
as  to  mortgages  and  some  few  securities.  You  think  the 
law  should  be  made  so  when  a  man  tries  to  dodge  you 
in  your  county  you  should  notify  the  county  where  he 
claims  a  residence  to  look  out  for  him? 

A.  I  should  think  so. 

Q.  Do  you  go  any  further  and  investigate  whether  he 
does  return  in  this  county? 
A.  I  do  not  know  as  we  have. 

Q.  Why  do  you  not  do  that? 

A.  I  want  to  know  what  the  law  is  in  that  case? 

By  a  Member  of  the  Committee : 

Q.  Do  you  not  think  it  is  your  duty,  outside  of  the 
law? 

A.  I  should  think  it  would  be.  This  is  a  sample  case. 
I  venture  to  say  there  are  hundreds  of  them  right  around 
the  suburbs  of  Philadelphia. 

Q.  "Would  it  not  pay  Montgomery  county  to  employ 
someone  to  do  just  that  sort  of  work? 

A.  There  is  no  question  about  that. 

By  Mr.  Brown: 

Q.  Where  does  this  gentleman  vote? 

A.  I  believe  he  votes  in  Philadelphia  to-day.  He  form- 
erly voted  in  Ogontz. 


478 

Q.  He  voted  there  until  you  got  after  him  about  taxes? 

A.  I  guess  that  is  it. 

Q.  Then  he  migrated? 

A.  I  guess  that  is  it. 

Q.  For  tax  purposes? 

A.  Very  likely. 

By  a  Member  of  the  Committee : 

Q.  If  he  is  reputed  to  be  worth  $5,000,000  he  would 
escape  taxation  entirely  if  he  made  no  return  in  Philadel- 
phia? So  far  as  you  know  he  has  made  no  return  *.n 
Philadelphia? 

A.  That  is  very  true,  although  I  do  not  assume  he  is 
worth  $5,000,000. 

Q.  Assuming  he  is  worth  $500,000,  he  would  escape 
taxation  simply  because  he  Commissioners  of  Montgomery 
county  do  not  manifest  enough  interest  to  see  whether 
he  was  making  a  return  in  Philadelphia  county? 

A.  I  think  that  is  right. 

By  Mr.  Brown: 

Q.  In  a  case  of  that  kind  why  do  you  not  raise  the  issue 
right  in  your  own  county,  and  let  him  furnish  proof  ne 
is  a  resident  of  Philadelphia,  in  other  words,  put  him  on 
the  defensive  ?  That  is  what  the  law  contemplates  ? 

A.  I  presume  so.  I  am  afraid  the  statutes  are  not  well 
defined.  I  do  not  want  to  hunt  trouble. 

Q.  Is  that  just  one  swallow  that  does  not  make  a 
summer,  or  is  that  just  the  general  condition  there? 

A.  That  is  the  condition.  Then  again,  corporations  who 
pay  State  tax,  a  certain  portion  of  that  should  be  re- 
covered or  collected  by  the  township  or  county  in  which 
such  franchise  exists.  We  will  take  now,  for  instance, 
the  power  house  at  Ogontz.  I  live  near  there.  I  have 
been  told  it  cost  about  half  a  million  dollars.  As  town- 
ship or  county  officials  we  do  not  derive  one  penny  of 
revenue.  It  goes  to  the  State.  Of  course,  we  get  75  per 


479 

cent,  of  the  State  money  back  that  comes  directly  by 
taxation,  but  not  by  the  corporate  tax.  Someone  men- 
tioned the  fact  that  it  would  be  the  proper  thing  for  the 
assessor  to  have  a  term  of  three  or  four  years  and  not  to 
succeed  himself.  It  is  very  true  that  our  Treasurers  in 
former  years  would  leave  all  the  low  men  who  pay  nominal 
tax  go,  because  they  needed  their  vote  to  reinstate  them. 
I  think  that  rule  would  apply  to  assessors  also.  An  as- 
sessor's inclination  is  to  be  a  little  lax  in  making  an 
assessment. 

Q.  Is  not  the  whole  system  lax? 

A.  I  am  afraid  so. 

Q.  Its  enforcement? 

A.  That  is  not  up  to  county  officials,  that  is  up  to  the 
State  authorities. 

Q.  Do  you  make  any  attempt  to  get  this  money  on 
deposit  by  certificate? 

A.  No,  sir. 

Q.  Have  you  any  idea  how  much  money  in  Montgomery 
county  is  deposited  in  your  trust  companies  and  banks  by 
certificates  ? 

A.  I  have  not  the  least  idea.  I  would  oppose  any 
measure  that  would  tax  a  building  and  loan  association, 
or  even  a  lodge,  because  that  is  a  beneficial  society. 

Q.  I  am  talking  now  of  money  at  interest.  You  heard 
Eschelman  say  what  he  had  done  in  his  county? 

A.  I  only  heard  part  of  Mr.  Eschelman 's  talk.  I  did  not 
hear  it  all.  Of  course,  our  banking  institutions  pay  their 
corporate  tax. 

Q.  What  about  money  of  depositors  at  interest? 

A.  It  goes  back  on  to  the  borrower's  shoulders. 

Q.  I  mean,  suppose  you  deposited  money  in  a  trust  com- 
pany, and  they  give  you  for  $10,000  a  certificate  of  deposit, 
in  which  they  agree  to  pay  3J  per  cent.  Do  you  mean 
to  say  you  ought  not  to  pay  tax  on  that  money  at  in- 
terest? 

A.  That  is  very  frequently  the  poor  man's  saving. 


480 

Q.  Do  you  think  that  would  be  so  in  a  rich  county  like 
Montgomery  ? 

A.  To  a  certain  extent  it  is.  I  am  director  of  a  trust 
company  at  Jenkintown  which  is  a  poor  man's  institution. 
Out  of  2,800  depositors,  2,100  of  them  are  savings  ac- 
counts. That  represents  the  poor  man's  savings.  The 
other  is  working  capital  of  the  middleman,  farmers,  and 
so  forth. 

Q.  So  you  think  it  would  bear  unusually  heavy  on  that 
class  ? 
A.  I  do. 

By  a  Member  of  the  Committee : 

Q.  Do  you  not  think  the  trust  company  might  pay  that 
tax? 

A.  You  mean  directly  to  the  State  as  corporate  tax? 

Q.  Yes,  and  have  it  returned  on  the  three-quarter  basis 
as  at  present  the  law  is  ? 

A.  All  those  things  are  oppressive  to  the  borrower 
and  the  poor  man. 

Q.  The  trust  company  is  a  flourishing  institution,  is 
it  not? 

A.  Surely. 

Q.  You  have  had  dividends  ? 

A.  No,  sir.  Our  institution  is  only  six  years  old.  "We 
are  making  money,  I  heard  one  year,  more  than  any  other 
institution  outside  of  the  two  great  cities  of  Philadelphia 
and  Pittsburgh,  yet  we  have  never  declared  a  dividend. 
We  are  adding  it  all  to  surplus. 

Q.  How  much  is  your  surplus? 

A.  In  six  years  $115,000. 

Q.  You  made  more  money  than  any  other  bank  or 
trust  company  outside  of  the  large  cities  ? 

A.  Yes,  sir. 

Q.  Why  would  it  not  be  fair  that  you  should  pay  tax 
to  the  State  of  Pennsylvania,  and  not  put  it  on  the 
shoulders  of  your  certificate  holders? 

A.  You  mean  on  net  revenues? 


481 

Q.  I  mean  to  say,  why  would  it  not  be  a  fair  proposition 
and  a  square  deal  to  the  State  to  have  the  trust  company 
pay  a  small  tax  on  all  certificates,  and  on  all  moneys  held 
in  the  form  of  certificates  of  deposit? 

A.  I  thought  you  were  alluding  to  net  earnings  each 
year? 

Q.  No,  I  refer  to  this.  Take  a  sayings  fund  account  of 
$50,  drawing  3£  per  cent,  interest  for  one  year.  Why 
should  not  the  trust  company  pay  a  tax,  say  of  four  mills, 
on  that  $50  certificate  of  deposit,  without  putting  it  on  the 
shoulders  of  the  holder  of  that  certificate  ? 

A.  Perhaps  that  would  be  just,  but  the  bulk  of  your 
taxation  should  come)  from  manufacturers  and  bond- 
holders that  are  not  hunted  up  as  they  should  be.  I  am 
well  aware  of  the  fact  that  the  revenues  that  support  the 
State  Government  come  from  our  great  corporations, 
something  like  $17,000,000  a  year  or  $18,000,000  derived 
from  that  source.  That  nearly  runs  the  Government  of 
the  State,  does  it  not  ? 

By  Mr.  Brown: 

Q.  No,  it  does  not.  It  may  make  the  appropriations  to 
State  institutions,  but  it  does  not  provide  for  the  charities 
and  one  hundred  and  one  other  things. 

A.  There  are  so  many  of  those  things  that  come  back 
on  the  wage-earners7  shoulders  after  all.  If  the  assessor 
increases  the  valuation  of  a  man's  house  he  immediately 
raises  the  rent  on  his  tenant.  It  is  not  a  hardship  to 
the  owner  of  the  house. 

By  a  Member  of  the  Committee : 

Q.  How  many  wage-earners  are  stockholders  in  your 
company? 

A.  I  think  a  good  many  of  them.  We  are  all  men  in 
very  moderate  means.  I  am  a  laboring  man  myself. 

By  Mr.  Brown: 

Q.  What  dividends  could  you  have  declared  if  you  had 
25 


482 

not  put  this  money  to  surplus  or  undivided  profits  ?    What 
were  the  dividends  you  passed? 

A.  I  do  not  just  care  to  declare  that.  We  want  to  make 
the  institution  absolutely  safe.  Every  dollar  up  to  this 
time,  never  a  directer  picked  up  a  dollar  off  the  table 
when  we  were  in  session. 

Q.  You  would  have  done  it  if  you  had  not  put  it  10 
surplus  ? 
A.  Yes,  sir. 

Q.  Should  not  companies  that  earn  more  than  6  per 
cent,  pay  this  tax  without  the  depositors  paying  it? 

A.  That  is  a  fair  proposition.  If  they  earn  over  6  per 
cent,  perhaps  that  is  a  fair  proposition. 

Q.  You  think  under  those  circumstances  that  they 
should  pay  a  tax  of  four  mills  on  moneys  deposited  there  ? 

A.  A  limited  tax,  ever  bearing  in  mind  it  is  the  savings 
of  poor  people.  If  the  income  tax  bill  had  passed  last  year 
you  did  not  intend  to  impose  any  taxation  on  the  building 
and  loan  associations?  I  believe  that  was  the  wording  of 
it? 

By  a  Member  of  the  Committee : 

Q.  How  would  the  taxing  of  direct  inheritances  affect 
matters  in  your  county  ? 

A.  I  do  not  know. 

By  Mr.  Brown: 

Q.  It  would  drive  out  all  these  people? 

A.  It  might  and  might  not.  I  know  some  wealthy  peo- 
ple in  this  city  who  are  living  in  my  neighborhood.  One 
gentleman  within  a  few  hundred  feet  of  this  building 
says,  "I  am  warning  my  wealthy  associates  not  to  come 
into  Montgomery  county,  to  keep  away  from  Montgomery 
county." 

Q.  Where  does  he  say  they  ought  to  go? 

A.  I  do  not  know.  I  do  not  think  it  would  be  in  Phila- 
delphia county. 


483 

Q.  You  think  if  this  was  done  by  the  State  they  could 
not  migrate  from  county  to  county.  It  would  catch  them 
some  place? 

A.  You  mean  the  triennial  assessment? 

Q.  I  mean  the  assessment  of  money  at  interest.  If  it 
was  done  by  the  State  a  man  could  not  in  one  county 
say  he  was  assessed  in  another  county,  because  he  would 
have  but  one  place  to  respond  to,  and  that  would  be  the 
State  officials? 

A.  You  want  to  enact  some  drastic  measures  by  which 
you  can  catch  those  people.  Their  money  must  be  in 
evidence  somewhere.  It  may  not  be  done  within  the  limits 
of  Montgomery  county,  it  may  not  be  done  in  Philadel- 
phia, but  it  must  be  done.  You  must  make  the  assessment 
in  a  general  way. 


484 


ADAMS  F.  SAYLOR,  Norristown,  Pa.,  called. 

Mr.  Saylor :    I  come  from  an  upper  township. 
By  Mr.  Brown : 

Q.  Your  people  do  not  migrate? 

A.  They  do  migrate  to  Pottstown,  but  so  far  as  the 
assessors  are  concerned,  I  think  that  they  should  not  be 
returned.  They  should  have,  say  a  four  years'  term,  and 
after  that  there  should  be  a  law  made  that  they  could  not 
succeed  themselves  in  office.  I  believe  that  would  help 
our  assessments  a  great  deal. 

Q.  How  does  the  element  of  personal  friendship  enter 
into  this  with  assessors  and  taxables? 

A.  I  do  not  know.  I  have  not  heard  much  of  that.  We 
have  four  first-class  townships  in  Montgomery  county, 
Lower  Merion,  Cheltenham,  Abington  and  Springfield. 
They  are  our  first-class  townships.  Of  course,  the  assessors 
in  those  townships  get  $5  a  day.  That  is  a  good  job. 

Q.  Do  you  think  they  work  any  harder  than  the  man 
who  gets  $2? 

A.  Not  as  hard. 

Q.  Then  it  would  be  a  mistake  to  pay  them  more? 

A.  I  do  not  believe  they  work  as  hard,  because  I  often 
read  in  the  paper  where  a  man  in  Cheltenham  or  Lower 
Merion  buys  a  property  for  $150,000.  I  go  and  look  him 
up  in  the  office  and  find  he  is  assessed  about  $18,000, 
$20,000  or  $25,000.  That  is  not  right. 

Q.  Why  do  you  not  go  after  the  assessor  for  making 
a  false  return?  He  knows  that  is  a  false  return.  It  is 
highly  penal.  Such  a  man  could  be  brought  to  book.  Is 
it  not  strange  that  in  all  this  thing  nobody  prosecutes  this 
man? 

A.  I  have  not  been  long  in  office,  only  about  a  year.  It 
takes  a  little  while  to  learn  the  ropes  of  this  thing.  We 


485 

had  an  assessor  appointed  in  one  of  the  wards  of  Potts- 
town,  and  he  went  and  made  an  assessment  last  spring, 
and  of  course,  he  asked  a  man  how  much  money  he  had. 
He  said  he  had  something  like  $2,000.  "Is  that  all?" 
"Yes."  Said  he,  "Are  you  willing  to  swear  that  is  all 
you  have?"  "No,  I  have  a  couple  of  thousand  more,  but 
the  other  assessor  did  not  swear  us."  Out  of  that  ward 
we  got  $37,000  more. 

Q.  Would  not  that  same  result  come  generally  from 
the  county  if  the  Commissioners  were  careful  to  supervise 
all  this  work? 

A.  I  think  it  would. 

Q.  Why  do  not  the  County  Commissioners  do  that? 
What  is  the  use  of  complaining  about  these  things  when 
you  have  in  your  own  hands  the  remedy  for  it? 

A.  We  should.  It  takes  a  while  to  learn  these  things, 
but  we  are  getting  on  to  that  gradually. 


486 


JOHN  F.  KENNY,  Media,  Pa.,  called. 

Mr.  Kenny:  I  think  I  have  very  little  to  say.  I  think 
the  argument  of  Mr.  Eschelman,  of  Lancaster  county, 
covered  the  whole  thing  pretty  much.  In  our  county, 
Delaware,  there  is  a  strong  sentiment,  I  think,  in  favor 
of  the  taxation  of  railroad  property.  As  to  the  taxation 
of  manufactures,  the  sentiment  is  very  much  against  it 
because  we  are  a  manufacturing  county  and  we  see  the 
advantage  of  having  factories  in  our  county.  In  regard 
to  returns  from  personal  property,  this  year  the  Com- 
missioners have  required  the  return  to  be  made  by  every 
person  as  near  as  it  could  possibly  be  done,  but  the 
Ananiases  are  not  all  dead.  The  law,  I  think,  is  all  right 
as  it  stands.  I  do  not  see  any  objection  to  the  law.  The 
difficulty  is  in  enforcing  it.  It  has  been  suggested  here 
that  the  Commissioners  could  oversee  the  returns  from 
the  county,  but  they  do  not  know  the  people  of  the  county. 

By  Mr.  Brown: 

Q.  They  could  know  whether  or  not  all  the  blanks  sent 
out — they  could  get  a  blank  for  every  taxable  from  the 
Auditor  General? 

A.  They  do  that,  but  how  can  they  know  whether  the 
returns  are  correct? 

Q.  They  know  whether  all  returns  are  made? 

A.  Certainly,  they  know  the  returns  are  made. 

Q.  Is  it  not  fair  to  assume  that  the  County  Commission- 
ers of  your  county  would  have  some  general  knowledge  of 
the  people  in  that  county,  and  when  they  saw  a  man 
return  $10,000  money  at  interest  and  they  knew  he  had 
$100,000  or  $500,000,  that  they  would  stop,  look  and 
listen  at  such  a  proposition? 

A.  They  could  know  a  case  of  that  kind. 

Q.  Do  they  examine  these  returns  at  all? 


487 

A.  Yes,  sir,  they  examine  the  returns,  but  they  do  not 
know  anything  about  the  personal  property  a  man  has. 
The  law  is  weak  in  one  respect,  I  think,  that  is  that  it  does 
not  fix  a  penalty  on  a  man  who  does  not  make  a  return. 
It  fixes  a  penalty  on  the  man  who  makes  a  false  return. 

Q.  But  the  assessor  can  fix  a  penalty  on  him,  because  he 
adds  50  per  cent,  and  he  can  put  in  the  amount? 

A.  There  is  no  penalty  in  that.  It  does  not  amount  to 
anything  because  the  assessor  only  guesses. 

Q.  But  suppose  I  do  not  return,  the  assessor  adds  50 
per  cent,  to  what  he  thinks  I  should  return.  Suppose  it 
is  $100,000.  You  would  very  soon  bring  that  man  to 
book? 

A.  The  Commissioners  add  50  per  cent,  to  the  assess- 
ment of  the  assessor. 

Q.  The  penalty  is  added? 

A.  The  assessor  has  no  means  of  knowing  what  he  has. 
Q.  He  makes  a  guess.    You  heard  them  say  how  they 
added  on  $100,000  and  then  the  person  sent  in  and  lie 
paid  on  another  $100,000? 

A.  I  think  there  ought  to  be  a  penalty  imposed  on  per- 
sons who  make  no  return.  There  ought  to  be  some  pro- 
vision made  that  they  can  be  sent  for  and  sworn  by  the 
Commissioners,  or  somebody  else,  put  on  their  oath.  There 
is  no  doubt  the  county  of  Delaware,  I  do  not  believe,  gets 
half  the  personal  tax  we  ought  to  get.  I  think  we  receive 
about  $44,000  personal  tax.  It  ought  to  be  two  or  three 
times  that.  It  is  a  little  like  the  tax  of  $1  on  dogs.  No- 
body owns  a  dog  when  the  assessors  go  around,  and  there 
are  thousands  of  them  the  next  day.  I  think  Mr.  Eschel- 
man  covered  the  whole  ground  entirely.  I  was  going  to 
state,  if  he  had  not  stated  it,  that  I  think  the  certificate 
of  deposit  is  money  loaned  the  same  as  money  loaned  on 
mortgages. 

Q.  What  is  the  sentiment  of  your  county  as  to  whether 
any  other  thing  should  be  taxed? 

A.  No,  except  railroad  property  and  certificates  of  de- 


488 

posit.  There  is  a  general  impression  there  that  they 
ought  to  be  taxed.  It  would  seem  as  fairly  taxable  prop- 
erty as  anything  else. 

Q.  You  think  the  laws  are  sufficient  to  raise  sufficient 
income  providing  they  are  properly  enforced? 

A.  Providing  they  were  properly  enforced  the  income 
would  be  three  or  four  times  what  it  is. 

Q.  Did  you  hear  Mr.  Eschelman  tell  the  methods  he 
uses? 

A.  Yes,  sir. 

Q.  Why  would  they  not  be  good  in  your  county? 

A.  I  do  not  know.  They  might  work  in  some  cases. 
There  is  no  way  of  getting  at  the  unrecorded  loans  that 
I  see.  Records  of  real  estate  are  all  plain.  Anybody  can 
get  at  those.  As  to  those  that  are  not  of  record  it  is 
almost  impossible  and  pure  guess-work.  We  find  some 
that  are  omitted  and  put  them  on  the  list,  generally  with- 
out any  complaint.  Then  again  parties  will  come,  like 
the  gentlemen  spoke  of  awhile  ago,  and  say  they  live  some- 
where else. 

Q.  You  do  not  notify  the  county  where  they  say  they 
live  of  that? 

A.  We  notify  them  and  they  notify  us.  There  was  one 
party  I  believed  had  $500,000  one  year  and  next  year 
he  said  his  residence  was  in  Maine,  that  he  had  a  shooting 
box  up  there. 

Q.  He  resided  in  Maine  but  he  lived  here? 

A.  Yes,  sir. 

Adjourned  until  February  18,  1910,  at  11  A.  M. 


489 


Philadelphia,  Pa.,  February  18,  1910. 

Public  Meeting  of  the  Committee  held  at  Room  496, 
City  Hall,  Philadelphia,  Friday,  February  18,  1910,  at  11 

0  'clock  A.  M. 

Present:  Gabriel  H.  Moyer,  Vice  Chairman  and  Secre- 
tary, presiding;  Wm.  C.  Sproul,  William  H.  Keyser, 
James  F.  Woodward,  David  Hunter,  Jr.,  of  the  Com- 
mittee ;  Francis  Shunk  Brown,  Esq.,  Counsel. 

DR.  GEORGE  STRAWBRIDGE,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission :  I  am 
here  on  rather  a  sad  sort  of  an  errand.  To  be  a  little 
personal,  I  have  been  in  practice  here  in  this  City 
for  forty  years.  I  started  at  twenty-five,  and  I  am  now 
sixty-five,  so  you  see  I  have  been  practicing  forty  years. 

1  started  at  the  Episcopal  Hospital,  and  have  since  been 
connected    with    the    Presbyterian,    University,    Wills 
Hospital  and  the  Pennsylvania  Eye  and  Ear  Infirmary. 
I  am  forty  years  practicing  and  still  practicing. 

I  am  here  practically  as  a  self-appointed  representative 
of  the  profession  here  in  Philadelphia.  This  is  my 
position,  self-appointed;  I  want  that  distinctly  under- 
stood. 

The  position  of  the  profession  here  in  town  is  getting 
desperate.  It  is  getting  worse  and  worse  year  by  year; 
and  unless  some  change  is  made  I  should  say  fully  one- 
half  of  the  doctors  will  have  to  go  into  other  businesses — 
fully  one-half.  The  practice  of  the  medical  profession  is 
getting  less  and  less  year  by  year,  and  I  see  nothing  ahead 
of  them  but  hard,  hard  times. 

Now,  naturally,  the  first  thing  that  would  come  up 
26 


490 

would  be  to  combine  all  of  the  institutions  of  the  medical 
profession  in  this  City,  for  two  reasons ;  there  are  too 
many  practicing  doctors — I  should  say  about  four  times 
too  many  for  the  need  of  the  community ;  and  there  are  too 
many  hospitals.  So  you  have  the  profession  hindered 
both  ways.  There  are  too  many  people  in  the  hospitals 
in  this  City  who  should  largely  be  in  the  hands  of  the 
practitioner  as  they  were  in  days  gone  by.  These  are 
the  conditions  confronting  us,  and,  as  I  say,  the  condition 
gets  worse  every  year.  I  don't  suppose  there  is  any 
difference  of  opinion  amongst  the  profession  at  all  as  to 
the  conditions.  Most  doctors  simply  say  the  case  is  hope- 
less. There  is  no  remedy,  that  is  about  the  feeling 
throughout  the  City.  That  is  why  I  appear  before  you, 
to  present  this  aspect.  As  far  as  I  know  this  aspect  has 
not  been  presented  to  you  at  all  by  anybody  up  to  the 
present  time.  Other  aspects  have  been  presented,  as  to 
the  needs  of  the  hospitals,  etc.,  but  as  to  these  conditions 
as  far  as  I  know,  not  a  word  has  been  said  up  to  this 
moment. 

Now,  if  what  I  state  is  correct  (and  I  am  very  sorry 
to  say  it  is  correct)  we  are  naturally  seeking  about  for  a 
remedy  (which  the  medical  profession  should  not  be 
compelled  to  do  in  this  rich  municipality)  ;  therefore,  after 
a  thorough  consideration  of  the  situation,  I  beg  to  make 
the  following  suggestions : 

As  I  said  before,  there  are  at  least  four  times  too  many 
doctors  for  the  needs  of  the  community.  There  are  five 
medical  schools  in  this  City — imagine,  five  medical  schools 
in  a  city  of  less  than  two  million  people — why  the  whole 
thing  is  absurd,  simply  ridiculous.  Everybody  says  we 
want  the  best  here,  the  very  largest  college  and  university 
and  the  best  people,  and  they  are  seeking  the  very 
opposite  way  to  get  the  very  best. 

If  you  ask  me  what  I  consider  to  be  the  best  university 
in  the  entire  world  and  the  one  admittedly  the  best,  there 
is  only  one  answer,  the  University  of  Berlin.  The  Univer- 


491 

sity  of  Berlin  has  nearly  fifteen  thousand  students  in  it. 
It  has  over  three  thousand  foreign  students  and  the 
majority  of  these  are  Americans;  then  come  the  English 
next,  and  then  the  Russians  and  the  Turks.  There  are 
nearly  three  thousand  foreigners  with  a  nearly  fifteen 
thousand  clientele.  That,  gentlemen,  is  the  very  first 
university  in  the  whole  world.  The  first  in  everything. 
Why  is  it  the  very  first?  Because  everything  is  done  to 
make  it  the  first.  There  is  only  one — there  are  not  five. 
Everything  is  consolidated.  The  Government  is  inter- 
ested in  it  and  all  the  people  of  Germany  are  interested 
in  it.  There  is  the  very  first  university  in  the  whole 
world. 

Naturally,  at  my  time  of  life,  when  I  am  rounding  up 
things  and  when  I  have  the  least  interest  in  accumulating 
any  store,  the  thought  comes  up  whether,  here,  in  this 
country,  we  are  not  good  and  old  and  big  enough  now 
to  plan  first-class  things ;  and  I  think  we  are.  There  is  no 
doubt  in  our  minds  (I  mean  my  own)  that  the  medical 
schools  should  enter  into  a  consolidation.  The  five  medical 
can  see  that.  We  could  bring  all  into  a  consolidation 
under  the  head  of  the  University  of  Pennsylvania  and 
make  it  one  of  the  greatest  universities  in  the  country. 
There  is  no  reason  why  all  five  should  not  enter  into  the 
consolidation.  The  Hahnemann  institution  could  easily 
be  consolidated  by  having  in  the  university  a  chair  of 
Homoeopathy. 

By  the  Chairman  : 

Q.  Do  you  think  the  Hahnemann  and  the  rest  of  the 
medical  institutions  could  be  so  consolidated  in  the 
manner  you  suggest? 

A.  Without  the  slightest  trouble.  The  County  Medical 
Society  recently  passed  a  resolution  to  call  in  the  homoeo- 
paths into  consultation,  that  is,  for  the  allopaths  to  call 
the  homoeopaths. 


492 

By  Mr.  Brown: 

Q.  Does  that  custom  exist  in  the  hospitals 

A.  I  was  just  going  to  touch  upon  that  subject  in  a 
minute.  Consolidation  is  unquestionably  the  remedy. 
In  that  way,  if  everything  was  combined  in  one,  if 
everything  was  consolidated  into  one  that  way,  the  next 
question  would  be  which  should  be  at  the  head  of  the 
consolidation.  It  should  be  the  University  of  Pennsyl- 
vania. I  don't  think  anybody  would  doubt  but  what 
that  was  the  proper  head.  It  is  the  greatest  source  of 
learning  in  this  City,  and  in  every  way  it  has  the 
advantages  with  it;  it  has  all  the  departments  in  it,  and 
it  is  the  sort  of  a  house  it  should  be  if  immediately 
required  to  consolidate  with  and  absorb  these  other 
schools. 

By  the  Chairman: 

Q.  Provided,  of  course,  the  other  schools  would  be 
willing  to  consolidate? 

A.  I  was  going  to  touch  on  that  in  another  minute. 
I  may  say,  for  your  information,  that  the  feeling  among 
them  now  is  most  friendly.  When  I  was  a  young  man 
it  was  different.  I  heard  a  gentleman  talking  about  Dr. 
Dever,  who,  perhaps,  is  one  of  the  best  surgeons  in  the 
City 

By  Mr.  Brown: 

Q.  My  understanding  is  that  your  thought  is  that 
whether  they  wanted  to  come  together  or  not,  that 
probably  the  withholding  from  them  of  State  appropria- 
tions would  induce  them 

A.  I  was  going  to  touch  upon  that;  if  the  State  says, 
we  have  no  more  such  moneys  for  you 

Q.  Unless  you  get  together? 

A.  Yes.  I  say  give  the  university  enough  money  to 
make  it  first-class,  which  would  not  be  quite  as  much  as 
that  which  has  been  given  out  to  all  the  others,  and  in 


493 

that  way  you  would  see  what  an  enormous  credit  to  this 
part  of  the  country  this  would  be.  Someone  has  asked 
about  the  excess  hospitals.  Whenever  a  medical  school 
starts  it  has  to  have  a  hospital  to  provide  patients  for  the 
school  attached.  Every  medical  school  must  have  a 
hospital.  If  the  consolidation  were  effected,  you  would 
have  the  five  hospitals  in  one.  The  hospitals  for  these 
institutions  would  be  cut  down  to  one  by  the  consolida- 
tion. 

Q.  Does  the  location  of  the  hospital  have  anything  to 
do  with  it?  Could  they  use  the  one  hospital  just  as 
readily? 

A.  As  far  as  hospital  treatment  is  concerned. 

Q.  There  is  no  advantage  in  having  them  scattered  over 
the  City? 

A.  No. 

Q.  The  five  you  speak  of  are  what? 

A.  The  University  of  Pennsylvania,  Medico-Chirurgical, 
Jefferson,  Hahnemann  and  Women's. 

Q.  Why  don't  you  ask  the  Polyclinic  to  come  into  the 
consolidation. 

A.  The  Polyclinic  is  not  a  medical  school — it  has  no 
power  to  issue  diplomas.  I  think  the  Polyclinic  has  been 
rather  anxious  for  some  year  or  two  for  some  sort  of  a 
consolidation. 

Q.  That  is  a  post-graduate  hospital? 

A.  Yes.  You  would  have  five  hospitals  cut  out.  No 
homoeopathic  hospital  is  necessary,  no  women's  hospital 
or  college  is  necessary.  Women  are  admitted  everywhere. 
It  is  well  known  that  this  going  to  the  hospital  has  been 
a  perfect  fad  for  the  last  fifteen  years.  If  we  get  any- 
thing the  matter  with  us  we  go  to  the  hospital.  That 
is  the  place  for  us.  I  have  been  sick  a  number  of  times 
and  have  had  two  or  three  operations  performed  upon 
my  person.  Have  I  ever  gone  to  the  hospital?  No. 
Why?  Because  I  have  a  home,  which  to  me  is  superior 


494 

to  the  hospital.  If  I  am  sick  I  want  to  be  home.  I  don't 
care  to  go  to  the  hospital  where  a  man  must  be  subjected 
to  the  sights  and  scenes  of  hospital  life.  You  couldn't 
get  me  there.  You  lie  ill  in  your  room  and  are  com- 
pelled to  listen  to  the  piercing  screams  of  some  poor 
unfortunates  recovering  from  the  effects  of  ether.  You 
cannot  get  away  from  it.  From  my  standpoint,  the 
hospital  is  only  adapted  to  the  people  who  have  no  home — 
no  good  home.  If  they  live,  say  at  a  boarding  house, 
then  the  hospital  is  for  them.  I  know  where  a  person 
has  a  good  home,  they  would  be  better  off  in  sickness 
than  in  a  hospital.  If  you  ask  the  doctors  on  that  point 
there  will  be  some  little  hesitation.  You  can  easily 
understand  the  advantage  of  a  large,  busy  surgeon  to 
have  about  one  hundred  patients  packed  into  one  hospital 
It  concentrates  his  work  and  enables  him  to  handle  them. 

Q.  You  think  it  is  monopolistic  ? 

A.  Absolutely. 

Q.  How  is  the  State  of  Pennsylvania  to  destroy  that? 

A.     Suppose  you  don't  appropriate  to  these  hospitals? 

Q.  Don't  you  think  the  money  of  the  State  is  being 
used  properly? 

A.  No.  A  certain  few  particular  doctors  and  specialists 
reap  the  benefit  of  it.  This  practice  makes  it  hard  for 
the  practitioner  to  get  along  and  brings  about  the  condi- 
tions I  have  spoken  of. 

Q.  The  strength  of  the  few  against  the  many? 

A.  Yes. 

By  the  Chairman: 

Q.  Do  you  know  of  any  concrete  case? 

A.  I  have  one  in  my  mind  at  this  minute,  but  I  don't 
think  it  is  fair  to  mention  any  names.  These  people  are 
all  friends  of  mine.  I  know  a  very  concrete  case. 

By  Mr.  Brown : 

Q.  In  other  words,  if  they  did  not  have  such  unlimited 


495 

facilities  in  the  hospitals  a  patient  would  be  treated  at 
home  by  his  own  physician? 

A.  Yes. 

Q.  Then  the  hospital  service  should  be  left  for  the  poor 
sick? 

A.  Yes,  people  who  have  no  homes. 

Q.  And  no  other  means  by  which  they  could  get  the 
proper  treatment? 

A.  That  is  it.  These  conditions  would  bring  back  an 
enormous  quantity  of  practice  into  the  hands  of  the 
practitioner. 

Q.  Is  there  any  consensus  of  opinion  among  the  physi- 
cians of  this  City  on  this  subject  generally? 

A.  Yes,  all  of  them  say  there  is  no  practice  and  that  is 
on  account  of  the  hospitals.  These  gentlemen  who  are 
in  the  hospitals  would  not  be  so  positive  in  their  declara- 
tions. 

Q.  That  has  an  effect  upon  the  general  practitioner 
who  is  not  within  the  hospital  practice? 

A.  Undoubtedly  so.  He  is  out  of  work,  has  nothing  to 
do  and  is  discouraged. 

By  the  Chairman : 

Q.  You  have  heard,  undoubtedly,  of  repeated  efforts 
to  have  a  bill  passed  in  the  Legislature  to  establish  one 
Board? 

A.  No,  I  have  not  kept  close  touch  upon  these  things. 

Q.  That  would  be  in  line  with  your  argument  that  all 
the  boards  should  be  eliminated  and  consolidated  into  one 
medical  board? 

A.  Yes,  and  if  I  may  say  so,  if  such  a  thing  is  done,  the 
University  should  be  selected  as  the  official  head  of  the 
consolidation  and  the  State  should  be  represented  in  the 
Board  of  Trustees  of  the  University. 

By  Mr.  Brown : 

Q.  She  has  no  connection  now,  that  is,  except  in  theory  ? 


496 

A.  Yes,  that  is  all  she  can  do,  and  that  means  practically 
very  little. 

Q.  Your  thought  is  that  if  we  had  such  an  institution 
here,  there  would  not  be  so  many  students  of  this  country 
go  to  Berlin? 

A.  Yes.  I  was  three  years  abroad  myself.  I  was  over 
to  Berlin  and  Vienna  and  also  Heidelberg  and  I  know 
all  these  places.  What  I  am  saying  is  not  theory.  I  have 
no  axe  to  grind.  I  am  still  active  in  practice,  and  spend 
the  good  money  that  I  get  out  of  it. 

Q.  Why  is  it  that  the  medical  profession  cannot  get 
together  in  a  body  and  recommend  this  consolidation  such 
as  you  have  suggested? 

A.  The  local  jealousies  have  been  getting  greater. 
There  is  better  progress  within  the  last  year  or  two, 
though. 

Q.  Do  you  think,  as  a  medical  man  of  the  Common- 
wealth, that  the  State  of  Pennsylvania  could  fairly  with- 
hold appropriations  from  these  several  institutions  unless 
they  get  together  into  one? 

A.  I  think  fair  notice  could  be  given  to  these  institu- 
tions with  an  unnatural  growth  and  give  them  a  fair  idea 
of  things. 

Q.  You  don't  think  the  time  is  ripe  now  for  it? 
A.  I  would  have  a  definite  plan,  and  work  upon  this 
plan. 

By  the  Chairman : 

Q.  Do  you  think  an  institution  like  the  Jefferson,  if  the 
State  appropriation  were  withdrawn  (I  have  particular 
reference  to  the  Jefferson)  that  the  Board  of  Trustees  and 
the  management  would  refuse  to  enter  into  the  consolida- 
tion. Do  you  think  it  would  practically  put  the  Jefferson 
out  of  commission? 

A.  I  think  it  would. 

Q.  If  they  would  not  receive  any  State  appropriation? 


497 

A.  Yes,  unless  they  had  an  enormous  support  by  citi- 
zens. 

By  Mr.  Brown : 

Q.  Have  you  gathered  any  information  or  data  as  to 
whether  or  not  these  different  State  appropriations  have 
tended  to  minimize  the  providing  of  provisions  of  the 
several  institutions? 

A.  No,  I  don't  think  I  can  give  any  information  on 
that  point. 

Q.  Have  you  anything  else  on  your  mind,  Doctor,  that 
would  probably  be  of  use  or  benefit  to  the  Committee? 

A.  No,  I  think  this,  in  a  general  way,  is  all  I  have  to  say. 

Mr.  Brown: 

Have  the  gentlemen  of  the  Commission  any  further 
questions  to  ask  Dr.  Strawbridge? 

The  Chairman: 
I  believe  that  is  about  all,  Mr.  Brown. 


498 


Mr.  Brown: 

Mr.  Chairman,  the  next  gentleman  from  whom  we  shall 
hear  is  Mr.  Simon  Gratz,  President  of  the  Board  of 
Revision  of  Taxes  of  the  County  of  Philadelphia.  (Mr. 
Brown  addresses  Mr.  Gratz : 

Mr.  Gratz,  of  course  you  are  aware  of  the  purpose  of 
the  appointment  of  this  Committee,  which  is  to  consider 
a  revision  of  the  corporation  and  revenue  laws  of  the 
Commonwealth;  that  is,  to  determine,  and  gather  such 
information  as  they  can  as  to  whether  or  not  every  dollar 
to  which  the  Commonwealth  is  entitled  she  is  receiving 
and  as  to  whether  or  not  every  dollar  she  is  paying  out 
is  being  wisely  expended.  We  have  heard  a  good  deal  as 
to...a  large  portion  of  that  outgoing,  and  I  think  the  Com- 
mittee would  like  to  hear  from  you  as  to  whether  or  not 
the  Commonwealth  is  receiving  all  she  is  entitled  to  re- 
ceive in  the  matter  of  the  personal  property  tax  that  is 
collected  by  the  county  of  Philadelphia,  of  which  the  Com- 
monwealth receives  one-fourth  and  of  which  the  county 
receives  three-fourths.  If  you  have  any  suggestions  to 
offer  as  to  defects  in  the  present  laws  or  amendments 
thereof,  we  would  be  very  glad  to  hear  from  you. 

Mr.  Simon  Gratz: 

Mr.  Chairman  and  Gentlemen  of  the  Commission :  This 
is  a  very  troublesome  subject,  as  you  very  well  know. 
If  all  men  were  truthful  and  honest,  the  law  would  be, 
as  it  stands  today  in  regard  to  the  assessment  of  the  per- 
sonal tax,  entirely  satisfactory.  But,  unfortunately,  there 
is  a  failing  in  human  nature  with  which  we  are  all 
familiar,  and  a  great  many  people  resort  to  any  means, 
reputable  or  otherwise,  to  evade  the  process  of  the  law. 
I  think  I  can  say  that,  in  the  main,  the  law  is  fairly  and 
fully  enforced  in  Philadelphia. 


499 

Every  man  or  woman  who  presumably  has  anything 
that  is  subject  to  taxation,  judging  from  his  or  her  mode 
of  living,  is  served  with  a  blank  form  of  return.  If  the 
return  is  made  to  us,  of  course,  it  is  accepted.  If  the 
person  in  question  fails  to  make  a  return,  then  there  is 
an  estimate,  and  50  per  cent,  is  estimated.  I  do  not 
say  that  in  every  case  or  in  an  exceedingly  large  per- 
centage of  the  cases  in  which  the  estimates  are  made  that 
the  money  is  collected,  because  the  assessors,  like  some 
members  of  the  Board  of  Revision  of  Taxes,  are  at  times 
bad  guessers.  But  there  is  one  portion  of  the  law  that 
we  do  not  attempt  to  enforce,  because  it  would  be  almost 
impossible  to  do  so ;  that  is,  the  return  of  that  portion  of 
money  at  interest  which  is  comprehended  in  deposits  at 
banks,  savings  funds,  trust  companies,  private  bankers, 
etc.,  on  which  interest  is  paid,  but  which  we  cannot  trace, 
and  which,  if  we  did  trace,  would  be  a  most  difficult 
matter  to  collect.  For  instance,  I  suppose  that  a  great 
majority  of  house  servants  in  Philadelphia  have  accounts 
at  some  of  the  saving  funds  where  they  deposit  their 
earnings.  It  would  be  manifestly  impossible  for  us  to  get 
any  returns  from  them  if  the  tax  should  be  collected.  So 
that  on  accounts  bearing  interest  from  2  to  3J  per  cent., 
or  maybe  4,  there  is  absolutely  nothing  collected. 

By  Mr.  Brown : 

Q.  Mr.  Gratz,  have  you  ever  made  any  estimate  of  the 
amount  of  money  so  deposited? 

A.  No,  but  it  would  be  a  great  amount.  The  only 
instance  I  know  of  in  which  a  man  voluntarily  made  a 
return  of  money  deposited  in  any  banking  house  in 
Philadelphia  was  that  of  a  man  whose  residence  was  out 
of  town  and  who  spent  a  part  of  his  time  in  Philadelphia. 
He  came  into  the  office  one  day  and  said,  "I  want  to  make 
a  return  of  $200,000  deposited  in  a  banking  house  upon 
which  I  am  getting  3  per  cent.  I  think,  under  the  law, 
I  ought  to  return  it  for  taxation."  I  said,  "Yes,  under 


500 

the  strict  letter  of  the  law,  you  should  unquestionably 
return  it."  He  said,  "Well,  I  am  ready  to  return  it." 
He  then  informed  me  that  he  had  it  there  for  years  and 
intended  to  allow  it  to  remain  there  as  he  didn't  want 
to  invest  it.  He  said  if  he  got  2.1  per  cent,  it  was  enough 
for  his  needs. 

I  know  of  some  cases  in  which  4  per  cent,  has  been 
allowed.  Saving  funds  all  allow  3.65  now.  It  is 
a  question  whether  it  would  be  wise  to  enforce  the 
collection  of  the  tax  on  these  amounts  of  moneys  at 
interest.  If  that  should  be  your  conclusion,  there  is,  in 
my  opinion,  only  one  way  to  do  it,  and  that  would  be  to 
require  these  corporations,  or  firms,  or  individuals  to 
deduct  from  the  interest  they  allow  the  tax,  whatever  it 
might  be,  and  annually,  at  the  proper  time,  make  a  return 
to  the  Board  of  Revision  of  Taxes,  in  order  that  it  might 
be  included  in  the  returns  of  the  Revision  Board  to  the 
State  and  that  the  City  might  ultimately  get  its  three- 
fourths  of  the  amount.  There  is  practically  no  other 
way  to  reach  it. 

Mr.  Brown: 

Q.  Is  that  an  absolutely  practical  way? 

A.  Yes.  I  don't  say  anything  as  to  the  wisdom  of 
doing  it. 

Q.  Assuming  it  was  a  law,  then  the  way  you  suggest 
would  be  a  practical  one? 

A.  Yes,  I  cannot  think  of  any  more  practical  way. 

Q.  Would  you  do  that  upon  all  moneys  deposited  upon 
which  they  calculate  interest? 

A.  I  think  it  would  have  to  be  uniform.  I  think  from 
the  amount  of  interest  computed,  or  paid  to  any  person, 
by  any  corporation  or  firm  in  the  banking  business, 
there  should  be  deducted,  at  the  close  of  the  year  (or 
any  time)  4  per  cent,  of  the  amount  paid,  and  that 
returned  to  the  Board  of  Revision  of  Taxes. 

Q.  When  you  say  4  per  cent,  you  mean  four  mills? 


501 

A.  Yes,  four  mills.  I  don't  know  whether  all  of  you 
know  how  very  easy  we  are  here  in  the  imposition  of 
taxes.  I  have  had  a  good  many  visits  from  taxing  au- 
thorities in  different  parts  of  the  country.  One  of  the 
last  was  a  man  who  is  at  the  head  of  the  Tax  Board  in 
the  State  of  Ohio.  He  said  to  me,  "How  much  do  you 
tax  mortgages  here  ? "  I  said, ' l  Four  mills.' '  He  said,  * '  You 
mean  4  per  cent,  don't  you?"  I  said,  "No,  four  mills/' 
He  said,  "In  my  place  it  is  4  per  cent."  I  said,  "Do 
you  mean  to  tell  me  you  get  4  per  cent.?"  He  said,  "Yes, 
we  get  4  per  cent."  He  said,  "What  a  nice  place  Phila- 
delphia is  to  live  in.  I  would  like  to  live  in  Philadelphia 
if  the  taxes  are  so  small. ' '  "Whether  or  not  it  would  be  a 
hardship  to  enforce  this  tax,  or  the  payment  of  this  tax, 
I  do  not  say. 

Q.  Is  there  any  reason  in  your  mind,  Mr.  Gratz,  why 
one  species  of  money  at  interest  should  not  pay  the  same 
tax  as  another  species  of  money  at  interest? 

A.  No.  Of  course,  it  would  be  pretty  hard  on  the  man 
whose  money  was  deposited  and  only  bringing  him  2 
per  cent,  to  pay  four  mills,  but  you  couldn't  escape  it. 

Q.  If  he  prefers  to  live  on  his  money,  as  your  client 

from  out  of  town 

A.  Delaware  county. 

Q.  At  2.1  per  cent,  it  is  not  fair? 

A.  Yes. 

Q.  Your  thought  would  be  as  to  the  poor  people  who 
make  these  deposits  in  order  to  get  a  return  for  their 
money?  You  think  it  would  be  a  hardship  upon  them? 

A.  Yes. 

Q.  Have  you  ever  given  the  matter  of  the  average  of 
deposits  in  Philadelphia  any  thought,  Mr.  Gratz? 

A.  I  simply  know  they  are  enormous. 

Q.  I  mean  the  average  deposits? 

A.  No.    I  have  not. 

Q.  Suppose   the   average   was   one   thousand,   two  or 


602 

four.  That  would  not  apply  to  the  very  poor,  would  it? 
Because  a  person  having,  say  four  thousand  dollars  on 
deposit  at  interest  could  probably 

A.  It  would  not  surprise  me  at  all  if  the  average  of 
those  of  the  servant  folks  is  one  thousand. 

Q.  Would  you  consider  them  the  very  poor  people  of  the 
community? 

A.  They  get  3.65  interest.  I  was  going  to  say  that. 
I  have  said  at  times  to  treasurers  or  trustees  of 
trust  companies,  "Can  you  use  to  your  pecuniary  ad- 
vantage all  the  moneys-  you  have  on  deposit?"  The 
answer  was,  "Yes,  indeed,  we  can;  and  get  4-J,  5  and  6  per 
cent. 

Q.  You  speak  about  giving  a  list  to  the  assessors  of 
those  who  are  presumably  taxable.  What  do  you  do  in 
the  way  of  checking  those  returns  up  ? 

A.  The  assessors  all  have  what  we  call  personal  blotters. 
They  go  out  on  the  street  and  go  from  house  to  house.  Of 
course,  if  they  come  to  an  alley  that  is  inhabited,  say 
by  Dagoes  who  earn,  perhaps,  a  dollar  a  day  out  on  the 
street,  they  pass  that  by;  but  they  would  not  pass  your 
house  or  mine,  because  we  look  as  if  we  did  have  some- 
thing. 

Mr.  Brown:  They  would  probably  stop  at  my  house 
under  a  false  presumption. 

Mr.  Gratz  (continuing)  :  They  leave  a  blank  at  all 
houses  in  which  there  is  any  reason  to  suppose  the  oc- 
cupant is  of  sufficient  means  to  have  anything  at  all  sub- 
ject to  taxation. 

I  want  to  call  your  attention  to  the  lax  enforcement 
of  the  law  in  some  other  localities.  We  have,  at  times, 
been  informed  (I  mean  the  Board  of  Revision  of  Taxes) 
by  the  Board  of  Revenue  Commissioners  and  sometimes  by 
the  Auditor  General,  that  Philadelphia  and  Pittsburgh 
were  the  only  counties  in  which  a  fair  enforcement  of  the 
law  was  attempted.  In  a  great  many  counties  of  the 
State  they  don't  attempt  to  enforce  it.  I  know  of  one 


503 

adjoining  county,  in  which  several  of  my  friends  live,  who 
are  very  rich  men,  and  they  have  often  told  me  that  they 
never  received  a  blank  and  never  were  asked  to  make  a 
return,  and,  therefore,  never  did  it.  They  have  escapsd 
the  tax  in  the  past  years  and  expect  to  escape  it  in  the 
future. 

What  stirred  me  up  to  write  a  letter  to  the  present 
Auditor  General  was  a  piece  of  information  which  I  re- 
ceived from  one  of  the  assessors.  A  man  residing  in 
Philadelphia,  who  had  a  country  home  in  an  adjoining 
county,  last  fall  was  served  with  a  blank.  He  had  been 
making  his  return  in  Philadelphia.  He  said  to  the  as- 
sessor, '  *  I  am  not  going  to  return  anything  more  in  Phila- 
delphia; I  am  going  to  make  my  return  in — naming  the 
county."  The  assessor  said,  "Why  do  you  do  that?"  he 
said,  "Because  the  clerk  there  allows  me  5  per  cent, 
discount  on  my  taxes,  and  you  don't  allow  any  discount 
here.' '  The  assessor  said,  "Has  he  a  right  to  do  that ? "  He 
said,  "I  don't  know  anything  about  that,  but  he  does  it." 
After  getting  that  piece  of  information  I  wrote  a  letter  to 
the  Auditor  General,  of  which  letter  this  is  a  copy: 

November  16,  1909. 
Hon.  Robert  K.  Young, 
Auditor  General, 

Harrisburg,  Penna. 
Dear  Sir : 

We  have  recently  learned  certain  facts  in  connection 
with  the  assessment  of  the  State  tax  on  personal  property 
which  we  think  of  such  importance  as  to  warrant  us  in 
communicating  them  to  you. 

A  number  of  our  most  wealthy  Philadelphians  have 
country  residences  in  adjoining  counties — principally 
Montgomery  and  Delaware — and  elect  to  vote  there,  in 
order  that  they  may  make  affidavit  that  they  are  non- 
residents of  this  City  and  thus  avoid  returning  their  tax- 
able personal  property  to  our  assessors. 


504 

In  a  large  number  of  these  cases,  when  the  individuals 
have  been  asked  why  they  did  not  make  their  returns 
here,  and  thus  aid  the  City  treasury,  the  answer  has  been : 
"We  are  not  asked  to  make  any  returns  in  Montgomery 
(or  Delaware)  county.  No  blank  for  returns  is  ever 
served  on  us  by  the  assessors."  Or,  in  some  cases,  the 
answer  was:  "I  let  the  assessors  estimate  me,  and  their 
estimate  is  greatly  below  what  it  would  be  in  Philadel- 
phia." 

An  additional  reason  for  fixing  their  residence  so  that 
they  may  make  their  returns  outside  of  Philadelphia  has 
lately  come  to  light.  Two  men  who  had,  for  years  past, 
been  in  the  habit  of  making  their  returns  to  our  assessors, 
have,  this  year,  made  affidavit  of  non-residence  here ;  and 
have  given  as  their  reason,  that  the  collectors  of  the  State 
taxes  assessed  against  them  in  the  adjoining  counties 
always  allow  a  deduction  of  5  per  cent,  where  the  bills 
are  paid  promptly.  I  do  not  know  what  authority  they 
have  for  doing  this ;  but  I  do  know  that  all  the  facts  above 
stated  unite  to  lessen,  to  a  great  extent,  the  total  amount 
of  State  tax  to  be  returned  to  you  by  this  office  on  July 
31st  of  each  year. 

Very  truly  yours, 
(Not  signed) 

(Written  on  the  letter  head  of  the  Board  of  Ke vision 
of  Taxes,  Philadelphia.) 

Q.  Have  you  any  thought  as  to  the  amount  of  these 
taxes  that  are  evaded  by  these  quondam  citizens  of  Phila- 
delphia ? 

A.  I  have  no  knowledge  at  all. 

Q.  I  assume  the  amount  is  of  sufficient  size  to  justify 
the  writing  of  that  letter? 

A.  My  personal  belief  is  that  the  amount  is  pretty 
large,  but  I  have  no  absolute  knowledge. 

Q.  What  was  Philadelphia's  share  last  year  of  the  per- 
sonal property  tax?  As  I  recall  it,  the  total  returned 


505 

to  the  Commission  was  a  little  over  three  million  dollars. 
Can  you  recall  what  Philadelphia's  share  was? 

A.  I  think  I  have  a  memorandum  (reads  from  paper). 
The  City  got  three-fourths  of  the  tax  on  $568,786,796. 

Q.  That  is  about  one  and  a  half  million  dollars? 

A.  But  that  included  fifty-one  million  assessed  against 
the  Provident  Trust  Company,  which  you  know  about, 
which  has  not  been  paid? 

Q.  Yes. 

A.  Take  off  fifty-one  million  and  there  is  five  hundred 
and  twenty  million  about,  the  City  getting  three-fourths. 

Q.  Let  me  ask  you  this :  ' '  When  these  people  that  you 
know  go  to  another  county,  couldn't  you  inform  the  ad- 
joining county?  "Why  should  not  the  Auditor  General  be 
notified  that  certain  people  claimed  a  residence  in  Mont- 
gomery or  Delaware  county,  so  that  the  Auditor  General 
could  keep  some  check  on  them  and  require  the  County 
Commissioners  to  make  the  proper  returns? 

A.  It  would  be  possible  for  the  Board  of  Revision  of 
Taxes  here  to  notify  the  county  assessors  of  Delaware  or 
Montgomery  county  or  any  other  county,  but  while  a  man 
says  he  is  not  a  resident  of  Philadelphia,  but  resides  in 
Delaware  county,  we  could  not  give  his  address. 

Q.  There  is  no  law  compelling  you  to-day  to  do  it? 
A.  No. 

Q.  You  were  speaking  of  returns.  Has  there  ever  been 
any  attempt  in  this  county  to  prosecute  anybody  for  mak- 
ing false  returns? 

A.  Never. 

Q.  Why  is  that?  I  cannot  find  a  case  in  the  Common- 
wealth. Why  is  that? 

A.  Well,  I  will  tell  you.  I  know  of  some  cases  that 
came  near  to  it — not  quite  to  the  point  of  prosecution.  I 
have  in  mind  three  instances — of  men  who  were  worth 
over  a  million  dollars  and  some  three  or  four,  who  year 
after  year  made  a  sworn  return  that  they  had  no  taxable 


506 

property.  They  were  reputable  men — believed  to  be  so — 
and  no  one  questioned  the  truth  of  their  returns.  The 
first  one  who  died,  we  will  say,  was  Mr.  A.  "When  the 
inventory  of  his  estate  was  filed  it  showed  a  million  dol- 
lars that  was  placed  in  mortgages,  and  five  hundred  thous- 
and or  so  (maybe  a  million)  in  stocks  and  bonds  of  corpora- 
tions outside  of  Pennsylvania.  I  was  astounded,  and  I 
thought  it  could  scarcely  be  possible  that  a  man  of  his  repu- 
tation would  make  false  returns,  and  so  notoriously  false.  I 
could  have  found  some  means  of  explaining  to  myself  the 
false  statement  in  regard  to  the  taxable  stocks  and  bonds. 
I  had  the  clerks  bring  me  the  returns  that  were  made  by 
him  during  the  last  five  years  of  his  lifetime,  and  I  sent 
for  his  executor  (who,  by  the  way,  happened  to  be  a 
member  of  his  family).  I  spread  out  before  him  these 
returns,  and  he  held  up  his  hands  in  horror.  "What  are 
you  going  to  do  about  it?"  he  said.  I  said,  "I  want  you 
to  pay  the  taxes  for  all  these  years — during  the  years  this 
was  taxable.  If  you  do  that  I  will  be  satisfied.  You  are 
not  to  blame."  He  said,  "Of  course  you  don't  want  to 
pain  the  family  by  giving  any  public  expose  of  this?" 
I  said, ' '  Not  at  all. ' '  He  said, ' '  You  don 't  want  to  blacken 
his  memory."  I  said,  "No."  The  full  amount  of  the  tax 
was  paid  for  all  the  years. 

Another  case :  A  man  who  was  not  only  as  welll  known 
as  the  first  one  I  have  mentioned,  but  was  a  pillar  of 
the  church.  The  case  was  precisely  the  same. 

Q.  You  don't  say  where  the  pillar  was  located,  Mr. 
Gratz? 

A.  No.  This  was  even  a  worse  case  than  the  other. 
His  son-in-law  was  sent  for.  He  said,  '  *  My,  I  will  do  any- 
thing you  want  done."  I  said,  "We  want  the  whole 
amount  paid  up."  Of  course,  that  was  the  thing  to  do — 
to  get  the  money  for  the  City. 

Q.  Why  shouldn't  there  be  some  provision  for  the  col- 
lection of  such  tax  as  the  collection  of  the  collateral 
inheritance  tax? 


507 

A.  No  reason  in  the  world. 

Q.  And  yet  there  is  none  for  it  at  the  present  time  ? 

A.  No. 

Q.  You  have  had  no  trouble  in  these  cases? 

A.  No. 

Q.  Have  you  any  idea  as  to  the  number  of  these.  Have 
your  inquiries  led  you  into  any  means  of  ascertaining 
this? 

A.  I  have  kept  a  pretty  close  watch.  No,  there  is  no 
trouble  in  collecting  where  a  person  during  his  life  time 
has  made  false  returns.  The  personal  representative  'jr 
members  of  his  family  are  always  too  glad  to  do  anything 
to  save  him  from  reproach. 

By  the  Chairman : 

Q.  Do  these  cases  frequently  occur? 

A.  Very  seldom. 

Q.  You  spoke  about  making  no  returns.  Did  he  make 
any  return  of  the  mortgages? 

A.  No  mortgages. 

Q.  Were  the  mortgages  recorded? 

A.  That  was  before  we  got  the  records  from  the  Re- 
corder of  Deeds.  That  could  not  happen  now.  The  Re- 
corder of  Deeds  sends  us  a  transcript,  but  they  evade 
that.  They  don't  give  correct  addresses. 

Q.  That  is  assuming  that  when  the  mortgagee  records 
his  mortgage  he  gives  his  correct  address.  If  he  gives  it 
as  Kalamazoo,  Michigan,  you  couldn't  help  yourself? 

A.  No. 

Q.  Does  Senator  Vare's  bill  cover  that? 

A.  Yes,  to  a  certain  extent.  Human  invention  cannot 
devise  a  law  which  will  make  all  men  honest.  It  is  im- 
possible. I  should  say  this  for  your  general  information. 
In  the  course  of  a  year  a  vast  number  of  people  come 
into  the  office  of  the  Board  of  Revision  of  Taxes,  and  they 
talk  about  taxation  and  other  things.  I  have  never  heard 


508 

anyone  say  that  he  was  not  entirely  satisfied  to  pay  a 
tax  on  his  personal  property,  or  even  pay  a  larger  tax,  if 
all  people  who  wrere  in  the  same  position  could  be  made  to 
do  it;  but  they  say — and  very  justly — "I  don't  want  to 
pay  a  tax  on  my  personal  property  when  my  neighbor  pays 
nothing  on  his. ' ' 

By  Mr.  Brown : 

Q.  Have  you  ever  had  any  complaints  from  land  owners 
who  seek  to  relieve  the  burden  upon  them  by  insisting 
upon  a  more  rigid  enforcement  of  the  collection  of  the  per- 
sonal property  tax? 

A.  No. 

Q.  We  have  some  letters  upon  the  subject  of  local  tax- 
ation of  public  utility  corporation  property.  Have  you 
given  that  subject  any  thought,  Mr.  Gratz? 

A.  Only  as  far  as  municipal  taxation. 

Q.  Only  as  to  the  Commonwealth  and  City  revenues. 
I  assumed  that  if  all  this  property  were  local  property  of 
the  public  utility  corporations,  it  should  be  taxed  locally, 
or  do  you  think  that  would  be  an  attempt  on  the  part  of 
the  State  to  impose  too  heavy  a  burden? 

A.  You  know,  Mr.  Brown,  as  well  as  I  do,  that  not  by 
any  statute  law,  but  by  a  decision  of  the  Supreme  Court, 
certain  portions  of  the  real  estate  of  public  utility  cor- 
porations have  been  exempted ;  for  instance — power  houses, 
telephone  exchanges — not  to  mention,  perhaps,  some  lesser 
improvements  in  that  connection.  My  own  personal  opinion 
is  that  they  should  be  taxed. 

Q.  You  tax  the  Pennsylvania  Railroad  Company  lo- 
cally on  what,  in  Philadelphia  ? 

A.  Locally  on  its  station. 

Q.  That  is,  Broad  street,  West  Philadelphia— all  sta- 
tions? 

A.  Yes,  everything  except  road  beds  and  water  sta- 
tions. 

Q.  Where  is  the  distinction  of  law  that  taxes  one  cor- 


509 

poration  and  exempts  other  public  utility  corporations  from 
paying  a  similar  tax  upon  similar  conditions  ? 

A.  The  Supreme  Court  saw  fit  to  do  it. 

Q.  Is  there  any  reason  why  this,  as  far  as  you  know, 
should  not  be  done  ? 

A.  I  see  no  reason  whatever. 

Q.  I  gather  your  thought  that  you  think  it  should  be 
done.  Have  you  been  able  to  gather  any  sentiment  as  to 
taxing  other  subjects  than-  those  now  taxable  ? 

A.  Do  you  mean  for  State  purposes? 

Q.  Yes. 

A.  There  is  a  great  diversity  of  opinion. 

Q.  You  are  a  sort  of  a  clearing  house.  I  thought  you 
probably  had  gathered  some  sentiment  as  to  this?  That 
is,  manufacturing  corporations  and  others? 

A.  All  the  manufacturers  would  protest  against  any 
taxation  of  the  State  of  their  capital.  They  would  insist 
that  they  could  not  live  and  thrive  if  such  a  tax  were  im- 
posed. I  feel  very  kindly  to  the  manufacturers,  but  I 
confess  I  see  no  reason  why  they  should  be  favored  to  too 
great  an  extreme.  They  are  favored  in  the  matter  of  local 
taxation — always  have  been  and  are  still — in  this  respect: 
That  their  machinery  absolutely  escapes  taxation  (I  am 
speaking  of  machinery  as  a  fixture,  and  that  is  the  most 
valuable  part  of  a  plant).  It  has  been  the  case  here,  from 
time  immemorial,  not  to  include  that,  and  we  follow  the 
custom  down  to  date. 

Q.  What  about  taxing  inheritances  ?  Have  you  gathered 
any  thought  on  that — direct  inheritances? 

A.  I  am  not  going  beyond  the  provision  of  the  present 
laws. 

Q.  I  am  speaking  now  of  the  taxing  of  direct  inheri- 
tances ? 

A.  No,  I  haven't  thought  of  that. 

Q.  Are  you  able  to  give  any  thought  upon  the  subject 
of  taxing  other  subjects  not  now  taxed? 

A.  You  mean  for  State  purposes? 


510 

Q.  Yes. 

A.  I  confess  it  has  never  occurred  to  me  to  give  any 
general  thought  to  the  whole  subject,  so  far  as  State  tax 
goes.  I  have  had  in  mind,  more  frequently,  the  subject 
of  municipal  taxation,  because  the  City  of  Philadelphia 
needs  a  larger  revenue  than  it  gets,  and  I  have  often  thought 
that  if  some  method  of  raising  the  revenue  by  taxation 
could  be  devised,  it  would  be  a  fine  thing. 

Q.  It  is  your  thought  that  the  burden  upon  real  estate  in 
this  City  has  about  reached  the  limit  ? 

A.  Yes.  The  burden  that  is  placed  upon  real  estate  is 
exceedingly  heavy. 

Q.  Where  is  the  City  to  obtain  her  additional  revenue 
unless  it  is  derived  from  these  other  taxes? 

A.  Undoubtedly,  in  a  great  many  places,  goods  in  the 
process  of  manufacture  are  taxed  for  municipal  purposes. 
Goods  for  sale  and  in  stock  are  taxed.  Just  take  these 
two  articles  alone ;  consider  what  an  immense  amount  would 
be  subject  to  taxation  if  all  the  goods  that  are  on  sale 
in  the  stores  were  subject  to  taxation. 

Q.  Someone  has  suggested  that  automobiles  and  other 
luxuries  should  be  taxed  heavily — some  suggest  as  high  as 
fifty  to  one  hundred  dollars  a  year. 

A.  You  tax  carriages  for  hire,  and  why  should  not  au- 
tomobiles for  hire  be  equally  taxable?  There  is  no  reason 
for  the  discrimination.  Councils  have  a  right,  I  think, 
under  the  general  law,  to  make  automobiles  taxable  if  they 
wanted  to.  It  was  suggested  here  the  other  day. 

Q.  A  rigid  enforcement  of  the  law  in  one  county  would 
drive  taxpayers,  or  tax  dodgers,  to  other  counties  to  evade 
it? 

A.  No,  I  hardly  think  it  would.  If  a  very  rich  man  has 
a  town  house  along  the  main  line,  and  he  happens  to  be 
fortunate  enough  to  escape  the  tax  in  the  county,  and  is 
a  voter  in  the  adjoining  county,  I  don't  think  he  would  pull 
up  stakes  and^go  into  some  other  county. 


511 

Q.  Could  the  State  collect  those  taxes  more  efficiently 
through  collectors,  who  were  independent  of  the  local  color 
— men  who  had  no  local  associations?  It  has  been  sug- 
gested that  the  assessor  is  a  little  tender  because  he  is  fol- 
lowing the  lines  of  his  next  election  ? 

A.  You  are  speaking  now  of  other  counties  than  Phila- 
delphia ? 

Q.  Yes. 

A.  I  think  the  assessor  should  be  appointed,  not  elected. 

Q.  By  whom?    The  Auditor-General? 

A.  Where  there  is  a  Board  of  Revision,  the  Board  would 
be  the  proper  body  to  appoint  them.  If  there  is  no  Board 
of  Revision,  then  some  other  authority. 

Q.  You  don't  think  the  Auditor-General  could  come  into 
this  county  and  appoint  collectors. 

A.  No. 

By  the  Chairman: 

Q.  What  would  you  say  if  the  Court  were  to  appoint 
the  assessors  for  the  various  townships  in  the  several  coun- 
ties of  the  Commonwealth,  excepting  the  counties  of  Phila- 
delphia and  Allegheny,  for  instance? 

A.  You  would  probably  get  a  pretty  good  set  of  men  that 
way. 

Q.  In  your  judgment,  would  that  be  an  improvement 
over  the  present  method? 

A.  I  think  almost  any  method  would  be  an  improvement 
over  the  one  which  prevails  in  making  them  elective.  Just 
as  long  as  that  system  is  operative,  the  men  who  are  candi- 
dates for  re-election  are  going  to  favor  voters. 

Q.  The  present  length  of  the  term  of  assessors  is  three 
years,  and  the  compensation  is  fixed  by  an  Act  of  Assembly 
passed  at  the  last  session  of  the  Legislature  at  two  dollars 
and  a  half  per  day.  What  would  you  say  if  this  com- 
pensation was  increased  to  five  dollars  per  day  ? 

A.  Well,  I  don't  think  two  and  a  half  dollars  per  day  is 
sufficient. 


512 

Q.  Do  you  think  five  dollars  a  day  would  be  sufficiently 
attractive  for  a  man  to  accept  the  job? 

A.  Five  dollars  a  day  in  the  country  would  be  equivalent 
to  ten  dollars  a  day  here. 

Q.  Suppose  the  term  was  four  years  instead  of  three  and 
he  should  not  be  permitted  to  succeed  himself,  what  would 
you  say? 

A.  That  would  be  an  improvement. 

By  Mr.  Brown : 

Q.  Have  you  any  other  thought  on  the  subject? 
'    A.  Not  that  I  know  of. 

Q.  How  is  the  examination  made  to  determine  whether 
or  not  the  assessor  accounts  for  all  of  these  blanks  that  are 
given  to  him? 

A.  They  don't  account  for  any  particular  number  of 
blanks. 

Q.  I  mean,  suppose  an  assessor  has  in  his  district  ten 
thousand  presumable  taxables  and  sends  these  blanks  to 
the  people,  what  check  is  there  when  he  gets  them  back? 
Does  he  account  for  every  one  of  them  ? 

A.  Yes,  when  he  serves  the  blank  he  marks  on  his  blot- 
ter "Blank  served/'  such  and  such  a  date.  The  blank 
has  a  printed  notice  on  it  that  unless  the  return  is  made 
within  ten  or  fifteen  days  (that  is  January  10)  from  the 
day  of  service  of  the  blank,  that  the  person  to  whom  it 
is  served  will  be  estimated,  and  the  penalty  will  be  attached. 

Q.  And  they  do  estimate? 

A.  Yes. 

Q.  In  a  case  where  you  get  a  false  return,  where  you 
know  it  is  false,  why  shouldn't  the  officials  of  the  several 
counties  know  of  such  a  case?  Why  shouldn't  you  follow 
that  up  to  make  an  example  of  somebody?  Wouldn't  one 
example  do  more  good  than  all  the  laws  you  could  pass  ? 

A.  Yes,  it  would  prevent  them,  probably,  from  doing 
the  same  thing. 

Q.  In  other  words,  it  is  generally  assumed  that  the  rules 


513 

governing  taxing  are  different  from  any  other  class  in  the 
community.  A  man  who  dodges  taxes  does  not  think  he 
is  doing  wrong,  and  a  prosecution  of  a  flagrant  case  would 
bring  about  a  correction  and  prevent  a  great  many  cases 
of  tax  dodging  ? 

A.  The  law  does  not  provide  enough. 

Q.  What,  for  making  false  returns? 

A.  Yes,  it  does  not  send  a  man  to  prison. 

Q.  It  provides  a  fine  of  five  hundred  dollars  and  seven 
years  in  prison,  under  the  Act  of  '79,  as  I  recall.  Where 
the  assessor  fails  to  make  a  return,  five  hundred  dollars 
and  five  years.  Neglect  of  it  in  any  respect,  five  hundred 
dollars  fine  and  one  year  in  prison.  It  seems  to  me  these 
laws  are  drastic  enough. 

A.  They  are  very  drastic.  But  the  trouble  would  be  to 
get  the  evidence  which  would  enable  you  to  say  the  re- 
turn was  false. 

Q.  I  say,  only  a  flagrant  case,  where  there  is  no  question 
about  it. 

A.  For  instance,  I  have  heard  of  a  man,  who  happened 
to  be  a  friend  of  mine,  who  owned  a  couple  of  million 
dollars  of  mining  stock  and  didn't  return  any.  I  went  to 
him  and  said,  "You  can't  afford  to  do  this;  you  should 
make  a  return  of  that  mining  stock."  He  said,  "Why, 
is  that  taxable?"  I  said,  "Of  course,  it  is."  It  was  the 
stock  of  a  company  organized  in  one  of  the  far  Western 
States.  He  said  "I  never  thought  of  that.  I  will  return 
it  next  year."  They  like  to  forget  if  they  can — in  re- 
gard to  their  taxable  property. 

Q.  I  refer  to  the  failure  of  those  who  boast  about  it  ? 

A.  I  don't  think  they  boast  about  it.    A  man  may  boast 
that  he  has  never  been  served  with  a  blank — that  he  is 
fortunate  in  that  respect.    A  man  who  makes  a  false  return 
is  never  going  to  brag  about  that. 
By  the  Chairman : 

Q.  If  the  Board  of  Revision  of  Taxes  has  reason  to  be- 
lieve that  a  false  return  has  been  made,  the  blank  is  placed 
in  the  hands  of  the  assessor,  returned  to  him  and  asked  to 
27 


514 

pass  upon  it  again  and  make  a  better  return.    That  is  the 
method  under  the  law  ? 

A.  Yes,  they  are  often  sent  back,  and  the  man  who  owns 
one  thousand  dollars  of  taxables  puts  down  fifty  dollars, 
and  we  have  no  means  of  knowing  the  truth. 

Q.  For  instance,  who  estimates  under  the  law? 

A.  The  assessor. 

Q.  He  makes  the  estimate  and  has  the  power  to  add  50 
per  cent? 

A.  The  Board  of  Revision  is  required  by  law,  in  the  City 
of  Philadelphia,  to  add  fifty  per  cent.  We  had  an  illustra- 
tion of  that  in  the  case  of  a  man  leaving  an  estate  of 
twenty  millions.  That  was  about  fifteen  or  eighteen  years 
ago.  The  assessor  had  been  estimating  him  at  fifty  thou- 
sand dollars  taxable  personal  property.  I  sent  for  the 
assessor,  after  the  death  of  the  man  and  the  filing  of  his 
inventory,  and  said  to  him,  "How  in  the  world  did  you 
come  to  do  a  thing  like  this?"  He  said,  "He  told  me  he 
didn't  know  how  much  he  had  and  couldn't  make  a  sworn 
return,  as  he  really  didn't  know  how  much  he  had  that 
was  taxable,  but  was  sure  it  was  not  in  excess  of  fifty 
thousand  dollars."  "We  had  it  placed  on  our  books  and 
made  an  estimate  of  three  to  four  millions  to  cover  during 
the  current  year,  and  after  the  man's  death  his  executor 
disputed  it  and  went  to  Court  and  we  lost  it.  The  Court 
said  that  the  action  of  the  Board  of  Revision  in  estimating 
him  at  fifty  thousand  was  conclusive. 

Q.  Why  don't  they  take  higher  sums? 

A.  If  the  Board  of  Revenue  would  give  the  people  credit 
for  taxes  they  are  imposing  that  are  not  collectible,  there 
would  be  no  trouble.  The  State  charges  the  City  of  Phila- 
delphia with  every  penny  standing  on  its  books  on  the 
thirty-first  of  July,  and  I  think  they  should  at  -least  give 
you  credit  if  you  notified  afterwards  that  one  million  dol- 
lars of  the  tax  proved  uncollectible.  So,  in  the  case  of 
the  State,  we  have  to  be  careful  not  make  the  estimates  too 
great. 

Q.  That  benefits  the  taxpayers  who  dodge  taxes  ? 


515 

A.  I  will  tell  you  how  it  is  done.  A  man  declines  to 
make  a  return,  and  if  the  assessor  isn't  a  pretty  good 
guessor,  he  will  go  to  me  and  say,  "How  much  should  I 
estimate?"  Well,  we  will  start  it  at  a  comparatively  small 
figure,  adding  the  penalty.  If  that  is  paid,  there  will  be 
a  very  great  increase  the  next  succeeding  year;  but  we 
have  had  a  considerable  number  of  cases,  pretty  large  es- 
timates, and  in  no  one  of  them,  for  a  series  of  years,  has 
the  City  collected  one  penny  of  the  money.  You  cannot 
get  any  money  from  the  State,  and,  therefore,  in  the  case 
of  the  State,  we  have  to  be  reasonably  careful  in  making 
these  estimates.  You  can  see  what  it  would  be. 

By  the  Chairman: 

Q.  If  tax  dodging  is  as  prevalent  in  Philadelphia  county 
as  we  have  just  heard,  how  would  a  prosecution  brought 
ever  get  past  the  grand  jury  or  past  the  petit  jury.  Would 
it  be  all  right  to  have  them  brought  before  the  grand  jury  ? 

A.  I  suppose  the  presumption  is  that  probably  they  might 
be.  I  didn  't  say  tax  dodging  was  so  very  prevalent  in  Phila- 
delphia. 

Q.  I  presume  it  is  prevalent? 

A.  It  is  the  world  over. 

Q.  It  seems  to  be  contagious? 

A.  Yes.  The  law  is  pretty  fairly  enforced  in  Philadel- 
phia. The  trouble  is  in  the  adjoining  counties,  where  they 
have  been  too  lax.  I  happened  to  say  to  one  of  the  Com- 
missioners of  Montgomery  County,  and  after  the  session 
was  adjourned  I  said  to  him,  "Why  can't  you  notify  the 
Board  of  Revision  of  people  who  have  country  places  in 
your  county  who  claim  residence  in  Philadelphia?"  He 
said,  "We  have  lots  of  them."  I  said,  "The  same  people 
tell  our  assessors  they  are  residents  of  your  county  and 
not  residents  of  Philadelphia."  He  promised  to  send  me  a 
list,  but  I  have  not  received  it  as  yet. 

Mr.  Brown :   He  is  probably  thinking  it  over. 

Mr.  Brown:  Mr.  Chairman,  Mr.  Albright,  of  the  Penn- 
sylvania Tax  Reform  Association,  has  something  to  say. 


516 


Haines  D.  Albright,  Tax  Reform  Association  of  Penn- 
sylvania: Mr.  Chairman  and  Gentlemen  of  the  Com- 
mission: What  I  have  to  say  is  somewhat  technical, 
and  I  have  therefore  reduced  it  to  writing  for  your  con- 
venience and  for  mine.  I  am,  however,  willing  to  answer 
any  questions  concerning  what  I  have  written  here. 

The  Tax  Reform  Association  of  Pennsylvania  consists 
of  a  number  of  Pennsylvania  real  estate  owners  and  busi- 
ness men  whose  property  interests  are  large  and  import- 
ant and  who  are  convinced  that  general  business  pros- 
perity is  more  effectively  helped  or  hindered  by  the  man- 
ner in  which  the  tax  burden  is  adjusted  than  by  its  size. 
While  we  cannot  fail  to  appreciate  the  need  for  more 
public  revenue,  we  know  that  the  most  important  part 
of  the  work  of  this  Commission  is  not  so  much  to  devise 
a  way  to  get  more  money  as  it  is  to  discover  how  to  get 
sufficient  public  revenue  in  ways  which  will  not  check 
business  prosperity. 

The  Tax  Reform  Association  of  Pennsylvania  desires  to 
assist  in  promoting  the  evolution  of  a  system  of  State  and 
local  taxation  which  will  not  hamper  productive  business 
activity.  It  therefore  respectfully  suggests  and  recom- 
mends : 

First :  That  no  additional  taxes  be  imposed  upon  manu- 
facturing companies. 

Second:  That  the  State  taxes  upon  mortgage  debts, 
stocks,  bonds,  money  at  interest  and  other  forms  of  mov- 
able personal  property  be  abolished. 

Third:  That  cities,  counties  and  boroughs  be  given  a 
degree  of  local  option  as  to  the  manner  and  subjects  of 
taxation  for  local  revenues. 

Fourth:  That  certain  technical  devices  for  promoting 
equality  of  real  estate  assessments,  the  value  of  which 


517 

have  been  amply    demonstrated,    be    made    compulsory 
throughout  the  Commonwealth. 

PROPOSED  SUPER  TAX  ON  MANUFACTURING 
COMPANIES. 

The  income  producing  utility  of  land  is  almost  entirely 
dependent  on  the  presence  of  an  active,  prosperous  popula- 
tion. Real  estate  owners  are  therefore  most  substantially, 
though  indirectly,  interested  in  having  the  tax  burden  so 
adjusted  as  to  attract  rather  than  repel  manufacturing 
enterprises  which  furnish  a  profitable,  nearby  market  for 
most  of  their  farm  produce,  rent  paying  tenants  for  many 
of  their  dwelling  houses,  and  the  most  liberal  purchasers 
of  the  merchandise  of  retail  storekeepers.  The  presence 
of  the  property  and  activities  of  Pennsylvania  manufactur- 
ing companies  in  this  way  contributes  hundreds  of 
millions  of  dollars  to  the  source  of  the  incomes  of  the 
owners  of  neighboring  Pennsylvania  real  estate;  and  for 
farmers  and  other  thus  benefited  real  estate  owners  to 
seek  to  subject  Pennsylvania  manufacturing  companies 
to  even  a  small  handicap  would  be  as  unwise  and  self- 
injurious  as  killing  geese  which  lay  golden  eggs. 

Manufacturing  companies  pay  the  same  direct  taxes 
upon  the  value  of  the  real  estate  which  they  hold  and  the 
personal  property  which  they  own  as  is  paid  by  other 
citizens.  They  are  all  exposed  to  close  competition ;  even 
in  their  own  immediate  neighborhood  they  must  sell  in 
competition  with  goods  manufactured  elsewhere.  They 
almost  always  sell  in  a  State-wide  market;  generally  in 
a  Nation-wide  market ;  often  in  a  world-wide  market.  Any 
tax  which  they  must  pay  in  excess  of  those  levied  upon 
their  competitors,  is,  to  that  extent,  a  business  handicap, 
and  eren  a  small  special  or  super  tax  upon  them  will 
bear  so  heavily  upon  some  of  them  as  to  either  destroy 
or  drive  them,  together  with  the  benefits  which  they  in- 
cidentally confer  upon  neighboring  real  estate,  into 
another  taxing  district,  which,  though  it  may  raise  a 


518 

larger  amount  of  taxes,  does  so  in  a  manner  which  doos 
not  hamper  production  of  the  wealth  out  of  which  ail 
taxes  and  all  incomes  are  paid. 

THE  TAXATION  OF  CONCEALABLE  PERSONAL 
PROPERTY. 

We  suggest  the  abolition  of  the  taxes  upon  mortgage 
debts,  stocks,  bonds,  money  at  interest  and  other  forms 
of  movable  personal  property. 

First:  Because  the  burden  of  such  taxation  is  usually 
shifted  from  those  intended  to  be  taxed,  to  wit,  the  own- 
ers of  the  property  taxed,  to  other  persons  who  have  al- 
ready paid  their  just  share  of  taxes.  This  is  the  case 
with  the  tax  on  loans  secured  by  mortgages  of  Penn- 
sylvania real  estate.  This  mortgage  tax  is  added  to  the 
rate  of  interest  paid  by  the  borrowing  real  estate  owner 
to  the  money-lender  5.4  per  cent,  is  the  prevailing 
rate,  the  four-tenths  being  the  "tax).  If  the  money- 
lender is  a  resident  of  this  State  and  gives  his  cor- 
rect address  to  the  Recorder  of  Deeds  at  the  time  the 
mortgage  is  recorded,  the  information  isj  communicated 
to  the  tax  assessors  of  the  district  in  which  the  money- 
lender lives,  and  he  is  compelled  to  pay  the  tax  which 
he  has  collected  from  the  borrower  over  into  the  public 
treasury,  but  as  some  money-lenders  give  incorrect  ad- 
dresses, and  many  actually  live  outside  the  State,  this 
tax,  which  is  shifted  to  real  estate  owners  and,  ultimately, 
paid  by  them,  costs  them  much  more  than  it  profits  the 
public  treasury. 

A  second  reason  for  abolishing  these  taxes  is  that  they 
never  can  be  collected  with  anything  like  practical 
equality.  A  large  proportion  of  those  liable  can  always 
succeed  in  evading  payment,  and  the  burden  is  therefore 
most  unequally  and  unjustly  distributed.  Such  property 
does  not  lie  out  of  doors,  in  full  view  of  all  men,  as 
land  does.  Its  ownership  and  its  very  existence  can  there- 
fore be  concealed  and,  most  frequently,  is  not  generally 


519 

known.  Mr.  Eshelman,  the  Controller  of  Lancaster 
county,  who  testified  two  weeks  ago,  told  how  he  had 
investigated  the  ownership  of  the  certificates  of  deposit 
presented  to  the  receivers  of  an  insolvent  local  trust 
company  and  found  that  only  5  per  cent,  of  them  had  been 
assessed  for  taxation.  This  testimony  is  in  harmony  with 
the  facts  disclosed  by  many  other  investigations  in  widely 
dissimilar  places,  and,  indeed,  with  the  universal  experi- 
ence of  mankind.  In  every  country  and  in  all  ages  taxes 
upon  property  which  could  be  concealed  have  been  paid 
only  by  the  trustees  of  widows  and  orphans  and  by  com- 
paratively few  conscientious  persons. 

A  third  reason  for  favoring  the  abolition  of  taxes 
upon  concealable  property  is  that  they  operate  as  a  strong 
inducement  to  the  commission  of  perjury,  and  make  false 
swearing  so  common  as  to  appear  innocent,  thus  weaken- 
ing respect  for  law  and  for  the  sanctity  of  an  oath.  The 
great  mass  of  men  know  that  such  tax  laws  are  not  uni- 
formly applied;  that  evasions  are  numerous  and  com- 
mon, and  that  the  administrative  factors  are  unable  to 
circumvent  evasions.  They,  therefore,  omit  from  their 
tax  returns  all  reference  to  their  not  generally  known 
possessions  and  swear  to  the  returns  with  consciences 
which  are  not  visibly  troubled.  One  of  the  speakers  of 
the  Louisville  Session  of  the  International  Tax  Conference, 
speaking  of  this  well-known  fact,  said  that  it  "by  no 
means  implied  an  inherent  dishonesty  in  the  average 
citizen.  The  average  man  believes  in  fair  play  and  *s 
usually  willing  to  perform  his  part,  where  fair  play  is 
the  established  order  of  the  day,  but  where  his  confidence 
is  shaken,  he  meets  kind  with  kind,  unfairness  with  un- 
fairness. If  frankness  with  the  authorities  as  to  his 
actual  possessions  means  injustice  to  himself  he  will  pro- 
tect himself  by  silence,  evasion,  and  even  perjury."  The 
tax  upon  concealed  property  is  really  a  tax  upon  con- 
science. A  strong  and  frequently  effective  temptation  to 
suppress  that  instinct  for  morality  which  should  be  the 
most  precious  possession  of  a  Commonwealth. 


520 

A  fourth  reason  for  favoring  the  abolition  of  taxes 
upon  movable  personal  property  is  because  the  economic 
effect  of  drastic  efforts  to  collect  taxes  upon  this  kind  of 
property  is  to  induce  citizens  of  the  State  to  send  their 
money  into  other  States. 

When  George  Vanderbilt  acquired  the  great  Biltmore 
estate  in  North  Carolina,  it  is  said  that  'he  forbade  trap- 
ping and  shooting,  and  that  in  a  short  time  the  birds  and 
deer  came  to  know  that  Biltmore  was  a  safe  place  for 
them  to  be,  and  they  came  there  in  great  flocks.  Monied 
capital,  which  is  the  life  blood  of  business  and  the 
necessary  tool  of  modern  industry,  is  quite  as  responsive 
to  such  inducements.  In  these  days  of  close  competition 
and  convenient  facilities  for  the  transmission  of  intelli- 
gence and  the  transportation  of  persons  and  property, 
monied  capital  flows  from  place  to  place  with  great  facilty, 
and  if  Pennsylvania  will  altogether  cease  trying  to  ferret 
out  and  tax  it,  it  will  flow  into  this  State  even  as  the 
birds  of  the  South  flock  to  Biltmore. 

In  1871  Thomas  Cochran,  Esq.,  who  was  then  Presi- 
dent of  the  Board  of  Revision  of  Taxes  of  Philadelphia 
county,  in  a  paper  which  he  read  before  the  Social  Science 
Association,  pointed  out  that  "  There  is  nothing  that  will 
so  silently,  yet  certainly,  dry  up  the  sources  of  prosperity 
of  a  community  as  taxation  injudiciously  imposed. "  He 
illustrated  the  proposition  by  relating  how  a  tax  on 
auctioneers,  1  per  cent,  higher  than  New  York  levied 
on  East  India  goods,  had  transferred  from  Philadelphia 
to  New  York  an  auction  business,  which  in  the  first 
quarter  of  the  nineteenth  century  was  the  most  important 
in  the  country.  Mr.  Cochran  said  it  was  no  wonder  that 
goods  were  consigned  to  New  York  instead  of  to  Phila- 
delphia, though  for  many  years  much  of  the  foreign 
shipping  that  sailed  into  New  York  was  owned  in  Phila- 
delphia and  that  this  law  remained  long  enough  (30 
years  to  permanently  injure  us. 

In  New  York  the  assessors  are  required  to  ferret  out 


521 

and  assess  the  machinery,  credits,  materials  on  hand  and 
stock  in  trade  of  manufacturers.  Many  of  the  towns  of 
New  Jersey  have  advertised  the  fact  that  they  make  ex- 
ceedingly low  assessments  of  the  personal  property  and 
plants  of  manufacturers,  and  have  in  this  way  induced 
many  of  the  larger  New  York  factories  to  move  into  New 
Jersey  so  that  there  are  now  few  large  plants  in  New 
York  City  except  those  which  need  water  terminal  facil- 
ities or  have  other  special  reasons  for  remaining.  The 
greatest  amount  of  manufacturing  in  New  York  City 
now  is  in  the  clothing  and  allied  trades  where  the  ma- 
chainery  is  in  rented  buildings  and  not  assessable  as 
real  estate  and  when  assessed  as  personal  property, 
usually  escapes  taxation  because  of  the  offsetting  of 
debts. 

Concerning  this  exodus  of  manufacturing  plants  from 
New  York  City  to  New  Jersey,  Hon.  Michael  Coleman, 
for  twenty  years  Deputy  and  Commissioner  of  Taxes  in 
the  City  of  New  York,  testified  as  follows  before  the  Joint 
Commission  of  the  Senate  and  Assembly  in  1893: 

"Tn  1869,  along  the  easterly  and  western  shores  there 
were  large  factories  employing  at  one  time  one  hundred 
thousand  skilled  workmen.  The  first  case  that  came  up 
was  the  Singer  Sewing  Machine  Company.  For  three 
years  they  conferred  with  the  Department  as  to  what 
their  taxes  would  be.  Finally  they  moved  to  New  Jersey 
and  from  that  time  up  to  the  present  they  have  been  going 
almost  every  year,  and  today  there  is  only'  one  large 
establishment  that  was  here  at  that  time,  and  that  is  Hoe '  s 
establishment. ' ' 

LOCAL  OPTION  AS  TO  THE  MANNER  AND 
SUBJECTS  OF  LOCAL  OPTION. 

The  science  of  local  taxation  is  now  in  process  of  de- 
velopment, and,  in  order  that  its  growth  may  be  facili- 
tated and  the  effects  of  various  policies  demonstrated  by 
actual  experience,  it  is  desirable  that  local  taxing  districts 


522 

shall  have  a  degree  of  freedom  to  make  proper  classifica- 
tions of  subjects  of  taxation,  and  authority  to  choose  for 
themselves,  for  purposes  of  their  own  local  taxation,  the 
class  or  classes  of  subjects  which  to  them  shall  seem 
wisest.  They  would,  of  course,  be  required  to  obey  the 
constitutional  requirements,  that  "all  taxes  shall  be  uni- 
form upon  the  same  class  of  subjects  within  the  territorial 
limits  of  the  authority  levying  the  tax  and  shall  be  levied 
and  collected  under  general  laws."  And  they  shall  be 
restricted  in  their  choice  of  subjects  to  those  not  ex- 
clusively reserved  for  State  taxation.  Cities,  counties 
and  boroughs  ought,  however,  to  be  expressly  authorized 
to  classify  the  various  items  which  constitute  real  estate, 
as,  for  example,  mineral  rights,  surface  site  value, 
dwelling  houses,  factory  structures,  trees  and  fences ;  and 
should  be  expressly  authorized  to  determine,  by  popular 
vote  which  class  or  classes  should  be  taxed  for  local  pur- 
poses. 

A  good  illustration  of  the  practical  educational  value  of 
local  experiments  is  the  impetus  which  Pennsylvania 's 
liberal  policy  towards  manufacturing  has  given  to  move- 
ments for  the  improvement  of  the  tax  laws  of  other  States. 
Students  of  taxation  are  almost  everywhere  exhibiting 
an  interest  in  the  growth  of  our  manufactures,  which 
growth  they  attribute  to  our  wise  policy  of  not  imposing 
super  taxes  on  them,  and  are  contrasting  the  folly  of  their 
own  States  which  tax  the  stock  in  trade,  materials  on 
hand,  and  machinery  of  manufacturers ;  with  the  wisdom 
which  Pennsylvania  has  shown  in  raising  the  bulk  of  her 
local  city  and  county  revenue  by  direct  taxation  on  real 
estate. 

The  result  of  the  experiment,  made  possible  by  the 
local  option  which  is  possessed  by  the  several  States  of 
the  Union,  will  be  to  eventually  perfect  the  tax  laws  of 
all  the  States;  by  the  well  known  evolutionary  process 
of  the  survival  of  the  fittest,  and  in  the  same  general  way, 
successful  city  and  county  experiments  will  enlighten 


523 

and  inform  other  nearby  cities  and  counties  of  this  Com- 
monwealth and  thus  enable  us  to  continue  to  keep  our 
light  shining  a  little  in  front  of  the  next. 

DEVICES  FOR  SECURING  EQUALITY  IN  THE 

ASSESSMENT  OF  REAL  ESTATE. 

Real  estate  is  not  only  the  chief  subject  of  local,  City 
and  county  taxation  in  this  State,  but  it  is  also  the  foun- 
dation to  which  the  burden  of  indirect  taxation  gravitates 
and  is  eventually  shifted.  In  order  that  the  directly  im- 
posed portion  of  this  burden  shall  not  be  so  distributed 
as  to  oppress  the  weak  and  discourage  honest  enterprises, 
it  is  essential  that  real  estate  assessments  be  equal,  that 
is,  that  each  property  be  assessed  at  the  same  percentage 
of  its  actual  value  as  is  other  property.  To  accomplish 
this  the  assessors  must  not  only  be  competent  and  dis- 
interested; they  must  also  record  their  work  in  forms 
which  will  disclose  inequalities;  and  these  itemized  rec- 
ords ought  to  be  printed  and  published  in  convenient  sized 
pamphlets  so  that  the  assessors,  and  officials  who  super- 
vize  the  assessors'  work,  may  have  the  benefit  of  the  in- 
telligent criticism  of  the  largest  possible  number  of  in- 
terested citizens. 

In  the  tax  assessment  records  of  the  Pennsylvania  cities 
of  Pittsburgh,  Easton  and  Chester,  are  set  down  not  only 
the  assessors'  opinions  of  the  lumped  value  of  each  parcel 
of  real  estate,  but  also  their  separate  estimates  of  the  site 
value  of  each  parcel  of  land.  In  Schuylkill  County  the 
value  of  the  mineral  rights,  of  the  artificial  improvements, 
and  the  site  value  of  the  surface  area,  are  all  separately 
set  forth.  This  method  of  bookkeeping  is  no  hardship  to 
a  competent  assessor.  The  only  additional  work  it  re- 
quires of  him  is  the  manual  labor  of  writing  down  a  figure 
which  he  already  has  in  mind,  for  when  he  decides  upon 
his  valuation  of  a  parcel  of  real  estate,  he  necessarily 
considers  the  advantages  of  the  location  and  decides  on 
the  site  value  of  the  land,  as  well  as  the  cost  and 


624 

character  of  the  artificial  improvements,  and  the  extent 
to  which  their  presence  increases  the  value  of  the  prop- 
erty as  a  whole.  If  any  assessor  fails  to  make  these  cal- 
culations he  is  neglecting  his  duty,  and  if  any  assessor 
is  unable  to  make  them  he  is  not  a  competent  man  for 
the  position. 

A  separate  statement  of  the  site  value  of  land  is  now 
required  in  all  the  cities  and  boroughs  of  New  Jersey, 
Massachusetts,  Minnesota,  Indiana  and  North  Dakota;  in 
several  of  the  Canadian  provinces  and  in  all  the  largest 
ten  cities  of  the  United  States,  except  Philadelphia.  The 
tax  lists  are  printed  and  published  in  Ohio,  New  York 
City,  Chicago  and  a  number  of  New  Jersey  cities  and 
towTis.  The  Department  of  Taxes  and  Assessments  of 
New  York  City  has  also  published  an  atlas  containing 
land  value  maps  of  every  parcel  of  land  in  the  city  limits. 
These  maps  contained  the  estimated  value  per  foot  front  of 
a  normal  sized  lot  in  the  centre  of  every  block  and  from 
these  estimates  the  valuation  of  particular  parcels  of  land 
is  calculated  by  means  of  various  formulas  which  have 
been  worked  out  by  real  estate  experts. 

In  order  to  ascertain  the  opinions  of  tax  assessment 
officials  who  have  practical  first  hand  knowledge  of  the 
utility  of  keeping  records  of  the  value  of  the  land  as  well 
as  the  lumped  value  of  the  properties  as  a  whole,  the  Tax 
Reform  Association  of  Pennsylvania  addressed  a  circular 
letter  requesting  information  and  opinions  from  the  chiefs 
of  real  estate  tax  assessment  departments  of  every  im- 
portant city  where  we  knew  the  plan  to  be  in  operation. 
We  received  replies  from  Thomas  G.  McMahon  of  the 
Board  of  Assessors  of  Pittsburgh;  James  C.  Forman, 
Assessment  Commissioner  of  Toronto,  Canada ;  G.  L.  Fort, 
City  Assessor  of  Minneapolis,  Minn. ;  S.  J.  Hill,  City 
Assessor  of  Fargo,  N.  D. ;  Frank  S.  Crane,  Chairman 
of  the  Board  of  Assessors  of  Springfield,  Mass. ;  Robert 
L.  Volk,  Clerk  of  the  Commissioners  of  the  Assessment 
of  Taxes  in  the  City  of  Trenton,  N.  J. ;  Wm.  P.  Richards, 


525 

the  Assessor  of  the  District  of  Columbia;  Henry  W. 
Buxton,  Clerk  of  the  Board  of  Equalization  of  Taxes  of 
New  Jersey;  J.  P.  McLeod,  Assessment  Commissioner  of 
Hamilton,  Canada;  Martin  J.  Ryan,  Assessor  of  Buffalo, 
N.  Y. ;  Frank  B.  Schutz,  Tax  Commissioner  of  Milwaukee, 
Wis. ;  Walter  H.  Nevills,  Chairman  of  the  Board  of  Assess- 
ors of  Yonkers,  N.  Y. ;  William  J.  Reardon,  Clerk  of  the 
Board  of  Assessors  of  the  City  of  Lowell,  Mass. ;  Washing- 
ton Dodge,  Assessor  of  San  Francisco,  Cal. ;  Stephen 
Grant,  Assessment  Commissioner  of  London,  Ontario ; 
Oscar  Leser,  President  of  the  Appeal  Tax  Court  of  the 
City  of  Baltimore,  and  Lawson  Purdy,  Esq.,  President  of 
the  Department  of  Taxes  and  Assessments  of  New  York 
City. 

These  letters  are  now  in  the  possession  of  the  Finance 
Committee  of  the  Councils  of  Philadelphia.  We  have 
printed  extracts  from  them  in  a  pamphlet,  copies  of  whicr 
will  be  furnished  to  the  members  of  the  Committee 
These  officials,  all  of  whom  have  had  opportunities  to 
observe  the  effects  of  the  separate  valuation  of  land  in 
actual  practice,  are  unanimous  in  recommending  it.  They 
say  that  it  conduces  to  equality ;  makes  the  assessors  more 
careful,  and  simplifies  the  work  of  correcting  errors  and 
of  revision  generally.  Mr.  Purdy,  the  Chief  of  the  New 
York  Department,  whose  letter  is  a  typical  one,  says : 

"The  separate  statement  of  the  value  of  land  in  the 
assessment  of  real  estate  was  ordered  by  an  amendment 
to  the  Charter  enacted  in  1903.  It  has  met  with  universal 
approval.  I  have  yet  to  hear  any  criticism.  It  conduces 
to  accuracy  on  the  part  of  the  assessors,  and  it  greatly 
aids  our  Board  in  considering  applications  for  the  reduc- 
tion of  assessments.  We  always  ask  the  applicant  whether 
he  objects  to  the  value  placed  on  the  land  or  the  value 
placed  on  the  buildings.  The  answer  to  this  question 
raises  the  proper  issues.  In  the  event  that  the  building  is 
assessed  higher  than  others  of  like  class,  it  is  easy  to  grant 
redress.  If  we  find  that  the  entire  class  to  which  the 


520 

building  belongs  is  over  assessed,  relief  is  given  in  the 
particular  case  and  corrections  are  made  wherever  prac- 
ticable, and  appropriate  instructions  are  issued  for  the 
assessment  for  the  following  year. 

"I  have  not  the  slightest  doubt  that  the  separate  state- 
ments of  the  value  of  land  is  absolutely  essential  to  the 
proper  conduct  of  an  assessing  department  and  that  the 
widest  possible  publicity  is  of  great  value. 

"I  have  been  frequently  informed  by  real  estate  men 
and  lawyers  that  the  work  of  the  Department  grows  in 
public  favor  and  esteem  every  year.  At  one  time  it  was 
common  to  hear  the  remark  that  assessors  merely  guessed 
at  values.  Today  it  is  very  generally  understood  that 
assessments  are  the  result  of  a  careful  system  and  the 
public  is  proportionately  generally  better  satisfied/7 

The  reason  the  plan  conduces  to  equality  is  because  it 
makes  comparisons  easy  and  instructive.  Land  valua- 
tions when  they  are  separately  set  down  can  be  compared 
with  the  valuations  of  neighboring  land,  because  the  price 
for  a  lot  of  land  as  sold  is  a  good  indication  of  the  value 
of  neighboring  land,  although  it  furnishes  no  clue  to  the 
value  of  a  neighboring  building.  Buildings  can  be 
compared  with  similar  buildings  in  other  neighborhoods. 
Where  the  valuations  of  land  and  buildings  are  lumped 
together  intelligent  comparisons  becomes  impossible. 

There  is  today  a  growing,  world-wide  appreciation  of 
the  fact  that  the  laws  which  most  intimately  affect 
business  prosperity  for  good  or  evil  are  those  laws  which 
you  are  now  engaged  in  studying  and  improving — the 
laws  which  designate  the  manner  in  which  the  State  and 
local  public  revenues  are  obtained.  We  believe,  there- 
fore, that  the  work  of  this  Commission  is  the  most  im- 
portant public  work  now  being  performed  in  this  Com- 
monwealth. 

If  we  bear  in  mind  the  extent  of  our  area,  population 
and  accumulated  wealth,  the  $115,000,000  which  we 
annually  raise  by  State  and  local  taxation  does  not 


527 

appear  to  be  such  a  very  great  sum,  but  this  sum  could 
be  so  injudiciously  imposed  as  to  repel  and  drive  away 
the  valuable  business  enterprises  and  thus  dry  up  the 
sources  of  our  prosperity,  or,  on  the  other  hand,  the 
General  Assembly  may  adjust  it  in  a  sensible,  business- 
like way,  so  that  the  burden  will  not  impede  the  triumph- 
ant progress  of  our  "Ship  of  State'7  any  more  than  does 
the  ballast  which  is  always  carried  by  vessels  that  are 
built  to  win  great  races.  Misplace  your  ballast  and  you 
will  wreck  the  ship.  Place  it  judiciously  and  she  will 
stand  up  against  a  gale. 

Q.  Didn't  you  get  yourself  down  almost  to  the  single  tax 
idea? 

A.  I  don 't  think  so. 

Q.  Don't  you  limit  yourself  practically  to  the  tax  on 
land,  because  you  exempt  manufacturing  interests  and  the 
money  at  interest  and  mortgages,  and  by  a  process  of  elimi- 
nation you  exempt  practically  everything  except  land. 

A.  The  single  tax  idea  is  that  the  unimproved  land  should 
bear  the  whole  burden  of  taxation.  My  theory  and  the 
theory  of  Benjamin  Franklin  is  that  it  does  bear  the  whole 
burden  of  taxation,  but  my  proposition  is  that  we  should 
distribute  it  in  such  equal  manner  as  the  law  now  requires. 
Equality  of  assessments  are  now  required  by  law,  but  the 
trouble  is  the  machinery  for  bringing  it  about  is  imperfect. 

Q.  Before  we  get  away  from  the  question  of  real  estate, 
let  us  get  down  to  the  subject  as  to  what  other  subjects 
should  be  taxed  according  to  the  ideas  of  your  association 
besides  real  estate 

A.  Our  idea  is  that  the  State  should  derive  its  revenue 
from  sources  independent  of  those  which  are  used  to  raise 
local  revenue — entirely  independent. 

Q.  Such  as  what? 

A.  Such  as  taxes  on  mineral  land,  railroads  and  public 
service  corporations — telephone  and  telegraph  lines.  Ac- 
curate assessments  of  mineral  lands  are  impossible  by  the 


528 

assessors  chosen  in  the  present  manner.  Such  properties 
should  be  assessed  by  experts  who  are  paid  salaries  high 
enough  to  command  the  services  of  men  with  the  requisite 
technical  knowledge  and  skill,  and  they  should  be  employed, 
not  for  a  few  weeks  at  the  triannual  assessment,  but  con- 
tinuously, to  put  a  value  upon  the  mineral  properties  of  the 
State,  and  the  State's  own  treasury  ought  to  profit  by  that 
taxation,  independent  of  the  local  government.  The  min- 
eral rights  that  lie  beneath  the  surface — I  think  taxation 
of  that  sort  of  property  ought  to  go  into  the  State  treasury. 

Q.  Take  a  county  like  Schuylkill,  where  it  is  largely  a 
mining  section,  how  would  the  county  itself  be  supported 
if  it  gave  to  the  State  all  the  income  from  this  source? 

A.  The  fact  that  there  are  minerals  beneath  the  surface 
does  not  detract  anything  from  the  usefulness  of  the  sur- 
face. I  think  the  counties  should  be  permitted  to  derive 
their  support  from  whatever  source  they  pleased. 

Q.  Would  you  let  them  tax  manufacturers  and  money  at 
interest  ? 

A.  I  would  let  them  do  anything  they  wanted  to.  I 
know  they  would  learn  by  experience  that  it  would  be  an 
unwise  thing  to  do. 

Q.  You  don't  mean  to  argue  that  these  subjects  should  be 
exempt  from  all  tax,  and  that  it  should  be  limited  to  real 
estate  ? 

A.  I  think  the  local  government  should  be  free  to  raise 
their  local  revenue  in  any  -way  that  seemed  wisest  to  them, 
but  I  think  there  should  be  a  general  law  providing  an  up- 
to-date  method  of  valuing  real  estate,  as  is  done  in  New 
Jersey;  that  is,  requiring  tax  bills  to  be  itemized,  and  re- 
quiring the  valuation  of  the  land  to  be  set  forth  separately, 
so  that  we  can  compare  them  when  we  fail  to  see  inequali- 
ties. 

Q.  How  would  you  value  the  property  of  public  utility 
corporations  which  extend  from  one  county  to  another. 
What  standard  would  there  be  for  valuing  that  property? 


529 

A.  The  property  of  public  utility  companies  ought  to  be 
taxed  as  a  going  concern,  and  not  by  the  local  tax  districts 
through  which  they  extend.  It  is  proper  that  the  State 
should  derive  the  revenue,  and  that  they  should  be  a  subject 
of  State  taxation.  What  you  want  to  get  at  is  what  that 
property  is  worth  as  a  whole  going  concern.  Some  indica- 
tion of  what  it  is  worth  is  what  it  sells  for;  the  parts  into 
which  it  is  divided,  or  what  the  stock  sells  for.  The  value  of 
the  stock  and  securities  is  evidence  of  what  the  property  is 
worth. 

Q.  You  have  given  this  subject  considerable  thought; 
what  is  the  consensus  of  opinion  to-day — that  the  tax 
should  be  based  upon  ability  to  pay? 

A.  In  a  sense  that  is  true. 

Q.  I  am  asking  as  the  result  of  your  reading  and  your 
observation;  that  it  should  be  based  upon  ability  to  pay 
independent  of  any  particular  class  of  property? 

A.  A  just  rule  would  be  that  the  people  should  pay  taxes 
in  proportion  to  the  benefits  which  they  derive  from  the 
treasury  into  which  they  pay  taxes. 

Q.  Then  the  personal  property  tax  would  be  elementally 
an  honest  and  just  one? 

A.  If  it  were  paid  by  the  owner  of  the  property,  but  it 
is  not.  When  you  tax  a  man  who  owns  a  million  dollars 
worth  of  mortgages  you  are  not  taxing  him,  you  are  taxing 
the  real  estate  owners. 

By  the  Chairman : 

Q.  That  isn't  generally  true  throughout  the  Common- 
wealth, is  it  ? 

A.  I  think  so. 

By  Mr.  Brown : 

Q.  I  think  it  is  largely  true  in  the  City  of  Philadelphia 
more  than  in  the  counties.  My  experience  has  been  in  the 
counties  that  the  lender  is  the  man  who  pays  the  tax. 

A.  It  affects  the  money  market,  which  is  determined  by 


530 

competition.  A  tax  on  mortgages  affects  the  amount  of 
money  available  to  the  borrower.  Money  is  fluid,  and  will 
flow  from  those  places  where  the  lender  has  to  pay  to 
places  where  he  can  make  the  borrower  pay  the  tax. 

By  the  Chairman : 

Q.  In  Lebanon  county  the  tax  isn't  taken  into  consider- 
ation in  making  a  loan.  The  man  who  desires  to  invest  his 
money  in  mortgages  simply  does  so  because  he  is  attracted 
by  the  higher  rate  of  interest,  and  while  there  may  be 
several  isolated  cases,  I  think  it  is  pretty  generally  true 
throughout  the  Commonwealth  that  the  man  who  invests 
his  money — that  is  to  say,  the  mortgagee — pays  the  tax,  and 
not  the  mortgagor. 

A.  It  is  this  way:  The  amount  of  interest  which  I 
charge  is  as  much  as  I  can  get,  and  the  amount  which  I 
pay  is  as  little  as  I  can.  The  effect  of  the  tax  is  on  the 
money  market.  A  tax  of  four  mills  will  diminish  the 
amount  that  is  offered,  and  will  thus  affect  the  rate  of  in- 
terest paid  by  the  borrower,  and  the  result  is  that  the  peo- 
ple who  borrow  money  pay  about  five  mills  more  than  they 
would  otherwise  have  to  pay. 

By  Mr.  Brown : 

Q.  It  was  argued  here  that  you  don't  get  a  fair  return  of 
personal  property.  I  call  your  attention  to  the  fact  that 
in  Pennsylvania  last  year  there  was  more  than  a  billion  of 
dollars  of  personal  property  returned  and  money  at  in- 
terest and  six  hundred  thousand  dollars  of  corporate  bonds, 
etc.,  and  that  the  taxable  real  estate  of  the  Commonwealth 
was  a  little  over  two  billions.  Would  that  in  any  way  alter 
your  opinion  that  one-half  of  the  value  of  the  real  estate 
had  been  returned  for  taxation  ? 

A.  There  is  no  doubt  but  what  you  can  raise  money  from 
personal  property,  but  the  point  is  it  is  not  equally  raised. 
When  you  get  at  the  actual  facts,  as  Mr.  Eschleman  did  in 
the  case  of  the  defunct  trust  company,  you  find  that  only 
5  per  cent,  is  returned  for  taxation.  Mr.  Eschleman  is 


531 

evidently  an  efficient  and  energetic  public  official,  but  if  he 
succeeds  in  doing  in  Lancaster  what  he  is  trying  to  do,  he 
will  be  accomplishing  a  very  great  injury  to  Lancaster 
county.  He  will  drive  all  the  moneyed  capital  out  of  that 
county.  Lancaster  county  can  easily  transfer  its  money 
to  New  York  banks.  The  reason  that  more  money  is  not 
driven  out  of  the  State  is  the  fact  that  the  law  is  not  en- 
forced. 

Q.  I  understand  the  money  he  is  after  is  the  inactive 
money,  not  the  money  that  is  put  into  enterprises,  but  the 
money  that  is  deposited  and  liable  to  lie  there,  drawing 
2  or  3  per  cent. 

A.  The  money  that  is  drawing  two  or  three  per  cent,  is 
not  lying  there  idle.  That  money  is  being  used  to  further 
the  interests  of  the  trust  company.  It  is  in  circulation. 
It  is  not  lying  in  idleness. 

Q.  Suppose  that  same  money  is  being  used  by  a  par- 
ticular trust  company,  promoting  the  business  of  the  com- 
pany, and  that  trust  company  is  able  to  pay  30  per  cent, 
per  year  dividend  on  that  money.  Do  you  consider  it  fair 
that  it  should  get  30  per  cent,  on  the  money  that  is  de- 
posited ? 

A.  The  reason  why  trust  companies  and  banks  are  able 
to  earn  30  per  cent,  is  because  the  taxation  of  such  in- 
stitutions makes  it  unprofitable  for  the  little  ones  that 
would  be  the  most  useful  in  the  country  districts,  and  en- 
ables the  larger  ones  to  monopolize  the  business.  If  you 
remove  all  taxes  from  monied  capital,  institutions  ot 
that  sort  will  spring  up  all  over  the  State.  They  will  be  as 
numerous  as  they  are  in  Scotland,  Canada  and  other  coun- 
tries where  they  are  not  taxed.  They  will  be  a  great  con- 
venience to  these  people,  and  will  facilitate  business  and  help 
the  general  prosperity  of  the  country. 

Q.  How  are  you  going  to  reach  these  institutions.  Cer- 
tainly these  companies  that  are  able  to  earn  30  per  cent. 
— a  trust  company  that  handles  other  people's  money  that 
is  able  to  earn  30  per  cent,  is  not  like  a  manufacturing 


532 

corporation.    Is  it  your  thought  that  that  company  should 
pay  the  same  tax  as  other  people  pay? 

A.  That  company  should  pay  tax  on  the  same  basis  as 
other  citizens  pay  on  the  real  estate  they  own,  and  on  the 
personal  property  they  own.  You  cannot  pick  out  the 
ones  that  earn  30  per  cent,  and  subject  them  to  a  differ- 
ent tax  from  what  you  impose  on  those  which  earn  the 
ordinary  rates  of  profit.  The  tax  must  be  uniform.  The 
fact  that  some  institutions  do  make  these  extraordinary 
profits  simply  proves  that  they  are  exceptionally  well  man- 
aged, and  it  is  a  proper  recompense  which  they  should  have 
for  a  great  service  rendered  to  the  general  community,  be- 
cause the  function  of  a  bank  is  to  loan  money  to  people  in 
the  community  at  times  when  they  need  it;  put  it  in  the 
hands  of  those  who  have  use  for  it.  That  is  a  very  impor- 
tant function,  and  it  is  a  very  desirable  thing  to  have 
institutions  of  that  sort.  I  know  of  a  case  right  here  in  the 
City  of  Philadelphia,  in  the  southern  section,  where  a  small 
trust  company  was  opened,  and  the  business  men  of  the 
neighborhood  had  a  celebration  and  called  out  the  band. 
It  was  such  a  good  thing  for  them,  even  in  the  City  of 
Philadelphia.  There  are  many,  many  country  districts 
that  would  be  immensely  benefited  by  the  establishment  of 
such  institutions,  that  cannot  possibly  carry  on  business 
because  on  account  of  the  tax,  no  matter  how  slight  it  is, 
it  is  the  difference  between  profit  and  loss. 

By  the  Chairman : 

Q.  Wouldn't  you  be  charged  with  having  a  great  many 
wildcat  institutions  under  those  conditions? 
•     A.  No,  I  don't  think  so. 

Q.  Under  your  theory,  if  you  had  a  dozen  springing  up 
aB.  around  that  one  place/  wouldn't  there  be  a  tendency 
toward  demoralizing  the  financial  interests  of  that  com- 
munity ? 

A.  I  don't  think  so;  not  where  such  institutions  spring 
up  in  response  to  a  demand  for  their  services.  Where  you 


533 

give  them  an  artificial  stimulus  it  might  have  that  effect, 
but  where  they  are  the  natural  outcome  of  a  local  demand 
for  their  services,  their  growth  would  be  normal  and 
healthy.  They  ought  to  be  permitted  to  do  business  wher- 
ever they  find  business  profitable,  and  I  think  you  ought 
to  permit  sound  and  substantial  institutions  to  have 
branches. 

By  Mr.  Brown : 

Q.  Your  folks  appreciate  that  the  demand  for  land — the 
constantly  increasing  demand  for  land — increases  its  value. 
The  supply  and  demand  governs  this  as  well  as  everything 
else.  That  creates  in  a  way  a  land  monopoly.  You  tax 
that.  That  is  a  natural  condition,  or  a  social  condition. 
What  is  the  difference  between  that  and  the  manufacture 
of  oil  ?  Of  course,  the  demand  regulates  the  price,  but  it  all 
tends  to  a  monopoly  in  oil.  Why  shouldn't  the  manufac- 
turer of  the  oil  pay  just  as  much  for  his  artificial  monopoly 
in  proportion  as  the  man  who  owns  his  land  pays  for  his 
natural  monopoly? 

A.  We  are  not  asking  you  to  tax  monopolies. 

Q.  I  don't  mean  to  tax  monopolies,  but  the  increase  in 
values.  What  is  the  difference  in  your  mind  between  a 
natural  increase  of  the  land  and  an  artificial  increase  of 
the  manufactured  article? 

A.  The  value  of  anything  is  determined  by  supply  and 
demand — the  desire  of  the  buyer  to  get  a  thing,  and  the 
difficulty  in  getting  it  elsewhere,  and  by  the  desire  of  the 
seller  to  get  what  he  gets  in  exchange.  That  is  what  de- 
termines the  value  of  everything.  The  law  of  this  State 
says  that  people  shall  pay  taxes  in  proportion  to  the  value 
of  their  real  estate,  and  I  am  proposing  a  way  to  enforce 
the  law.  For  example,  suppose  I  own  a  lot  in  Philadel- 
phia and  it  has  one  hundred  thousand  dollars  added  to  its 
value  by  public  improvements,  paid  for  out  of  the  public 
treasury.  Why  shouldn't  my  assessments  be  increased  one 
hundred  thousand  dollars?  If  the  general  improvement  of 


534 

the  community  makes  my  property  more  valuable,  my  point 
is  that  the  law  requires  that  I  should  pay  tax  on  my  prop- 
erty in  proportion  to  its  value.  If  by  reason  of  a  boulevard 
or  a  parkway  or  a  subway  or  any  public  improvement  my 
property  is  increased  in  value,  the  assessor  should  take 
notice  of  this  increase,  and  should  assess  my  property  at 
the  same  percentage  of  its  value  as  they  assess  the  dwell- 
ing houses  occupied  by  poor  people.  The  point  is  that  here 
is  a  way  in  which  you  can  do  that  better  than  the  way  we 
are  now  doing — a  way  in  which  these  inequalities  will  be 
immediately  disclosed.  We  do  not  contend  that  these  in- 
equalities are  due  to  fraud  or  crookedness.  It  is  simply  that 
the  method  of  doing  business  is  not  up-to-date. 

Q.  Your  thought  is  by  adopting  these  systems  that  have 
been  in  use  in  other  cities  and  States,  that  you  will  thereby 
lessen  the  need  for  additional  revenues  from  productive 
enterprises  ? 

A.  Exactly. 

Q.  I  am  satisfied  we  are  coming  to  just  what  you  say. 
Is  there  any  other  thought  in  your  mind  now? 

A.  I  have  here  a  copy  of  the  tax  law  of  Ohio,  which 
requires  that  these  tax  lists  should  be  published,  the  same 
as  it  is  published  in  New  York,  New  Jersey,  Chicago,  etc. 
This  is  the  form  that  is  used  in  "Woodbury  and  Passaie, 
New  Jersey;  this  is  what  they  use  in  New  York  City, 
and  this  is  the  form  which  we  have  proposed  for  use  here 
in  Philadelphia  (producing  forms). 

Q.  Is  there  any  city  where  this  local  option  method 
has  been  adopted  as  a  means  of  levying  taxes  ? 
A.  No  city  of  the  United  States  that  I  know  of. 

Q.  I  mean  in  this  country? 

A.  In  the  extreme  northwestern  Canadian  provinces  of 
Alberta  and  Saskatchewan  they  have  a  great  degree  of 
local  option,  but  it  is  the  general  practice  throughout 
Canada  to  separately  value  the  land  and  improvements. 
Up  in  some  of  those  northwestern  Canadian  provinces  the 


635 

rate  of  tax  on  the  improvements  differs  from  the  rate  of 
tax  on  the  land.  Up  in  Easton,  Pennsylvania,  a  local  or- 
dinance provides  that  to  the  value  of  the  land  should 
be  added,  in  the  case  of  factory  buildings,  not  less  than 
one-half  the  value  of  the  structure,  and  in  the  case  of 
dwellings  not  less  than  three-fourths.  I  do  not  know 
what  their  authority  is  for  doing  that,  but  I  have  the 
ordinance  on  my  desk  and  that  is  what  it  provides. 

Q.  There  is  no  system  in  existence  in  this  country,  I 
mean  locally,  where  any  county  has  been  authorized  to 
say  what  taxes  shall  or  shall  not  be  levied? 

A.  Not  that  I  know  of. 

Q.  That  is  the  thought  of  your  association? 

A.  Yes,  sir.  "We  offer  it  as  a  suggestion,  which  the 
Committee  may  take  for  what  it  is  worth.  I  might  state 
that  Mr.  Shearman  says :  "  If  anything  in  human  exper- 
ience as  applied  to  methods  of  taxation  is  settled,  it  cer- 
tainly is  the  fact  that  taxation  upon  personal  property 
never  can  be  made  a  success." 

Q.  Isn't  it  the  general  opinion  of  experts  on  this  subject 
that  Pennsylvania  has  a  better  system  of  taxation  than 
any  other  State? 

A.  Pennsylvania  is  in  the  forefront  of  the  United 
States.  The  tax  system  in  Pennsylvania  is  better  than 
any  other  State  in  this  Union.  Out  in  Ohio  the  Constitu- 
tion requires  all  property  to  be  taxed  at  the  same  rate. 
If  you  pay  4  per  cent,  on  real  estate,  you  must  pay  it 
on  mortgages.  The  consequence  is  that  almost  everybody 
out  there  lies  to  the  assessor  as  to  the  amount  of  their 
personal  property,  and  nobody  pays  a  tax  except  the 
trustees  of  widows  and  orphans,  on  personal  property, 
and  a  few  inexperienced  or  extremely  conscientious  peo- 
ple. A  tax  like  that  would  be  unbearable,  and  if  it  were 
enforced  people  would  migrate  immediately.  How  would 
you  lend  money  at  4  per  cent,  if  you  had  to  pay  <ill 
the  income  you  got  in  taxes?  In  Pennsylvania  a  larger 
portion  of  taxes  are  actually  raised  from  real  estate  than 


536 

in  any  other  place.  Here  we  do  favor  manufacturing 
enterprises.  Our  tax  laws  in  this  State  are  unquestion- 
ably better  than  those  in  any  other  State,  but  other  States 
are  coming  up.  They  are  profiting  by  our  example,  and 
are  changing  their  laws  to  make  them  like  ours.  Now, 
we  have  got  to  move  on  and  make  our  laws  a  little  better 
yet.  That  is  the  reason  why  we  are  ahead — because  we 
do  raise  a  large  proportion  of  our  taxes  from  real 
estate;  because  we  don't  attempt  to  tax  much  personal 
property  other  than  mortgages  and  judgment  debts,  the 
ownership  of  which  can  be  traced  by  means  of  the  records 
of  the  Prothonotary  and  of  the  Recorder  of  Deeds. 

Q.  Isn't  the  percentage  of  taxable  personal  property 
in  Pennsylvania  so  far  ahead  of  other  States  as  to  enable 
these  tax  experts  to  come  to  the  conclusion  that  Penn- 
sylvania has  shown  that  you  can  practically  tax  wealth 
in  its  untangible  form? 

A.  Pennsylvania  has  shown  that  by  the  exceedingly  low 
rate  we  have  here  as  compared  with  other  States  you 
can  get  more  money  by  a  low  rate  than  by  a  high  rate. 
The  reason  why  we  do  reach  so  much  of  it  is  because  our 
rate  is  much  lower  than  other  States  impose,  and  because 
the  personal  property  which  we  attempt  to  tax  is  the 
kind  whose  ownership  is  a  matter  of  public  record.  For 
example,  take  the  enterprises  which  you  reach  through 
the  corporation  itself,  and  the  mortgages  and  judgment 
debts,  etc.,  which  you  reach  through  the  public  records. 
Our  taxes  on  concealable  personal  property  are  com- 
paratively harmless,  because  no  serious  attempt  is  made 
to  enforce  them.  I  think  Mr.  Gratz  said  here  today  that 
he  only  knew  of  one  man  in  all  his  experience  who  volun- 
tarily came  in  and  returned  for  taxation  the  stock  of 
foreign  corporations — only  one  man  here  in  Philadel- 
phia. That  law  is  a  dead  letter. 

Q.  That  is  no  reason  why  it  should  not  be  done  if  it  is 
inherently  right? 

A.  That  is  no  reason  why  it  should  not  be  done,  if  it  is 


637 

inherently  right,  but  human  nature  is  as  it  is,  and  you 
should  take  into  consideration  the  limitations  of  human 
nature  and  try  and  build  up  your  institutions  according 
to  the  material  out  of  which  they  must  be  constructed. 
An  engineer  in  planning  a  building  takes  into  considera- 
tion the  amount  of  stress  and  strain  which  the  materials 
available  will  bear.  Institutions  which  would  be  adequate 
for  a  society  consisting  of  angels  would  not  do  for  mere 
mortal  men  who  are  not  always  actuated  by  altruistic 
motives. 

By  the  Chairman: 

Q.  Why  would  it  be  impossible  to  tax  personal  property  ? 

A.  For  the  reason —  -  Just  let  Mr.  Shearman  answer 
that  question.  I  will  read  what  he  says.  He  says : ' i  If  any- 
thing in  human  experience  as  applied  to  methods  of  taxa- 
tion is  settled,  it  certainly  is  the  fact  that  taxation  upon 
personal  property  never  can  be  made  a  success.  Taxes 
can  be  raised  from  personal  properties,  no  doubt,  for 
large  amounts  are  thus  raised;  but  that  they  cannot  be 
levied  with  any  reasonable  approach  to  accuracy  or 
equality  is  demonstrated  not  only  by  conclusive  reasoning, 
but  by  the  more  conclusive  fact  that  they  never  have  been 
thus  levied.  It  is  not  for  want  of  earnest  and  long 
sustained  effort  that  the  failure  of  this  system  of  taxation 
has  come  to  pass.  For  centuries  the  effort  has  been  made, 
and  for  at  least  six  centuries  it  was  backed  by  all  the 
power  of  a  Government  which  commanded  the  whole 
civilized  world,  and  which  armed  its  tax  gatherers,  not 
with  the  paltry  weapons  of  oaths  and  penalties,  but  with 
the  more  substantial  powers  of  indiscriminate  search,  the 
lash,  the  rack,  the  thumbscrew,  the  gridiron,  and  the 
cross.  The  Roman  Empire  fell  to  pieces  under  the  pressure 
of  this  vain  effort  to  reach  personal  property  by  taxation. 
The  same  thing  was  attempted  at  a  later  period  in  dealing 
with  the  Jews.  It  failed  with  them.  They  could  be  robbed 
and  murdered,  but  they  could  not  be  regularly  taxed. 
"That  which  all  the  tremendous  power  of  Rome  in  its 


538 

grandest  days  failed  to  accomplish,  that  which  the  infernal 
tortures  of  Spain  could  not  accomplish,  when  it  beheaded 
hundreds,  burned  thousands,  and  massacred  tens  of 
thousands,  letting  loose  a  brutal  soldiery  in  a  vain  struggle 
to  tax  the  Netherlands,  American  farmers  are  still  ap- 
parently convinced  that  they  can  accomplish  by  dis- 
tributing blank  forms,  and  administering  long  oaths,  and 
threatening  penalties  of  50  per  cent.  How  far  they 
have  succeeded,  Governors,  assessors  and  Tax  Commissions 
in  New  York,  Ohio,  Maryland,  West  Virginia  and  many 
other  States  have  set  forth  again  and  again,  lamenting 
the  utter  failure  of  the  system. 

1  'Gibbon  mentions,  quite  as  a  matter  of  course,  that 
fathers  murdered  their  children,  on  a  large  scale,  princi- 
pally as  a  result  of  fear  of  the  tax  gatherers,  that  racks 
and  scourges  were  freely  used,  that  the  approach  of 
the  tax  gatherers  'was  announced  by  the  tears  and  terrors 
of  the  citizens, '  and  that  false  returns  were  punished  with 
horrid  deaths,  as  being  both  'treason  and  sacrilege/ 
Savigny  shows  that  the  decurions,  who  governed  the  cities 
and  were  held  responsible  for  the  taxes,  often  sold  them- 
selves into  slavery  to  escape  the  dreadful  burden,  but 
Were  dragged  back  to  scourge  their  fellow  subjects.  Even 
a  Massachusetts  farmer  could  ask  no  greater  efficiency 
than  this." 

This  is  simply  an  example  of  the  fact  that  you  cannot 
do  it,  and  where  you  must  rely  only  on  the  oath  of  the 
man  who  owns  the  property,  where  he  is  the  only  person 
who  knows  what  it  is  and  where  it  is,  if  he  can  escape  the 
tax  by  concealing  it,  he  will  conceal  it,  particularly  if 
he  knows  that  other  people  are  doing  the  same  thing. 

By  Mr.  Brown : 

Q.  "We  have  experienced  in  Pennsylvania  that  there  is 
one-half  as  much  personal  property  returned  as  there  is 
real  estate,  showing  there  must  be  some  honest  people. 
Of  course,  you  are  looking  backward.  I  think  we  ought 


539 

to  look  forward.  Mr.  Shearman  is  taking  the  dark  side 
of  the  picture  instead  of  the  bright.  Our  people  in  Penn- 
sylvania seem  willing  to  pay  the  tax,  and  you  experts 
are  trying  to  find  out  why  it  is  that  our  people  seem  will- 
ing to  pay  these  large  sums  in  tax  on  personal  property. 
Of  course,  some  do  not  pay  it. 

A.  Mr.  Gratz  said  there  was  only  one  man  who  volun- 
tarily returned  his  foreign  stocks.  The  taxes  which  you 
do  collect  are  taxes  on  property  the  ownership  of  which 
can  be  traced,  like  mortgages,  judgment  debts  and  taxes 
on  stocks  collected  by  the  corporation  itself. 

Q.  Isn't  the  keynote  to  the  whole  situation,  that  when 
the  people  are  satisfied  that  every  man  is  contributing  his 
share,  they  will  all  do  it? 

A.  "When  they  are  satisfied  that  every  other  man  is 
paying  it,  they  will  all  pay  it,  but  they  will  never  be 
satisfied. 

Q.  Don't  you  in  stating  your  position  in  regard  to 
contributing  towards  the  support  of  the  State,  think  that 
men  generally  are  honorable,  because  it  seems  to  me  if 
men  are  honorable  they  will  pay  their  share  providing 
the  other  fellow  pays  his? 

A.  Where  men  feel  that  they  are  asked  to  pay  taxes 
which  the  majority  are  evading  they  feel  that  they  are 
unjustly  treated,  and  to  protect  themselves  from  the  in- 
justice they  will  meet  kind  with  kind,  and  they  will  often 
go  so  far  as  to  commit  perjury.  They  feel  like  the  man 
when  asked  by  a  highwayman  to  show  his  money,  he 
will  lie  to  the  highwayman  if  by  so  doing  he  can  get 
out  of  giving  it  up. 

Q.  Every  man  ought  to  contribute  his  share  towards 
the  support  of  the  State,  that  is  correct,  isn't  it?  and 
wholesale  exemptions  are  vicious? 

A.  Yes,  but  there  is  no  legal  or  moral  obligation,  on 
manufacturers,  for  example,  to  assume  a  super  tax,  a  tax 
which  they  pay  in  addition  to  the  tax  paid  in  common  with 
other  people. 


540 

Q.  I  am  assuming  the  tax  must  be  equal? 

A.  There  are  some  subjects  you  cannot  possibly  tax  with 
any  degree  of  equality,  and  the  wise  thing  to  do  is  to  tax 
those  subjects  which  can  be  reached,  that  is  to  say,  of 
which  a  very  large  proportion  can  be  reached,  and  not 
to  tax  the  kind  that  can  be  moved  away. 

Q.  Let  me  give  you  a  concrete  illustration.  You  re- 
member, probably,  that  this  matter  was  all  considered  by 
Voltaire.  Voltaire  had  a  little  farm,  and  his  annual  in- 
come was  forty  crowns,  and  they  came  to  him  and  said, 
' '  Here,  we  have  got  you ;  we  will  tax  you  twenty  crowns. 
Alongside  of  him  lived  a  wealthy  fellow  whose  income  was 
a  thousand  crowns  a  year,  and  he  paid  no  tax.  When 
the  man  complained  to  him,  he  said,  "Of  course,  I  don't 
pay  any  tax ;  I  am  not  a  land  owner ;  you  are.  You  own 
the  land,  and  you  are  in  a  different  class  from  me."  Sup- 
pose this  man  with  his  thousand  crowns  got  his  income 
from  money  deposited  in  a  trust  company,  inactive  money, 
not  invested  in  manufacturing,  but  deposited  in  a  trust 
company.  Why  should  he  be  exempt,  and  the  little 
farmer,  his  next  door  neighbor,  be  made  to  pay  his  tax? 

A.  He  is  not  exempt.  I  do  not  propose  that  he  should 
be.  My  proposition  is  that  the  man  with  the  large  in- 
come— what  does  he  do  with  his  income? 

Q.  He  drives  around  in  Voltaire's  story  with  eighteen 
horses  attached  to  a  gilded  coach. 

A.  Everything  he  consumes  and  uses  in  the  process  of 
spending  his  money  comes  out  of  the  land,  and  the  price 
that  he  pays  for  it  includes  the  taxes  that  are  paid  on 
the  land. 

Q.  Look  at  the  personal  benefit  he  gets  out  of  the  inde- 
pendent of  that  which  he  distributes  around  the  neighbor- 
hood? 

A.  The  system  of  taxation  ought  to  reach  that  man,  and 
my  contention  is  that  your  system  does  not  reach  him. 
The  taxes  which  are  imposed  upon  his  money  are  collected 
by  him  from  the  people  to  whom  he  lends  his  money.  That 


641 

is,  these  taxes  enable  him  to  get  a  higher  rate  of  interest. 
These  taxes  which  he  collects  he  does  not  always  pay  over 
to  the  public  treasury.  If  his  voting  residence  is  in  New 
Jersey,  he  puts  the  money  in  his  pocket,  and  the  effect  of 
your  tax  on  his  money  is  to  enable  him  to  tax  borrowers 
for  his  own  private  benefit. 


542 


WILMER  W.  CORNELL,  County  Treasurer  of  Bucks 

County,  called. 
By  Mr.  Brown : 

Q.  Have  you  any  suggestions  to  make,  Mr.  Cornell? 

A.  I  haven't  any  suggestions  to  make.    I  came  to  hear. 

Q.  What  is  your  experience  there  as  to  the  collection 
of  personal  property  tax,  moneys  and  interest,  etc.? 

A.  There  is  a  great  deal  that  we  do  not  get.    It  is  not 
assessed. 

Q.  Why  is  that? 

A.  I  think  that  is  the  fault  of  the  assessors. 

Q.  What  do  you  do  to  check  them  up? 

A.  Well,  I  really  do  not  know.    I  have  not  been  in  the 
office  long  enough  to  know  much  about  it. 

Q.  You  have  not  got  worked  in  yet? 

A.  No. 

Q.  Who  is  there  here  from  your  county  who  is  familiar 
with  it? 

A.  The  Clerk  of  the  Commissioners.     He  has  been  in 
office  four  or  five  years. 

Q.  Mr.  Cadawallader  ? 

A.  Yes. 

Mr.  Brown:  Suppose  we  ask   Mr.  Cadwallader    some 
questions  ? 


543 


W.  CADWALLADER,  Clerk  of  the  County  Commissions 
of  Bucks  County,  called. 

By  Mr.  Brown : 

Q.  Have  you  any  suggestions  to  make  to  us  as  to  any 
amendments  to  the  present  laws  as  to  the  collection  of 
State  revenue? 

A.  Nothing  new  at  all.  I  am  very  much  impressed  with 
some  ideas  that  have  been  suggested  here  that  I  have 
listened  to,  among  them  the  appointment  of  the  assessors 
by  some  authority  other  than  having  them  elected.  I 
think  that  is  a  great  wrong  to  the  assessment  of  the  taxes, 
particularly. 

Q.  You  think  better  results  would  be  obtained  from 
some  other  method  of  selecting  assessors,  so  as  to  divorce 
them  from  their  relations  to  the  people? 

A.  Very  much  so.  I  think  it  is  a  very  strong  sample  of 
favoritism. 

Q.  What  do  you  do  to  check  up  the  assessors  after  you 
give  them  their  guide  books? 

A.  That  is  when  their  returns  come  in? 

Q.  Yes? 

A.  "We  have  them  return  all  blanks,  all  their  slips  that 
are  given  them,  and  affidavits  from  all  the  taxpayers. 

Q.  Suppose  the  taxpayer  does  not  make  the  affidavit; 
what  do  you  do  then  ?  Do  you  follow  them  up  ? 

A.  Well,  in  some  cases  where  they  won't  make  any 
affidavit  they  make  an  estimate.  They  either  make  an 
affidavit  to  having  no  property,  or  they  make  an  affidavit 
as  to  what  they  have.  If  they  refuse  to  make  an  affidavit 
to  any  amount  and  won 't  make  an  affidavit  to  having  none, 
they  make  an  estimate. 

Q.  Do  you  suppose  if  these  men  were  paid  more  you 
would  get  better  results  from  the  assessors? 

A.  Not  if  we  had  to  take  the  same  men. 


544 

By  a  Member  of  the  Committee : 

Q.  If  they  were  appointed  by  the  Court  and  their  com- 
pensation doubled  and  the  appointment  for  four  years, 
what  do  you  think  would  be  the  effect? 

A.  I  think  the  effect  would  be  to  get  better  men  in 
many  instances  and  much  better  results. 

By  Mr.  Brown : 

Q.  Do  you  know  of  any  case  where  they  claim  residence 
in  other  counties? 

A.  We  have,  yes.  That  matter  was  spoken  about  by 
Mr.  Gratz,  I  think.  I  have  in  mind  just  one  particular 
instance.  He  spoke  of  the  taxpayers  wanting  to  be  as- 
sessed in  the  county  in  which  they  had  their  summer  home. 
We  have  quite  a  good  many  people  in  our  county  who  have 
summer  residences  there,  and  live  in  the  winter  time  in  the 
City  here,  and  I  have  in  mind  one  of  our  assessors  who 
is  rather  more  diligent  than  some  others  we  have.  He 
made  an  effort  to  follow  some  of  those  fellows,  and  they 
made  no  return  to  him  and  would  not  make  any  return 
to  him,  saying  they  claimed  residence  in  the  City,  and  in 
fact  they  never  voted  in  our  county.  He  followed  them 
to  the  City  and  made  inquiry  and  could  not  find  they  were 
assessed  or  paid  any  State  taxes  here.  It  seemed  to  me 
they  were  evading  it  at  both  ends. 

Q.  You  never  report  any  of  those  things  to  the  Auditor 
General,  I  find,  none  of  the  counties? 

A.  No. 

Q.  Why  ought  that  not  to  be  done? 

A.  I  don 't  know  any  reason  why  it  should  not. 

Q.  Do  you  think  it  would  be  more  effective  to  have  these 
collections  made  through  the  Auditor  General's  office,  to 
have  State  collectors  go  around  from  county  to  county 
and  do  it? 

A.  The  collection  of  the  taxes,  I  think,  is — I  cannot  say 
where  there  is  any  great  advantage  to  be  derived  from 
changing 


545 

Q.  I  mean  the  assessing? 

A.  That  is  where  the  main  trouble  lies,  it  seems  to  me. 
I  do  not  know  that  the  assessment  of  property  could  be 
done  better  by  people  outside  of  the  community  than  it 
could  by  people  living  in  the  community. 

Q.  Providing  they  did  their  duty? 

A.  Providing  they  were  the  class  of  men  who  would  do 
their  duty  and  were  fearless  of  being  put  out  of  office ; 
and  then  the  people  in  many  districts  seem  to  not  make 
any  effort — good  people  in  the  district — make  no  effort  to 
elect  a  first-class  man  to  the  office  of  assessor.  If  they 
can  get  a  fellow  who  will  assess  their  property  of  all  kinds 
just  exactly  as  they  want  it,  it  don't  make  any  difference 
if  he  is  the  lowest  bum  there  is  in  town,  he  will  suit  them 
first  rate,  and  they  will  elect  him,  one  right  after  the 
other. 

Q.  The  method  of  selection  is  not  proper  in  such  case? 

A.  No. 

By  a  Member  of  the  Committee : 

Q.  Have  you  ever  attempted  to  prosecute  anybody  for 
making  a  false  return? 

A.  Not  to  my  knowledge. 

Q.  Not  in  the  history  of  Bucks  county? 

A.  I  won't  say  that. 

Q.  To  your  knowledge? 

A.  Not  to  my  knowledge. 

By  Mr.  Brown : 

Q.  Have  you  any  suggestions  to  make  to  the  Committee 
as  to  any  improvements  that  could  be  made?  How  long 
have  you  been  in  this  position? 

A.  About  four  years. 

By  a  Member  of  the  Committee : 

Q.  "Would  not  such  a  prosecution  have  a  very  salutary 
effect? 

A.  I  haven't  much  doubt  of  that. 
28 


546 

By  Mr.  Brown : 

Q.  What  is  your  personal  property  return  from  Bucks 
County? 

A.  About  $46,000,  the  State  tax  is,  I  think. 

Q.  That  is  as  to  the  receipts? 

A.  That  is  the  receipts. 

Mr.  Cornell:  Between  eleven  and  twelve  millions? 

Mr.  Cad  wall  ader :  Something  like  that. 

By  a  Member  of  the  Committee : 

Q.  What  is  the  sentiment,  if  any,  regarding  the  taxing 
of  manufacturing  corporations  in  your  county  ? 

A.  Well,  we  haven 't  many  of  those — that  is,  to  any  great 
extent,  and  we  do  not  hear  much.  I  haven't  much  know- 
ledge on  the  subject,  and  I  do  not  hear  much.  The  tax 
on  automobiles  is  very  much  discussed. 

Q.  They  favor  taxing  automobiles? 

A.  Very  much  so. 

By  Mr.  Brown : 

Q.  You  do  tax  some  of  them  up  there  on  general  prin- 
ciples ? 

A.  Well,  that  has  been  done,  and  very  probably  over- 
done, in  that  line.  I  am  not  sure  about  that.  I  do  not 
know  whether  that  is  very  generally  approved  in  the  way 
it  has  been  done  at  all  times. 

Q.  Have  you  ever  gathered  the  sentiment  in  your 
county  as  to  things  that  should  not  be  taxed  and  other 
things  that  should?  I  mean  in  your  general  talk.  You 
people  come  and  go  and  they  must  talk  that  over  with 
you  about  these  subjects? 

A.  Well,  you  mean  for  State  purposes? 

Q.  State  purposes? 

A.  The  taxation  of  anything  that  is  not  being  taxed 
at  present,  you  mean? 

Q.  Yes? 

A.  I  have  never  heard  of  any 


547 

Q.  Or  that  things  now  taxed  should  be  exempt? 

A.  No,  I  don't  think  people —  I  have  heard  no 
sentiment  or  no  complaint  on  that  score.  The  inequality 
of  the  assessment  of  properties,  people  come  in  constantly 
and  complain,  "Now,  here  I  have  got  to  pay  State  tax  on 
so  much  money,  and  Mr.  So-and-So  "doesn't."  He  has 
sworn  in  an  affidavit  that  he  has  none. 

Q.  When  a  man  comes  in  and  informs  you  that  he  knows 
some  person  has  more  money  than  he  returns,  he  makes 
his  return,  does  he,  so  as  to  give  you  no  chance  to  increase 
your  estimate? 

A.  Yes.  I  have  known  instances  where  they  made  no 
return  at  all,  and  sworn  in  an  affidavit  that  they  had 
nothing.  People  come  in  and  say  they  have  no  mortgages, 
or  judgments,  or  bonds,  or  something  of  that  kind,  and 
they  often  swear  to  holding  mortgages  or  securities  of 
some  kind  that  are  valueless.  A  great  many  of  them  make 
that  item  quite  large. 

Q.  Insolvent  debtors? 

A.  Yes,  sir. 

Q.  You  have  no  way  of  finding  out? 

A.  I  cannot  get  at  that.    I  do  not  know  how,  at  least, 

By  a  Member  of  the  Committee  : 

Q.  Would  it  not  be  well  for  the  State  to  maintain  a 
corps  of  officers  to  look  after  that? 

A.  According  to  that,  I  think  it  would. 

Q.  Some  central  head  where  all  reports  could  be  looked 
into  and  inspectors  sent  into  each  district? 

A.  That,  I  think,  would  be  a  good  thing.  I  have  no 
doubt  at  times  there  is  a  great  deal  of  wrong  done  there. 

Q.  You  were  talking  a  moment  ago  about  the  inequality 
of  taxes.  Has  this  thought  ever  been  expressed  to  you  in 
talking  to  people  over  in  Bucks  county,  the  taxing  of  a 
mortgage  on  a  piece  of  land  and  the  taxing  of  the  land 
also? 

A.  Yes,  that  has  also  been  spoken  of. 


548 

Q.  How  would  you  avoid  that? 

A.  I  never  heard  any  good  theory  advanced  to  avoid 
it.  It  is  generally  objected  to  by  the  land  owner  paying 
taxes  on  the  full  valuation  of  his  property,  when  he  only 
has  a  very  small  interest  financially  in  it.  He  probably 
has  made  a  very  'small  payment  on  a  property  of  very 
considerable  value. 

Q.  I  suppose  his  argument  would  be  that  he  should  be 
exempt  from  paying  taxes  on  that  portion  of  the 
mortgage  ? 

A.  That  is  his  argument,  and  he  is  the  complainer. 

By  Mr.  Brown : 

Q.  He  is  not  supposed  under  the  law  to  pay  the  tax. 
The  tax  is  supposed  to  be  paid  by  the  man  who  owns  the 
property  and  gets  the  interest? 

A.  He  owns  the  property. 

Q.  Then  the  tax  on  the  property,  that  he  pays  also,  and 
he  pays  a  tax  on  the  mortgage  that  the  mortgagee  should 
pay? 

A.  That  is  what  he  claims  to  pay.  He  does  not  object 
to  paying  the  State  tax  on  the  mortgage ;  that  rate  is  not 
high  and  he  doesn't  object  to  that,  but  it  is  to  paying 
taxes  on  the  entire  value  of  his  property  at  the  present 
rates. 


549 


GEORGE  ALLEN,  County  Commissioner  Delaware 

County,  called. 
By  Mr.  Brown: 

Q.  You  are  County  Commissioner  of  Delaware  county? 

A.  Yes,  sir. 

Q.  You  have  heard  the  talk  on  these  several  subjects; 
have  you  any  suggestions  to  make  to  the  Committee  ? 

A.  I  have  been  down  there  for  five  years,  and  I  have 
had  mostly  charge  of  it  from  the  office.  I  have  been  there 
every  day  and  haven't  missed  a  day  for  five  years  and  I 
have  taken  this  up  very  carefully,  and  the  only  thing  that 
I  see  to  make  the  people  pay  is  to  give  the  power  to  the 
Commissioners  to  arrest  every  man  that  don't  make  a 
return,  to  make  it  compulsory,  because  if  a  man  down 
in  one  of  our  wards,  we  don't  know  him,  he  might  have 
a  small  house  and  he  might  have  ten  or  fifteen  thousand 
dollars,  and  it  is  up  to  the  Commissioners  to  put  50  per 
cent,  on  him,  and  he  might  not  think  he  has  a  cent,  or  he 
returned  nothing.  There  is  ten  or  fifteen  thousand  dollars 
gained  there.  The  assessor  ought  to  sit  in  certain  places 
and  make  the  people  come  to  him  and  make  a  return  right 
there  to  him.  If  I  understand  the  Act  right  there  are  no 
provisions  for  the  assessor  to  return  the  blanks  to  the 
Commissioners. 

Q.  What  are  they  supposed  to  do  with  them? 

A.  I  don't  know. 

Q.  Mr.  Eschner  said  the  other  day  there  are  blanks 
printed  and  given  out 

A.  Supposing  the  assessor  said,  "I  got  the  blanks  and 
the  law  don't  require  me  to  fetch  them  to  you,"  and  he 
wouldn't  fetch  them  to  you,  we  have  to  send  a  man  for 
them. 


550 

By  a  Member  of  the  Committee : 

Q.  Have  you  ever  come  across  a  case  like  that? 

A.  No. 

Q.  They  all  return  the  blank  sheet? 

A.  They  all  return  it,  but  if  it  would  be  compulsory  on 
the  Board  of  Revision  of  Taxes,  which  we  always  get 
sworn  down  in  Delaware  county;  we  always  take  under 
the  Act  of  1888  and  get  sworn  in  as  the  Board  of  Revision 
of  Taxes,  and  if  they  were  compelled  to  arrest  every  man 
or  woman  that  had  any  money  out  at  interest  and  did 
not  make  a  return,  I  think  you  would  get  a  great  deal 
more  money  in  the  county  of  Delaware  or  any  other 
county ;  I  know  we  would. 

By  Mr.  Brown : 

Q.  There  is  the  trouble.  You  would  have  to  know 
something  about  people  before  you  could  take  such 
drastic  action  against  them. 

A.  The  only  thing,  that  they  did  not  make  that  return. 

Q.  Failure  to  make  the  return? 

A.  Failure  to  make  the  return  and  make  an  affidavit. 

Q.  How  would  a  law  which  gave  the  County  Commis- 
sioners the  right  to  have  these  taxables  come  before  them 
and  be  put  under  oath  and  cross-examine  them  be  received 
in  your  county? 

A.  If  that  were  given  to  the  Board  of  Revision  of  Taxes, 
let  the  Board  of  Revision  of  Taxes  sit  at  certain  places, 
and  let  the  assessors  sit  at  certain  places*  and  make  the 
people  come  there. 

Q.  How  would  such  a  law  be  received  in  your  county ; 
do  you  think  your  people  would  acquiesce  in  such  an  Act? 

A.  I  should  think  so.  I  do  not  see  why  one  man  that 
comes  to  the  assessor  and  gives  a  return  willingly,  who 
takes  an  oath  to  the  amount  of  money  he  has,  and  others 
who  may  have  money  escape.  If  it  is  compulsory  to 
arrest  a  man  for  not  making  a  return  you  surely  would 
have  a  return  from  every  man  in  the  county. 


551 

Q.  Have  you  many  men  in  your  county  who  claim 
residence  elsewhere? 

A.  Some  of  them  are  going  to  do  this;  going  to  claim 
they  make  a  return  and  then  before  the  appeal  draw  their 
money  out  of  bank  and  then  claim  they  have  no  money, 
but  we  are  rid  of  those  fellows. 

Q.  The  payment  by  the  bank  of  the  average  deposit  of 
such  a  man  would  reach  that,  would  it  not? 

A.  Yes,  that  would,  but  if  every  man  would  be  com- 
pelled to  make  that  return,  I  think  we  would  get  a  great 
deal  more  revenue. 

Q.  Are  there  any  other  weak  spots  in  the  law  that  you 
think  might  be  strengthened  a  little? 

A.  I  don't  see  anything  the  matter  with  the  law,  if  you 
make  the  people  make  their  returns.  If  everybody  would 
make  a  return  it  would  be  compulsory  upon  them. 

Q.  You  have  never  had  any  prosecutions  in  your  county 
for  failure  to  make  proper  returns,  or  anything  of  that 
kind? 

A.  It  would  be  hard  to  get  at  it.  I  don't  see  how  we 
could  get  at  it. 

Q.  Do  you  have  any  means  of  getting  any  information 
by  which  you  could  help  the  assessors  to  locate  the  people, 
the  taxables.  Do  you  make  any  independent  inquiries 
yourself? 

A.  Yes,  we  go  around.  In  the  Recorder  of  Deeds  office 
a  whole  lot  of  those  mortgages  are  indexed  in  there  and 
returned  and  they  are  only  for  five  or  ten  days. 

Q.  Your  returned  judgments  and  like  that  you  get;  I 
do  not  mean  that.  You  are  a  man  of  affairs  in  your 
county,  and  you  have  general  information  about  the 
people  in  your  county.  Do  you  give  any  suggestions  to 
your  assessors  as  to  the  liability  in  your  opinion  of 
certain  people  who  pay  taxes? 

A.  Yes,  everyone  we  possibly  can,  but  there  are  a  whole 
lot  of  them  you  think  wouldn't  have  any  money  that  have 


552 

money,  and  there  are  a  lot  of  people  that  haven't  any 
money  that  you  think  have  money  out  at  interest  and 
don't  make  any  return  at  all.  If  the  assessor  makes  the 
return  he  makes  a  return  of  nothing,  thinking  they  have 
nothing. 

By  a  Member  of  the  Committee : 

Q.  What  is  your  idea  about  the  selection  of  assessors? 

A.  I  should  think  the  assessors  should  be  appointed  by 
the  Board  of  Commissioners,  for  this  reason:  they  have 
charge  of  the  taxes  and  I  think  they  would  pick  out 
people  capable  of  doing  that;  they  have  the  handling  of 
all  the  taxes  and  they  would  know  the  people  and  use 
good  judgment  in  that.  If  the  Court  appointed  them, 
they  might  appoint  some  very  intelligent  men,  but  not 
capable  of  estimating  on  real  estate,  and  one  thing  or 
another,  like  that,  and  not  have  a  man  to  assess  in  his  own 
district. 

Q.  They  might  be,  in  a  measure,  influenced  by  an  ap- 
peal from  one  of  their  appointees? 

A.  I  think  it  would  be  a  good  idea.  Two  or  three  times 
we  have  taken  it  out  of  the  assessor's  hands  and  went 
around  and  done  it  ourselves. 

Q.  Was  there  any  difference  substantially  in  the  result? 

A.  We  raised  about  eleven  million  dollars  in  assessment 
over  their  heads.  We  are  doing  it  now  today.  I  left  the 
Board  down  at  Leiperville  today  to  come  «p  here. 

ADJOURNED  until  Friday,  February,  25,  1910,  at 
eleven  o'clock  A.  M. 


553 


Public  meeting  of  the  Committee,  held  at  Room  No.  496, 
City  Hall,  Philadelphia,  Pa.,  February  25,  1910;  at  11 
o  'clock  A.  M. 

Present:  Gabriel  H.  Moyer,  Esq.,  Chairman  pro  tern., 
William  H.  Keyser,  Esq.,  William  C.  Sproul,  Esq.,  James 
F.  Woodward,  Esq.,  David  Hunter,  Esq.,  of  the  Committee, 
Francis  Shunk  Brown,  Esq.,  Counsel. 

Mr.  Brown :  It  is  hardly  necessary  to  state  the  purposes 
of  the  meeting,  as  we  are  all  familiar  with  them,  and  we 
might  just  as  well  proceed  to  hear  those  who  are  here  to 
help  us.  Mr.  Frank  H.  Caven,  President  of  the  Real 
Estate  Brokers'  Association,  of  this  City,  is  present,  and 
we  would  be  glad  to  hear  from  him. 

Mr.  Caven:  We  thank  you  very  much  for  being  ac- 
corded the  privilege  of  coming  before  you.  We  come  as 
representatives  of  the  Philadelphia  Real  Estate  Brokers' 
Association.  Our  members  in  turn  represent  the  owners 
of  about  100,000  properties  in  this  City,  and  by  reason  of 
said  ownership  we  are  taxpayers.  Our  Legislative  Com- 
mittee, Mr.  Dallam  acting  as  Chairman  thereof,  has  pre- 
pared certain  thoughts  upon  the  question  of  taxation,  and 
with  your  permission  Mr.  Dallam  will  now  present  th« 
same.  It  has  been  approved  by  our  Association. 

Mr.  David  E.  Dallam:  I  would  rather  speak  extempo- 
raneously, but  rather  than  take  up  the  time  of  the  Com- 
mittee I  have  put  this  in  writing. 

At  a  special  meeting  of  the  Philadelphia  Real  Estate 
Brokers'  Association,  held  on  February  23,  1910,  the  fol- 
lowing preamble  and  resolutions  were  adopted : 

' '  Whereas,  The  Association  is  gratified  at  the  receipt  of 
an  invitation  for  its  officers  to  appear  before  the  Joint 
Committee  of  the  Senate  and  House  of  Representatives  of 
29 


554 

the  Commonwealth  of  Pennsylvania  on  Revenue,  etc.,  and 
are  pleased  to  accept  the  same;  and 

' '  Whereas,  the  laws  concerning  the  revenue  of  the  State 
and  the  counties  are  so  allied  that  whatever  effects  the  rev- 
enues of  the  State  may  affect  the  revenues  of  the  county; 
and 

"Whereas,  The  existing  laws  now  'limit  the  authority 
of  a  county  to  raise  money  practically  only  by  taxes  upon 
real  estate,  it  is  the  opinion  of  this  Association  that  the 
taxes  upon  real  estate  in  the  County  of  Philadelphia  have 
reached  such  a  limit  that  any  increase  of  the  same  would 
be  most  unfair  and  unjust  until  all  other  species  of  prop- 
erty are  equally  taxed ;  therefore,  be  it 

11  Resolved,  That  the  officers  of  the  Association  and  the 
Committee  on  Legislation  be,  and  are  hereby  instructed  ID 
appear  before  the  said  Joint  Committee  on  February  25, 
1910,  or  any  subsequent  date,  and  to  urge  upon  the  same 
the  adoption  of  the  following  suggestions  as  to  the  changes 
in  the  tax  laws  of  the  Commonwealth : 

"First.  State  taxation  to  be  limited  strictly  to  the  tax- 
ation of  foreign  and  domestic  corporations.  Counties  to 
have  no  right  to  tax  corporations  as  such,  but  to  have 
the  authority  to  tax  the  physical  property  of  such  corpora- 
tions situate  in  their  respective  counties.  All  other  tax- 
ation now  made  and  collected  by  the  State,  including  collat- 
eral inheritance  tax,  is  hereafter  to  be  made  and  collected 
by  and  for  the  benefit  of  the  counties  wherein  the  same  may 
be  collected.  If  the  taxation  of  corporations  is  insuffi- 
cient to  meet  the  necessities  of  the  State,  then  the  State 
to  make  direct  taxation  upon  each  county,  to  be  a  certain 
percentage  of  the  amount  of  taxes  collected  by  said  county 
under  the  foregoing  authority. 

"Second.  All  property,  real  and  personal,  shall  be 
taxable  by  the  counties  in  which  the  property  is  situated 
and  located.  Real  estate  exemptions  shall  be  limited  to 
burial  lots  in  w7hich  interments  have  actually  been  made, 


555 

and  to  religious,  charitable  and  educational  institutions, 
in  proportion  as  they  are  free.  All  personal  property  to 
be  taxed,  except  merchandise  in  process  of  manufacture 
or  held  for  sale  by  licensed  manufacturers  or  dealers. 
Furniture,  pictures,  horses,  carriages,  automobiles,  books 
and  furnishings  to  be  assessed  against  the  person  in  pos- 
session of  the  same,  but  each  individual  taxpayer  might  be 
allowed  an  exemption  of,  say,  $1,000.  Where  the  personal 
property  consists  of  stocks  or  bonds  of  a  corporation  which 
pays  taxes  direct  on  the  same  to  the  State,  such  stocks  or 
bonds  shall  be  exempt  from  county  taxation,  as  also  mort- 
gages on  real  estate  where  such  real  estate  is  taxed  at  its 
full  value  by  the  county  in  which  it  is  situated. 

"Third.  Each  and  every  individual,  firm,  limited  part- 
nership and  corporation  engaged  in  a  legitimate  busi- 
ness or  profession,  having  an  office  or  place  of  business 
for  the  transaction  of  same,  shall  pay  a  license  to  the 
county  in  which  said  office  is  located." 

My  associates  and  myself  appear  before  you  as  a  Com- 
mittee from  the  Philadelphia  Real  Estate  Brokers'  As- 
sociation, of  which  Mr.  Frank  Caven  is  President,  and  I 
am  Chairman  of  the  Legislative  Committee.  The  present 
Association  is  only  of  about  two  years'  standing,  but  we 
have  to-day  about  160  members,  each  of  whose  first  re- 
quirement is  that  he  shall  be  a  licensed  real  estate  broker. 
We  claim  we  represent  the  payers  of  at  least  100,000  tax 
bills  for  the  year  1909,  and  more  than  that  number  for 
the  year  1910.  We  acknowledge  primarily  that  we  are 
more  interested  in  taxation  in  the  City  of  Philadelphia 
than  in  the  State,  but  in  the  resolutions  which  I  present, 
we  show  that  we  do  not  wish  to  deprive  the  State  of  its 
right  to  collect  taxes,  but  we  wish  to  increase  the  sources 
from  which  the  county  may  be  able  to  raise  money  for  its 
own  purposes.  Following  out  this  idea,  our  Association 
passed  the  following-  resolutions,  which  I  will  now  read: 


566 

Taking  up  the  first  resolution,  I  would  say  that  in  our 
Association  of  160  members,  we  have,  of  course,  various 
ideas  as  to  how  our  views  can  be  put  into  effect.  Per- 
sonally, I  have  my  own  views,  and  the  other  members  of 
the  Committee  may  have  their  views,  but  we  don't  desire 
to  take  the  time  of  your  Committee  in  expressing  our 
individual  opinions  unless  you  shall  request  it,  but  the 
resolution  as  offered  covers  the  whole  ground.  We  don't 
wish  to  deprive  the  State  of  its  revenues,  but  personally  I 
feel  confident  that  if  the  taxes  on  corporations,  foreign 
and  domestic,  are  made  uniform,  equitable  and  fair,  that 
there  will  be  enough  money  raised  by  the  State  direct  from 
them  for  all  State  purposes.  The  duty  of  a  State  is  simply 
to  protect  life,  liberty  and  property,  and  although  we 
have  gone  beyond  that  and  have  assumed  a  series  of  what 
I  call  "State  Socialism,"  that  is,  public  education,  State 
supervision  of  health  and  the  care  of  the  indigent  and  de- 
fective classes,  being  very  generous  in  appropriations  to 
that  end,  yet,  I  still  think,  that  under  a  proper  law,  the 
State  will  have  money  enough  from  its  corporation  tax 
to  pay  all  its  expenses.  If  it  has  not,  then  it  can  make 
its  direct  tax  upon  each  county,  each  county  paying  its 
proper  share,  being  a  certain  percentage  of  what  each  col- 
lects for  its  own  purposes.  Personally,  I  am  a  firm  be- 
liever in  the  home  rule  and  ability  of  each  county  to  de- 
termine what  are  the  best  subjects  within  its  borders  from 
which  to  raise  revenue.  As  a  Philadelphian,  I  don't 
think  I  know  enough  about  the  minerals  in  Carbon  or 
Schuylkill  counties,  or  the  oil  in  Venango  county,  as  to 
the  best  means  of  raising  taxes  on  the  same,  but  I  prefer 
to  lease  that  to  the  citizens  of  those  counties,  and  all  our 
Association  asks  you  is  that  Philadelphia  may  be  allowed 
to  tax  property  within  its  borders  in  an  equitable  and 
just  way,  as  it  may  see  fit,  and  we  stand  ready,  if  the 
State  revenues  are  deficient,  to  make  good  such  deficits  in 
a  just  proportion. 

Now,  as  to  the  second  suggestion  we  make.    Give  us  the 


557 

right  to  tax  personal  property,  and  in  that  way  we  will 
have  more  than  enough  money  for  our  purposes,  so  that 
we  will  even  be  able  to  reduce  our  taxation  on  real  estate. 

Our  third  resolution,  which  we  propose,  increases  the 
number  of  licenses.  I  see  at  once  the  means  of  raising  for 
the  County  of  Philadelphia  at  least  two  million  dollars 
additional  income.  At  present,  licenses  are  only  required 
from  tavern  keepers,  brokers  and  storekeepers.  No  pro- 
fessional man  pays  a  license ;  no  manufacturer  pays  a 
license.  Personally,  I  cannot  recognize  why  a  real  estate 
broker  should  pay  $100  per  annum,  whereas  a  lawyer,  who 
has  four  times  the  income,  pays  nothing.  Neither  can  I 
recognize  why  a  manufacturer  who,  in  the  general  opinion 
of  the  public,  makes  more  money  than  the  dealer,  is  exempt 
from  a  tax,  whereas  the  dealer,  who  only  sells  the  goods, 
is  compelled  to  pay  one.  I  disagree  with  Mr.  Albright, 
who  spoke  here  last  week,  that  a  tax  on  manufacturers 
would  drive  manufacturers  away,  and  quoted  the  example 
of  New  York  City.  In  answer  to  that,  I  say,  that  in- 
stead of  the  manufacturers  in  New  York  City  decreasing, 
they  have  increased,  and  to-day  that  city,  in  spite  of  its 
large  taxes,  is  the  largest  manufacturing  city  in  the  country. 
I  don't  propose  an  extravagant  license  tax,  but  a  mini- 
mum one,  and  the  greater  number  of  taxpayers  the  less 
in  proportion  each  would  bear.  There  is  nothing  in  this 
idea  that  taxing  manufacturers  drives  them  away.  When 
a  manufacturer  locates  in  a  place,  there  are  three  ques- 
tions to  be  considered.  The  importance  of  these  questions 
varies  with  each  man's  particular  business.  They  are 
labor,  transportation  facilities,  and  rent.  A  large  manu- 
facturer, located  in  the  Philadelphia  district,  told  me  that 
they  brought  in  seven  tons  of  crude  material  to  one  of  fin- 
ished material  that  they  put  out,  and  therefore  transpor- 
tation with  them  was  of  first  importance.  With  another 
manufacturer,  labor  would  be  of  first  importance.  A 
certain  manufacturer,  who  left  this  City  because  he  could 
get  cheaper  rent  in  a  neighboring  town,  says  he  has  never 


558 

regretted  anything  so  much  in  his  life  as  his  moving,  be- 
cause he  has  one  continual  trouble  with  his  labor.  The 
question  of  taxes  on  a  manufacturing  plant  is  not  one- 
tenth  of  the  rent,  and  is  the  last  thing  they  consider.  To- 
day Pennsylvania  is  the  best  labor  market  in  America. 
Along  the  Delaware  we  have  the  cheapest  land  along  the 
Atlantic  seaboard.  Courtauld  &  Co.,  the  English  crepe 
manufacturers,  after  having  examined  every  town  from 
Fall  River  along  the  coast  as  far  south  as  Savannah,  have 
located  at  Chester,  where,  I  think,  they  paid  for  land 
$600  per  acre  and  have  any  quantity  of  unskilled  labor 
at  their  command.  There  is  no  reason,  therefore,  why 
manufacturers  should  be  exempt  from  a  tax  if  it  is  a 
minimum  one,  as  I  propose  it  should  be. 

In  the  second  resolution,  in  which  I  except  from  taxes, 
as  personal  property,  merchandise  in  process  of  manufac- 
ture and  in  stores,  which  property  was  suggested  to  be 
taxed  by  Mr.  Gratz,  I  do  so  because  if  a  merchandise 
dealer  or  manufacturer  pays  a  fair  license,  which  license, 
of  course,  can  be  computed  on  the  amount  of  his  sales 
or  the  amount  of  capital  invested,  that  license  tax  would 
represent  the  property  in  his  possession,  so,  therefore,  there 
should  not  be  a  double  tax.  In  the  same  way  I  exempt 
mortgages  upon  property  which  has  paid  a  full  tax  to 
the  county,  for  the  simple  reason  that  that  is  double  tax- 
ation. 

Now,  the  experience  of  the  tax  office  and  trust  companies, 
who  have  more  experience  with  estates  than  the  ordinary 
broker,  is  that  of  invested  capital  in  the  City  of  Phila- 
delphia, about  one-fifth  is  in  real  estate ;  four-fifths  in  per- 
sonal property,  and  of  that  four-fifths  in  personal  prop- 
erty, fully  80  per  cent,  is  in  stocks  and  bonds  of  Penn- 
sylvania corporations.  This  would  leave  only  about  one- 
fifth  of  invested  capital  in  the  State  of  Pennsylvania  in- 
vested in  outside  corporations. 

The  rates  of  interest  on  good  securities  in  other  States 
have  so  declined  that  a  man  can  invest  his  money  now  in 


559 

Pennsylvania  and  obtain  for  it  the  equal  income  that  he 
could  in  any  other  place  except  in  speculative  securities 
in  the  mining  States.  Therefore,  in  taxing  personal  prop- 
erty, instead  of  having  four  pages  of  questions  to  answer, 
we  could  simply  put  one  question  to  the  taxpayer  and 
ask  him  to  swear  to  the  same,  the  same  as  we  now  ask 
him  to  swear  to  four  pages;  this  one  question  would  be, 
What  was  your  income  for  the  last  year  from  all  prop- 
erty you  had  outside  of  Pennsylvania?  Except  in  the 
case  of  a  very  rich  man,  this  amount  would  be  found  to 
be  comparatively  small,  and  a  man,  with  a  point  blank 
question  put  to  him  under  oath,  is  not  apt  to  perjure  him- 
self for  the  small  amount  of  money  which  the  truthful 
answer  to  such  a  question  would  compel  him  to  pay.  The 
great  objection  to  personal  returns  is  the  publicity  it  gives 
to  one's  private  business.  Personally,  T  am  optimistic, 
and  believe  that  95  per  cent,  of  the  world  are  honest 
and  truthful,  but  everyone  hates  to  disclose  his  pri- 
vate affairs,  but  if  the  State  properly  taxed  all  State 
corporations  and  those  were  exempted  from  taxation  in 
the  counties,  the  one  question  I  have  put  above  I  think 
will  be  nearly  always  answered  truthfully  by  the  tax- 
payer. 

I  would  like  to  go  beyond  the  authority  vested  in  me 
by  the  resolution,  and  suggest  personally  to  your  Committee, 
if  possible,  to  formulate  one  uniform  method  of  assessment 
and  collection  of  taxes  throughout  the  State.  You,  gen- 
tlemen on  the  Committee,  from  what  I  call  the  * '  rural  coun- 
ties," know  the  difficulty  which  we,  as  residents  in  Phila- 
delphia have,  being  unacquainted  with  local  laws  which 
are  so  different  throughout  the  various  counties,  that  it 
is  impossible  for  us,  by  correspondence,  with  one  officer 
of  the  county,  to  obtain  a  tax  bill  on  a  country  property 
which  covers  all  the  taxes  therein  levied.  We  have  to 
write  to  the  county  collector,  the  township  collector,  the 
borough  collector,  and  the  school  tax  collector,  and  pos- 
sibly others.  I  ask  that  you  in  your  report  to  the  State  you 


560 

urge  a  suggestion  that  some  plan  be  proposed  by  which 
all  taxes  payable  in  a  county  shall  be  payable  through  one 
collector,  and  that  one  person,  presumably  the  County 
Treasurer,  be  the  only  party  to  have  the  authority  to  lien 
for  the  non-payment  of  taxes  or  commence  proceedings 
for  the  collection  of  the  same. 

By  Mr.  Brown : 

Q.  "When  you  refer  to  the  local  real  estate  corpora- 
tions, what  have  you  in  mind  that  is  not  taxable,  the  local 
real  estate?  You  request  that  all  local  real  estate  or 
corporations  should  be  taxed  locally  ? 

A.  Yes,  we  tax  them  for  you,  we  tax  physical  property, 
as  they  are  doing  now.  We  do  not  tax  anything  but  the 
real  estate. 

Q.  What  is  there  not  taxed  that  you  would  tax,  now  ? 

A.  I  do  not  see  that  there  is — what  I  am  looking  at 
primarily  is  the  State  should  tax  every  corporation.  Now, 
in  the  first  place,  we  set  forth  that  the  charter  charges 
of  manufacturing  corporations  eliminated — 

Q.  Yes,  but  not  its  local  real  estate? 

A.  No,  not  its  local  real  estate. 

Q.  Now,  direct  your  mind  to  the  tax  of  local  real  estate 
of  corporations  ? 

A.  Yes,  very  good.  We  tax  that  now.  In  the  first  place 
we  want  to  raise  money  for  the  State.  That  is  the  first 
question. 

Q.  Now,  with  railroad  companies,  they  pay  tax  on  all 
their  local  real  estate  in  Philadelphia  except  their  water 
tanks  and  their  roadway? 

A.  Yes,  I  suppose  they  pay  on  the  terminal.  They  do 
not  pay  on  the  ground. 

Q.  They  pay  on  everything  but  the  roadway  and  the 
water  tanks. 

A.  Does  the  tax  on  terminal  cover  that? 

Q.  Yes. 

A.  That  is  all  right.     We  do  not  complain  of  that. 


561 

Q.  The  telegraph  companies  are  not  exempted,  and  the 
trolley  companies  pay  on  everything  but  their  power  plant 
and  roadway.  Would  you  tax  them? 

A.  No,  I  would  not  tax  that.  I  can  not  follow  your 
thought.  Primarily,  you  want  to  get  State  taxes.  Now, 
•  tax  them.  In  the  first  place,  that  opens  a  discussion  on 
the  question  of  what  is  a  corporation.  What  is  the  ob- 
ject of  incorporating?  There  are  only  two  objects  that 
I  know,  that  is  insuring  lives  and  public  utilities  that 
the  individual  cannot  do.  You  tax  them  for  that  incor- 
porating. You  give  them_more  than  you  give  me.  I  am 
talking  about  State  tax.  You  get  your  money  from  the 
State  tax  and  give  us  the  right  to  tax  personal  property 
here,  and  we  will  get  our  income. 

Q.  I  am  not  talking  about  personal  income.  I  am  ask- 
ing you  what  real  estate  corporation  that  is  not  now  taxed, 
you  would  tax  locally? 

A.  If  they  do  not  tax  them  now,  it  is  their  error.  I 
understand  that  with  the  exception  of  one  or  two,  we  al- 
ready tax  the  real  estate  corporations. 

Q.  Then  there  is  now  nothing — 

A.  Certainly  not ;  I  am  not  complaining  of  that. 

By  a  Member  of  the  Committee : 

Q.  What  do  you  understand  the  State  returns  are  from 
the  counties  now? 

A.  Three-fourths  of  what  you  get.  You  get  $4,000,000 
and  return  $3,000,000. 

Q.  That  would  not  make  a  very  great  difference,  then, 
in  your  receipts.  Where  would  you  get  the  two  millions  of 
dollars  out  of  the  license  tax? 

A.  Out  of  the  license  tax  we  would  get  $2,000,000  at 
once. 

By  Mr.  Brown: 

Q.  Just  one  other  thought  on  taxation  of  personal  prop- 
erty. You  speak  of  taxing  that  locally  ? 

A.  Yes,  sir. 


562 

Q.  Then  you  say  in  another  section  there  that  you  would 
not  tax  locally  what  the  State  already  taxes? 

A.  Of  course,  we  ought  not  to  do  that. 

Q.  What  personal  property  is  there  you  would  tax  lo- 
cally that  the  State  does  not  tax  ? 

A.  In  the  first  place,  give  us  our  license  tax — 

Q.  Do  not  wander  from  my  question.  I  am  talking  about 
the  personal  property? 

A.  I  am  talking  about  personal  property  in  storehouses 
and  warehouses.  I  am  opposed  to  what  Mr.  Gratz  says. 

Q.  Then  the  personal  property  that  the  State  does  not 
tax,  that  you  would  have  taxed,  would  be  the  goods  in 
the  stores? 

A.  No,  I  except  that.  The  personal  property  we  would 
have  taxed  is  the  furniture,  pictures,  paintings,  and  so  on 
and  put  back  the  Act  of  '88.  That  would  accumulate  at 
an  enormous  extent.  We  have  houses  in  which  there  are 
$200,000  worth  of  personal  property ;  the  State  gives  them 
protection. 

Q.  Another  subject  would  be  automobiles? 

A.  Of  course,  we  only  tax  now  carriages  for  hire. 

Q.  What  other  personal  property  have  you  in  mind  ? 

A.  That  covers  it.  Then  we  tax  personal  property  held 
by  corporations,  here,  for  instance,  taking  your  banks,  you 
tax  them  for  their  life,  we  tax  them  for  the  physical  prop- 
erty. 

Q.  You  tax  them  anyhow? 

A.  No,  we  do  not.    We  do  not  tax  their  investments. 

Q.  You  are  going  to  tax  their  security  and  investment? 

A.  Undoubtedly. 

Q.  I  understood  you  to-day  you  would  not  tax  locally 
what  the  State  taxes  generally  ? 

A.  No,  the  State  won't  do  it,  if  you  give  it  to  the  State. 

Q.  You  tax  them  on  their  charter  privileges? 

A.  We  can  not  tax  them  as  a  corporation ;  we  tax  them  on 
their  property. 


563 

By  a  Member  of  the  Committee : 

Q.  But  in  order  to  get  all  of  the  personal  property  tax 
instead  of  three-fourths  ? 

A.  To  delegate  to  the  county,  and  let  us  tax  in  the 
county  what  we  think  proper. 

Q.  Have  that  right  reserved  unto  each  county? 

A.  Of  itself.  If  you  can  not  get  enough  out  of  the 
direct  taxation  of  corporations,  then  you  appeal  to  us.  You 
say,  "We  Avant  5  per  cent,  of  the  tax  you  collected  last 
year. ' ' 

Q.  Instead  of  the  revenue  flowing  directly  into  the  State 
Treasury,  you  would  have  it  flow  indirectly  from  the 
county  tax? 

A.  Yes.    There  is  only  one  system  of  taxation  here. 

Q.  How  would  the  State  derive  its  revenue. 

A.  From  equal  taxation  in  all  corporations. 

Q.  It  would  not  appeal  to  the  counties  at  all  ? 

A.  No,  not  until  you  are  short. 

Q.  Until  the  State  is  short? 

By  Mr.  Brown : 

Q.  In  other  words,  the  Board  of  Revenue  Commissioners 
would  not  have  to  act  until  there  was  a  State  deficit; 
then  they  would  make  requisition  on  the  counties,  instead 
of  doing  as  they  do  now  ? 

A.  It  gives  us  one  set  of  collectors. 

Q.  Any  other  personal  property? 

A.  Anything  we  could  find.  That  is  for  the  county  to 
determine. 

Q.  Your  idea  is  to  tax  everything  in  sight? 

A.  Everything  we  want  to  tax.  If  Venango  county 
wants  a  half  a  cent  tax  that  is  their  business. 

Q.  Any  other  thought,  Mr.  Dallam? 

A.  Not  unless  there  is  something  that  requires  an  ex- 
planation. 


564 


SAMUEL  G.  DIEHL,  Philadelphia,  Pa.,  called. 

Mr.  Diehl:  I  am  not  a  member  of  the  Real  Estate 
Brokers'  Association,  although  I  am  a  broker.  In  the  early 
part  of  last  year  I  was  Chairman  of  the  Pension  Committee 
for  the  purpose  of  paying  pensions  to  Emergency  Men.  I 
had  an  interview  with  the  Governor,  and  he  said  he  was  in 
favor  of  the  bill  which  I  proposed  to  the  Legislature,  but 
he  said:  "Where  are  you  going  to  get  the  money  to  pay 
the  pensions  ? "  So  I  commenced  to  look  around,  and  I  hit 
upon  a  plan,  and  my  plan  is,  I  might  say,  revolutionary  in 
regard  to  the  past  collection  of  taxes  for  State  purposes. 
In  my  investigations  I  found  from  the  Census  Report  of 
the  United  States,  published  in  1907,  that  the  assessed 
value  of  real  estate  in  the  State  of  Pennsylvania  in  1904 
amounted  to  $3,476,000,000.  Now,  my  idea  was  to  place  a 
State  tax  upon  that  assessed  value  of  real  estate,  a  small 
amount,  say  one  and  one-half  mills.  One  and  a  half  mills 
on  that  amount  of  money  would  produce  $5,214,089.  Then 
I  propose  to  do  away  with  the  mortgage  tax,  four-tenth  of 
1  per  cent.  The  tax  received  by  the  Treasurer  of  the 
State  of  Pennsylvania  in  1908  amounted  to  $4,209,000.  I 
could  not  find  how  much  of  that  money  belonged  to  the  tax 
on  mortgages.  There  was  no  way  to  find  out.  The  Board 
of  Revision  kept  no  account,  but  they  said  they  thought 
about  seven-eighths  of  it  came  from  the  tax  on  mortgages. 
That  would  be  $3,806,204,  leaving  an  increase  in  the  State 
Treasury  of  $1,531,835.  Now,  out  of  that  $4,209,000 
collected  by  the  Treasurer  he  returned  to  the  counties 
$3,392,128.  Now,  taking  three-fourths  of  the  $5,214,000 
which  would  be  raised  by  the  tax  on  the  assessed  value,  you 
return  to  the  counties  $3,910,566,  or  an  increase  of  $618,438 
is  returned  to  the  counties.  Now,  there  are  a  number  of 
people  who  own  property  in  the  State  of  Pennsylvania  who 
do  not  pay  a  cent  towards  the  revenues  of  the  State.  For 


565 

instance,  there  was  one  of  our  citizens  who  died  recently, 
leaving  about  $40,000,000,  and  most  of  that  property  was 
in  real  estate  clear  of  incumbrance ;  about  $10,000,000  of 
it,  I  think,  is  in  the  City  of  Philadelphia.  That  does  not 
pay  one  cent  to  the  State  of  Pennsylvania,  not  a  penny. 
Now,  then,  other  gentlemen,  or  one  other  gentleman,  if  you 
take  for  example,  owns  ten  million  dollars'  worth  of  prop- 
erty and  he  is  not  able  to  keep  that  clear  of  incumbrance, 
and  he  is  compelled  to  mortgage  it  for  60  per  cent,  of 
its  value,  and  he  pays  four-tenths  of  1  per  cent,  upon 
that  six  millions  of  dollars,  which  amounts  to  $24,000  a 
year.  Of  course,  the  State  says  that  the  owner  of  property 
or  the  man  who  borrows  the  money  is  not  to  pay  the  tax, 
but  the  man  who  loans  it,  but  we  real  estate  brokers  know 
in  the  majority  of  cases  the  man  who  borrows  the  money 
pays  the  State  tax. 

By  Mr.  Moyer : 

Q.  That  is  pretty  generally  true  in  the  City,  is  it  not  ? 

A.  Yes,  sir.  Now,  my  idea  was  to  tax  that  ten  million 
dollars'  worth  of  property  value  one  and  one-half  mills, 
which  would  produce  $15,000,  that  is  the  clear  ten  millions, 
and  tax  the  other  the  same,  which  would  produce  $15,000 ; 
the  State  would  get  $30,000,  and  the  man  who  paid  his 
four-tenths  on  the  six  millions  would  save  $9,000.  He 
would  pay  $15,000  instead  of  $24,000.  Therefore,  every 
man  who  had  his  property  mortgaged  for  60  per  cent, 
of  its  value  would  save  money.  A  great  deal  of  the  prop- 
erty is  mortgaged  for  more  than  60  per  cent,  of  its  value. 
I  know  some  that  is  mortgaged  for  80  per  cent,  of  its 
value,  and  of  course  the  man  who  has  property  mortgaged 
for  a  larger  proportion  of  its  assessed  value  saves  more 
money. 

Now,  in  regard  to  the  City,  if  a  man's  property  is  as- 
sessed for  60  per  cent,  of  its  value  at  the  present  rate  of 
tax,  if  it  is  mortgaged  for  two-thirds  of  its  value  with  the 
City  tax  at  $1.50,  a  man  would  have  to  pay  $1,766.67. 


566 

Now,  under  my  plan  of  taxing  the  assessed  value  and 
making  the  City  rate  $1.60,  which  is  ten  cents  more  than 
it  is  to-day,  the  man  would  save  $16.67,  because  under  the 
old  way  he  would  pay  $1,766.67,  and  under  the  new 
way  he  would  pay  $1,750,  and  if  he  was  taxed  60  per 
cent,  he  would  pay  under  the  old  way  $740  and  under  the 
new  way  $750,  or  ten  dollars;  if  it  is  mortgaged  for  70 
per  cent,  of  its  value,  he  now  pays  $1,780,  and  under  the 
new  way  he  would  pay  $1,750.  He  would  save  money. 

Now,  the  assessed  value  of  Philadelphia  for  1909  is 
$1,356,869,000  odd  dollars.  At  $1.50  it  would  produce 
$20,353,000  odd  dollars.  Under  the  $1.60  it  would  produce 
$21,709,915,  an  increase  of  $1,456,000.  Now,  taxing  the 
real  estate,  you  can  always  get  your  money.  In  taxing 
personal  property  you  do  not  always  get  it,  because  a  great 
many  who  ought  to  pay  four-tenths  do  not  pay  it.  There 
seems  to  be  no  way  by  which  you  can  make  everybody  pay 
a  tax,  but  in  taxing  real  estate  you  can  make  everybody 
pay. 

Q.  What  is  your  authority  for  that  statement  ?. 

A.  Well,  my  authority  is  that  if  you  take — we  know— 
I  don't  know  that  it  is  an  authority,  but  we  know  that — 
we  feel  sure  that  there  are  a  lot  of  people  in  the  State  of 
Pennsylvania  who  do  not  pay  that  four-tenths  of  1  per 
cent.  tax. 

Q.  Is  there  no  way  of  enforcing  the  payment? 

A.  I  do  not  know  of  any  law  to  enforce  it.  You  cannot 
put  a  man  in  prison  for  debt.  Many  years  ago  when  I  was 
a  young  man  I  was  Internal  Revenue  Collector  in  the 
Second  District,  and  we  had  an.  income  tax.  We  felt  that 
80  per  cent,  of  those  returns  were  perjuries.  We  felt 
certain  that  the  people  did  not  make  the  lawful  returns. 
The  assessor,  when  he  knew  and  had  the  facilities  to  know, 
he  could  add  what  he  thought  the  man  had  failed  to  do, 
and  sometimes  we  did  add  50  per  cent.,  and  it  was  paid 
without  a  question. 


567 

By  Mr.  Brown : 

Q.  Why  didn't  you  add  50  per  cent,  more? 

A.  We  could  not  do  that  without  we  had  positive  assur- 
ance. One  prominent  man  made  a  return  and  the  assessor 
knew  it  was  wrong,  and  he  added  50  per  cent.,  and  it  was 
paid  without  any  question. 

Q.  Have  you  talked  this  over  with  your  associates? 

A,  I  have  submitted  this  to  a  number  of  men,  real  estate 
men  and  others,  and  they  all  thought  it  was  a  good  idea. 

Q.  Did  they  own  real  estate? 

A.  Yes,  they  own  real  estate.  I  myself  own  real  estate 
and  it  is  clear  of  incumbrance.  I  would  pay  more  under 
this  plan  than  I  do  pay  now.  I  do  say  a  man  who  is  worth  ten 
millions  of  dollars  and  does  not  pay  a  cent  to  the  State 
ought  to  pay  something,  and  the  State  would  be  the  gainer 
in  every  instance.  I  do  not  know  any  reason  why  the 
State  should  not  tax  real  estate,  and  as  I  showed  you,  the 
tax  if  it  was  done  in  that  way,  the  tax  in  Philadelphia  on 
men  whose  properties  are  mortgaged,  the  only  man  whose 
tax  would  be  increased  would  be  the  rich,  and  they  are  the 
men  you  want  to  pay  the  tax. 

By  Mr.  Moyer : 

Q.  Is  it  your  thought  that  real  estate  should  be  taxed 
both  for  State  and  local  purposes! 

A.  Yes. 

Q.  A  double  system  of  taxation? 

A.  Yes,  and  do  away  with  the  mortgage  tax,  and  by 
doing  that  the  taxpayer  does  not  pay  any  more  money. 
In  fact,  I  think  sixty  times  out  of  a  hundred  he  would  not 
pay  as  much,  taking  the  tax  at  $1.60. 

By  Mr.  Brown : 

Q.  Your  contention  is  that  the  land  owner  should  pay  the 
tax  to  the  State  and  county.  That  is  your  thought? 

A.  Yes.  You  see  in  this  way  we  would  raise  over  a 
million  dollars  for  the  City  annually,  a.  million  and  a  half 


568 

nearly,  and  also  for  the  State.  My  contention  on  account 
of  the  pension  was  that  I  could  see  where  I  could  collect 
three  million  dollars  for  the  State  and  without  increasing 
the  tax  on  the  necessaries  of  life.  It  has  been  proposed 
here  by  some  that  a  tax  should  be  put  on  corporations  who 
manufacture  gas  and  water,  and  a  bonus  on  coal.  We  all 
know  that  if  we  put  a  tax  oh  coal  for  five,  cents,  the  con- 
sumer would  pay  twenty-five  cents  more  a  ton,  and  if  we 
tax  water  or  gas  companies,  they  are  going  to  raise  the  rates 
and  the  consumer  will  pay  it.  In  this  case  the  rich  man 
who  owns  the  property  will  pay  the  tax. 

Q.  The  poor  man  also  ? 

A.  To-day  the  poor  man  pays  more. 

Q.  Tax  both  the  rich  and  the  poor  alike? 

A.  Here  is  a  man  owns  a  house  assessed  for  $2,000.  He 
is  paying  to-day  to  the  City  $30  taxes,  and  he  has  got  his 
mortgage  for  80  per  cent,  of  its  value,  and  he  is  paying 
the  State  $6.40  tax.  He  is  paying  $36.40.  Now,  under  my 
plan,  if  the  City  tax  would  be  ten  cents  more,  or  $1.50,  he 
would  pay  $32.00  to  the  City  and  he  would  pay  $3.00  to  the 
State,  or  $35  instead  of  $36.40,  and  the  man  who  owned 
the  $2,000  house  would  be  saved  $1 .40  a  year,  and  the  State 
of  Pennsylvania  and  Philadelphia  would  be  getting  a 
million  and  a  half  more  money.  On  the  personal  property, 
such  as  bonds  and  stocks,  etc.,  I  would  raise  the  tax  on 
those,  I  think,  because  if  you  raise  the  tax  on  those  there 
would  be  more  money  for  mortgages  and  you  get  the  mort- 
gages at  a  lower  rate. 

By  a  Member  of  the  Committee : 

Q.  What  would  the  citizens  of  the  State  of  Pennsylvania 
do  if  you  raised  the  rate  on  the  bonds? 

A.  He  would  sell  their  bonds  and  stocks  and  put  them 
on  his  mortgages,  where  it  would  be  less.  They  would  not 
have  to  pay  any  tax  on  mortgages.  You  know  the  man  who 
pays  on  his  bonds  is  the  rich  man,  and  he  is  the  man  who 
ought  to  pay  the  most  tax. 


569 

Q.  Wouldn't  your  plan  have  a  tendency  to  block  the 
State's  progress  and  the  upbuilding  of  any  credit  by  hav- 
ing a  system  of  taxation  such  as  you  suggest  on  real  es- 
tate? 

A.  I  don't  think  so. 

Q.  You  think  it  would  not? 

A.  I  don't  think  so. 

Q.  That  men  would  still  be  as  apt  to  invest  in  real  estate 
as  they  are  under  the  present  system  of  taxation? 

A.  I  think  they  would.  I  don't  see  any  reason  why  they 
would  not.  Another  thought  and  that  is  this,  if  a  man 
makes  an  improvement  that  is  a  benefit  to  the  City  or  in- 
creases the  value  of  the  surrounding  property,  he  should 
not  be  taxed  for  that  at  once;  he  should  have  some  credit. 
In  other  words,  for  the  addition  he  put  on  there  he  need 
not  pay  taxes  for  five  years. 

Q.  That  is  a  single  tax  idea? 

A.  Not  at  all.  What  I  mean  by  that  is  this:  I  have  a 
property  and  spend  $50,000  on  it  and  make  it  a  credit  to 
the  City  of  Philadelphia — His  Honor  wants  to  make  the 
City  beautiful — I  should  have  some  credit,  more  than  the 
man  who  lives  next  door  to  me  and  does  not  do  anything. 

Q.  Doesn  't  it  increase  the  value  of  your  property  1 

A.  Yes,  because  I  put  value  on  it. 

Q.  Thereby  increasing  the  value  of  your  property,  should 
you  not  pay  an  additional  tax  because  your  property  is 
worth  more  than  it  was  before  you  made  the  improvement  ? 

A.  T  don't  know  that  it  is  worth  any  more — it  might  not 
be  worth  any  more  than  the  amount  of  the  improvement  I 
put  on  it,  but  I  am  taxed  for  that  amount  of  improvement. 
It  keeps  people  from  improving  their  property. 

Q.  The  present  system  of  taxation? 

A.  Yes,  because  they  have  to  pay  for  that  improvement. 
Now,  I  want  to  say  something  about  appropriations  to  hos- 
pitals. I  am  a  trustee  of  a  hospital  in  the  City  of  Phila- 
delphia, and  I  believe  in  hospitals,  but  I  agree  also  with 
what  \Mr.  Strawbridge  stated  the  other  day  that  hospitals 


570 

ought  to  be  concentrated,  that  there  are  too  many.  I  know 
some  institutions  where  the  Board  of  Directors  could  not 
get  together,  and  they  do  not  agree,  one  part  goes  off  and 
starts  another  hospital,  and  they  haven't  any  money,  and 
they  ask  the  State  to  give  them  money  to  help  them  run  it. 
If  there  were  four  or  five  general  hospitals  like  the  Penn- 
sylvania or  the  Jefferson,  the  University  of  Pennsylvania, 
the  Hahnemann,  and  if  they  want  branch  hospitals,  we 
could  have  branches  of  the  Hahnemann  or  the  Pennsylva- 
nia, and  under  one  management.  But  now  we  have  a 
whole  lot  of  hospitals  gotten  up  by  different  people,  all 
doing  some  good.  I  hare  one  in  mind  now  that  has  bought 
a  property  in  one  of  our  best  streets  in  the  City  of  Phila- 
delphia ;  it  asked  for  a  contribution  to  a  building  fund  last 
year  which  was  stricken  out  by  the  Governor ;  instead  of 
going  where  they  could  buy  property  cheap  they  buy  it 
on  the  principal  street  in  Philadelphia;  they  paid  $40,000 
odd  dollars  for  the  land ;  they  have  got  $5,000  in  the  treas- 
ury; they  haven't  got  a  building  on  the  property.  They 
placed  upon  their  Advisory  Board  one  of  the  leading  mem- 
bers of  the  Senate  of  Pennsylvania,  with  the  .hopes  of  get- 
ting the  means  to  build,  I  suppose.  I  think  the  State  of 
Pennsylvania  should  not  furnish  money  for  building  hos- 
pitals, because  if  the  people  cannot  supply  the  buildings, 
the  State  should  not  do  it.  They  ought  to  furnish  so  much 
per  capita  for  people  in  those  hospitals  treated  there. 

By  a  Member  of  the  Committee : 

Q.  Unless  the  State  would  get  title  to  the  property? 

A.  Unless  the  State  would  get  title  to  the  property,  yes. 

Q.  Under  those  conditions  you  would  not  think  so  much 
of  it? 

A.  I  do  not  think  there  ought  to  be  so  many  hospitals. 
We  have  got  five  or  six  on  Broad  street,  some  of  them  very 
close  together. 

Q.  You  are  in  favor  of  consolidation? 

A.  I  am  in  favor  of  consolidation.  I  think  they  would 
do  better  work  under  one  management. 


571 


•MR.  L.  G.  FOUSE,  President  of  the  Fidelity  Mutual  Life 

Insurance  Company  and  representing  the  Association 

of  Life  Insurance  Presidents,  called. 

Mr.  Fouse :  In  this  dual  capacity  I  am  trying  to  take  a 
broad  view  of  the  subject,  and  I  desire  to  be  understood 
at  the  outset  that  we  are  not  here  to  ask  immunity  from 
taxation,  but  we  are  here  to  ask  a  redistribution,  and  more 
on  the  line  of  fairness  and  equity.  If  any  business  is 
entitled  to  exemption,  I  think  we  might  claim  that  the 
business  which  reduces  taxation  for  the  maintenance  of  a 
population  and  which  encourages  thrift  to  uplift,  is,  of 
course,  the  business  that  ought  to  be  exempt,  but  in 
view  of  the  fact  that  the  State  has  to  be  supported  and 
something  has  to  be  done,  we  are  perfectly  willing  to 
concede  that  the  life  insurance  companies  should  make 
their  fair  and  proper  contribution  to  the  support  of  the 
State,  but  when  enterprises  are  considered  by  the  State 
as  a  proper  subject  of  exemption,  such  as  a  building  and 
loan  and  such  as  savings  banks,  which  is  all  right — we 
have  no  quarrel  with  it,  if  the  State  can  do  it,  but  we  do 
say  this,  that  if  the  individual  who  deposits  his  money  and 
can  withdraw  it  at  will  for  his  own  benefit  can  be  exempt 
from  taxation,  that  the  man  who  conies  forward  frankly 
and  absolutely  agrees  to  put  aside  a  sum  of  money  merely 
in  order  that  his  wife  and  his  children,  when  the  lamp 
of  life  goes  out,  shall  not  become  a  charge  upon  the  public, 
we  say  that  those  people  are  just  as  much  entitled  to 
consideration  as  the  man  who  makes  a  deposit  for  selfish 
purposes  and  motives.  I  will  not  take  up  your  time,  but 
it. might  be  of  some  interest  just  merely  to  refer  to  it,  to 
history  in  this  connection.  About  the  year  1500  it  was  con- 
sidered a  high  crime  to  be  a  pauper — ears  cropped,  im- 
prisonment and  eventually  death  ensued.  That  resulted  in 
England  in  the  investigation  on  the  line  of  encouraging 


572 

self-dependence  and  thrift,  so  as  to  do  away  with  pauper- 
ism as  much  as  possible,  but  they  happened  to  strike  the 
wrong  lead.  They  started  the  poor  rate  proposition,  so 
that  parishes  were  taxed  for  the  maintenance  of  the  poor. 
This  became  such  a  burdensome  thing  that  finally 
Parliament  took  it  up  in  the  early  part  of  the  Nineteenth 
Century  and  made  an  investigation  covering  several 
years,  when  expert  testimony  was  produced,  and  the  con- 
clusion reached — Sec.  821 — that  life  insurance,  friendly 
societies  and  kindred  organizations  operated  to  reduce  the 
poor  rate,  a  burden  upon  the  public,  to  the  extent  of 
millions  and  millions  per  annum.  What  was  done  as  a 
result  of  that?  They  simply  turned  around  and  enacted 
laws  to  encourage  such  organizations,  ti>  help  them  to 
exist,  and  the  income  tax  which  prevails  in  Britain  had 
this  modification  made :  that  if  a  man  takes  one-sixth  of 
his  income  and  invests  it  in  life  insurance,  that  that  one- 
sixth  shall  be  exempt  from  the  income  tax.  That  was 
done  because  of  the  uplift,  of  the  help  that  it  was  to  the 
Nation  in  doing  away  with  pauperism  and  dependence, 
because  it  made  it,  therefore,  to  some  extent,  an  indepen- 
dent people.  There  was  a  time,  as  we  are  told,  in  history 
when  the  windows  were  taxed  because  of  admitting  light 
and  air.  That  belonged  to  the  dark  ages,  and  if  there 
is  anything  that  belongs  to  the  dark  ages  it  is  taxing  that 
which  helps  people  to  become  thrifty  ana  independent, 
and  that  is  what  life  insurance  is  assumed  to  do,  and  that 
is  what  it  expects  to  do.  The  insurance  reform  of  recent 
years  has  awakened  public  conscience  to  a  very  great 
extent.  I  think  that  people  are  now  beginning  to  know 
that  they  pay  the  tax,  that  the  companies  are  not  some- 
thing entirely  independent  of  the  people,  that  there  could 
be  no  life  insurance  at  all  unless  the  people  paid 
premiums,  and  the  tax  comes  out  of  the  premiums,  and 
therefore  they  have  got  to  pay  it.  That  is  primarily  a  very 
important  consideration  for  everybody  to  give  due  and 
proper  thought  to  that  subject,  to  appreciate  the  fact  that 


573 

the  individual  policy  holder  has  to  pay  the  tax,  and  those 
who  do  not  invest  their  money  in  that  line  are  exempt 
from  taxation,  because  they  have  no  interest  in  it. 

Now,  in  that  connection,  Pennsylvania  has  a  population 
of  over  seven  millions.  The  tax  imposed  on  life  insurance 
companies  exceeds  one  million  dollars  a  year.  It  is  the 
amount  of  money  that  goes  into  the  State  Treasury,  from 
whom?  From  the  whole  people?  Oh,  no.  Only  from 
those  who  carry  policies  of  life  insurance  in  a  certain 
class  of  companies ;  less  than  a  half  million  of  people  pay 
three-fourths  of  the  one  million  tax,  and  the  other  is  paid 
by  a  class  known  as  the  industrials,  who  pay  the  other 
quarter,  or  $250,000,  making  an  aggregate  of  over  a 
million. 

Now,  in  addition  to  that  fact,  which  shows  that  only 
a  very  small  proportion  of  the  population  pays  that  life 
insurance  tax,  comes  a  further  discrimination  which  is 
most  unfortunate  and  does  not  help  the  situation  at  all. 
One  thing  is  a  discrimination  against  mutual  companies, 
A  mutual  company  is  required  to  pay  a  tax  of  four  mills 
on  its  investment.  If  it  is  a  stock  company  it  simply  pays 
a  tax  of  five  mills  on  the  value  of  its  capital  stock,  and 
the  capital  stock  may  be  anywhere  from  a  hundred 
thousand  dollars  to  three  hundred  or  five  hundred  thou- 
sand dollars,  but  it  is  the  market  value  of  a  stock  that  is 
taxed.  Now,  the  result  is :  take  a  company  like  the  Penn 
Mutual;  they  have  returned  for  taxation  personal  prop- 
erty to  the  amount  of  $60,069,475,  or,  in  round  figures, 
$240,000.  Now,  suppose  it  was  a  stock  company  instead 
of  a  mutual  company,  what  would  they  pay?  Five  mills 
on  the  thousand  dollars  of  stock,  and  it  would  be  a  mere 
picayune,  instead  of  the  $240,000.  That  is  a  discrimina- 
tion that  is  most  unfair  and  should  be  corrected,  if  that 
system  is  to  be  continued,  the  four  mills  tax,  by  taking  the 
mutual  companies  less  the  reserve  liability  accumulation, 
so  that  they  would  be  taxed  more  nearly  akin  to  the 
capital  of  stock  companies.  That  is  a  mere  suggestion, 


574 

but  I  should  like  to  see  that  entire  portion  of  the  tax 
wiped  out  and  another  matter  substituted,  as  I  will  tell 
you  later. 

Now,  another  feature  that  is  a  discrimination  is  that  a 
large  proportion  of  those  doing  the  business  of  life  insur- 
ance under  various  titles  are  exempt  from  any  tax.  That 
does  not  seem  right  to  me.  I  do  say  that  if  it  is  proper 
to  tax  one  class  of  companies  it  ought  to  be  proper  to  tax 
another  class  of  companies  doing  practically  the  same 
business.  Perhaps  not  in  the  same  way,  but  meeting  with 
the  same  result  in  the  end. 

Now,  there  is  another  discrimination,  which  is,  to  my 
mind,  inexcusable,  and,  according  to  the  decision  of  the 
Supreme  Court  of  the  United  States  a  few  days  ago,  it 
is  a  question  whether  it  is  legal  and  proper,  and  that  is 
the  discrimination  between  the  domestic  or  home  com- 
panies and  the  companies  of  other  States.  In  the  case  of 
Alabama  it  has  been  held  that  the  discrimination  was  not 
only  unfair  but  unconstitutional.  We  tax  Pennsylvania 
companies  eight  mills.  That  is  what  Pennsylvania  com- 
panies are  supposed  to  pay. 

By  a  Member  of  the  Committee: 
Q.  On  the  gross  receipts? 
A.  Eight  mills  on  the  premium. 

By  Mr.  Brown: 

Q.  And  if  they  have  capital  stock? 

A.  That  is  an  additional  tax,  that  is  a  personal  property 
tax,  the  capital  stock  proposition,  but  I  am  now  addressing 
myself  to  another  classification  of  tax,  premium  tax.  Get 
that  separate  in  your  minds.  Now,  Pennsylvania  imposes 
eight  mills,  but  if  a  company  is  domiciled  in  some  other 
S1ate  and  comes  in  here  to  do  business,  there  is  2  per 
cent,  placed  on  them,  so  that  the  companies  of  other  States 
are  discriminated  against  to  that  extent. 


575 

By  Mr.  Moyer: 

Q.  That  is  done,  I  presume,  to  protect  home  companies? 

A.  Well,  it  don't  protect  them,  as  I  will  show  you  later. 
Now,  because  of  the  retaliatory  provisions,  and  this  is  not 
the  age  in  which  a  retaliatory  spirit  should  be  encouraged 
at  all,  under  the  retaliatory  provisions  of  the  States  the 
result  is  that  a  Pennsylvania  company  which  leaves  the 
border  of  its  own  State  has  got  to  pay  to  all  other  States 
just  the  kind  of  tax  that  we  impose  in  Pennsylvania  on  the 
companies  of  those  States,  so  that  we  are.  individually 
paying  a  great  deal  more  tax  to  the  other  States  than  we 
are  paying  to  Pennsylvania.  As  the  number  of  companies 
in  Pennsylvania  is  increasing  all  the  while,  it  is  a  matter 
of  considerable  importance,  aside  from  the  constitutional 
question  involved,  as  to  whether  it  is  right  and  proper 
to  have  such  a  discrimination  between  the  home  companies 
and  the  companies  emanating  from  other  States.  My 
own  opinion  is  that  that  is  not  good  business  and  it  is  not 
justice,  and  I  say  that  as  a  Pennsylvaiiian  interested  in 
my  home  State  more  than  I  am  anywhere  else,  but  as  I 
stated  before,  I  am  here  in  a  dual  capacity,  not  only 
representing  the  company  with  which  I  am  connected, 
but  also  representing  the  other  life  insurance  companies 
in  the  Life  Insurance  Presidents'  Association. 

By  Mr.  Brown: 

Q.  What  State  has,  in  your  opinion,  the  best  law  on  this 
subject? 

A.  Well,  we  have  in  our  discussions  sort  of  agreed  that 
New  York,  since  the  amendments  have  been  made  and 
changes  made,  comes  as  near  right,  because  there  it  is 
1  per  cent.,  and  it  is  1  per  cent,  to  all.  They  are  all 
treated  alike,  no  matter  where  you  are  from,  it  is  1  per 
cent.,  a  premium  tax  of  1  per  cent. 

Q.  What  was  the  cause  of  this  change  in  our  law;  who 
is  responsible  for  that  ? 

A.  I  do  not  know. 


576 

Q.  Is  it  not  you  insurance  people? 

A.  Oh,  no ;  insurance  people  have  had  very  little  to  do 
with  the  revenue  acts,  and  in  former  times  it  kept  them 
busy  to  know  when  the  revenue  laws  were  being  consid- 
ered, and  so  far  as  I  am  concerned — in  fact,  I  did  not 
know  it  until  after  it  had  become  a  fact — and  it  has  been 
this  way  for  years,  goes  back  some  twenty  years  or  more, 
and  there  has  been  no  change.  New  York  formerly  did 
not  have  any  tax  at  all  on  premiums.  They  had  other 
devices  for  taxing  insurance  companies  in  a  moderate 
way,  but  in  recent  years  they  have  changed  that  and  have 
adopted  the  1  per  cent,  premium  tax  in  lieu  of  all  other 
forms  of  tax,  and  it  is  agreed  between  the  members  of  our 
Association  that  that  is  a  fair,  equitable  basis  of  taxation, 
because  the  State  is  burdened,  of  course,  with  the  expense 
of  supervision,  which  is  highly  proper  and  it  is  highly 
proper  that  the  contribution  should  be  made  towards  it, 
but  supervision  will  represent  perhaps  less  than  a  hundred 
thousand  dollars,  while  in  Pennsylvania  the  companies 
pay  over  a  million  dollars,  so  that  there  is  a  profit  there 
to  the  State  of  over  $900,000,  and  it  is  converting  life 
insurance,  which  is  supposed  to  promote  independence, 
into  a  revenue  agency  for  the  support  of  the  State,  and 
I  do  not  believe  that  was  ever  intended  to  be,  and  it 
certainly  is  not  good  public  policy. 

By  Mr.  Moyer: 

Q.  What,  in  your  judgment,  would  be  the  loss  of 
revenue  to  the  Commonwealth  were  a  law  enacted  reduc- 
ing the  percentage? 

A.  I  do  not  believe  that  it  would  reduce  the  revenue, 
if  you  take  all  classes  of  companies  and  apply  that  1 
per  cent,  to  all,  which  I  do  not  think  would  be  seriously 
objected  to,  because  the  large  number  of  companies  that 
now  pay  nothing  would  be  required  to  pay  the  one  per 
cent.,  and  it  would  be  applied  to  all  fraternal  organiza- 
tions just  the  same,  apply  it  to  all.  I  do  not  think  it 


577 

would  reduce  the  revenue  to  the  State  but  very  little,  if 
at  all.  There  is  no  way  of  exactly  computing  that,  but 
that  is  my  best  judgment. 

Q.  But  you  made  a  statement  a  moment  ago  that  the 
State  was  exacting  from  the  insurance  companies  revenue 
approximating  $900,000  that  was  a  revenue  unjustly 
raised,  as  you  seemed  to  think? 

A.  Yes,  as  I  view  it,  of  course 

Q.  What  would  become  of  that  amount  of  money  if  a 
new  law  were  to  go  into  effect  ? 
A.  It  would  go  into  the  State  Treasury,  as  it  does  now. 

Q.  As  you  say  under  the  present  law  we  are  exacting 
from  the  policy  holders  a  sum  aggregating,  for  ex- 
ample  

A.  Over  a  million  dollars. 

Q.  And  the  State  turning  this  law  into  a  revenue  raiser, 

as  you  term  it 

A.  Yes. 

Q.  I  say  if  a  new  law,  such  as  you  propose,  on  the  1 
per  cent,  basis  were  to  go  into  effect,  would  the  revenue 
be  approximately  the  same  as  at  present? 

A.  I  have  stated  that  it  would  be,  if  you  make  it  apply 
to  all  companies. 

Q.  Fraternal  organizations  as  well? 

A.  Everything;  not  discriminate  between  them. 

Q.  Do  you  think  that  could  be  easily  accomplished? 

A.  That  is  another  question.  That  is  up  to  you  gentle- 
men. 

Q.  Do  you  recall  a  fraternal  organization  measure  that 
was  before  the  Senate  and  House  at  the  last  session? 

A.  I  believe  they  will  oppose  any  legislation  that 
imposes  a  burden  upon  them.  So  far  as  that  is  concerned, 
I  think  that  goes  without  saying,  but  when  you  consider 
a  nominal  premium  tax  and  the  method  of  doing  business 
that  they  pursue,  it  will  be  so  small  comparatively  that 
30 


578 

th^y  will  not  look  upon  it  as  they  would  the  2  per 
cent,  which  now  obtains  and  which  has  to  be  paid  by 
all  companies  of  other  States  in  Pennsylvania,  and  we 
have  to  pay  outside  of  Pennsylvania  because  Pennsylvania 
imposes  that  upon  the  other  companies. 

By  Mr.   Brown: 

Q.  Is  this  State  tax  the  highest  rate? 

A.  There  are  a  few  States  that  exact  two  and  a  half. 

Q.  On  foreign  or  domestic  companies? 

A.  All  alike.  This  discrimination  as  between  the  foreign 
and  homes  companies  is  a  very  rare  proposition.  I  cannot 
just  at  this  minute  tell  you  what  Sates  they  are,  but  I 
do  not  think  there  are  more  than  three  in  the  entire  forty- 
six  States. 

By   Mr.   Moyer: 

Q.  There  was  an  attempt  in  the  last  Legislature  to 
remedy  this,  was  there  not? 

A.  I  think  the  last  Legislature  had  a  bill  before  it, 
\\  hie])  was  supposed  to  correct  very  much  of  the  crude 
legislation  in  Pennsylvania,  but  it  failed,  out  whether  it 
touched  the  revenue,  which  is  a  different  law  in  the  State 
and  not  a  part  of  the  insurance  law,  is  a  matter  I  am 
not  prepared  to  answer. 

Q  I  think  it  did  have  reference,  among  the  other  things, 
to  the  legislative  clause  you  speak  of  here,  and  that  met 
with  a  great  deal  of  opposition  in  the  House. 

A.  It  did. 

Q.  You  are  familiar  with,  the  vote  on  the  bill,  are  you 
not? 

A.  Yes. 

Q.  And  the  principal  ground  of  opposition  seemed  to 
be  that  it  would  embody,  as  you  state,  fraternal  organi- 
zations who  pay  a  sick  benefit.  Now,  the  life  insurance 
companies  do  not  presume  to  pay  any  sick  benefits,  and 
fraternal  organizations  do,  which  would  affect  quite  a 
few  families  throughout  the  State. 


679 

A.  They  do  not  all  do  it. 

Q.  Embracing  them  all  as  one  class  of  organizations. 

A.  I  think  I  should  discriminate  between  the  life  insur- 
ance, fraternal  orders  and  the  sick  benefit  societies  myself. 

Q.  For  instance,  the  Eoyal  Arcanum  and  Modern 
Woodmen,  do  they  have  a  sick  benefit  feature  in  their 
policies? 

A.  They  have  it  in  the  lodges.  For  instance,  a  lodge 
can  give  sick  benefits,  but  it  is  not  a  part  of  the  policy 
contract,  I  do  not  think. 

Q.  They  have  a  death  benefit  feature,  have  they  not? 
A.  Yes,  sir. 

Q.  That  is  their  strong  asset? 

A.  That  is  their  principal  business,  but  the  lodge  can 
include  or  exclude  the  sick  benefits,  just  as  they  like.  It 
is  not  an  essential  part  of  the  functions  of  the  order. 

Q.  But  if  they  have  such  a  feature  embodied  in  their 
policy,  Mr.  Fouse,  how  could  you  reach  them  for  the 
purpose  of  taxation  as  you  have  just  stated  a  moment 
ago? 

A  WelJ,  in  an  off-hand  manner,  I  would  say  this, 
that  a  1  per  cent,  of  the  premiums  that  they  collect  is 
almost  infinitesimal,  it  is  so  small  that  I  do  not  believe  it 
would  be  necessary  to  discriminate,  but  if  I  did  discrim- 
inate I  would  make  a  provision  exempting  the  sick  benefit 
feature  of  any  order  from  the  taxation,  because  it  is  only 
an  agency  that  can  be  used  or  not  as  they  see  fit,  but 
sick  benefits  is  in  itself  a  thing  that  ought  not  to  be  taxed, 
I  agree. 

Q.  I  bring  this  out  at  this  time  because  of  the  very 
serious  opposition  that  this  proposed  piece  of  legislation 
met  with  in  both  the  Senate  and  House,  and  simply,  I 
take  it,  on  account  of  the  fact  that  it  would  apply  to 
many  fraternal  organizations  who  now  have  embodied  in 
their  policies  a  sick  benefit  feature. 

A.  Yes. 


580 

Q.  Now,  according-  to  your  argument,  for  instance,  the 
Modern  Woodmen  and  Heptasophs  and  Eoyal  Arcanum, 
if  they  have  a  sick  benefit  feature  in  their  policies,  it 
would  be  exempt  from  taxation  and,  of  course,  the  State 
of  Pennsylvania  would  lose  revenue  through  the  proposi- 
tion. 

A.  I  would  only  exempt  that  one  branch  of  it,  the  sick 
benefit  branch. 

Q.  Then  they  have  separate  policies? 

A.  Yes,  I  know  the  Royal  Arcanum  have,  because  I 
have  been  a  member  of  that  for  some  time.  I  know  they 
have  it  as  a  matter  belonging  to  the  lodge  itself.  That 
is,  you  can  take  it  or  not,  as  you  like. 

Q.  That  is  optional? 

A.  Yes,  and  because  of  its  being  optional  it  could  be 
set  aside,  and  only  the  death  benefit  part  of  it  be  subject 
to  the  insurance  tax  on  1  per  cent.  With  those 
features  that  I  have  given,  which  I  will  just  hurriedly 
run  over  again,  a  discrimination  between  mutual  and 
stock  companies,  it  does  not  strike  me  as  proper  and 
right  and  that  that  should  be  corrected ;  that  a  discrimina- 
tion between  organized  companies  of  other  States  is  not 
right,  and  that  should  be  corrected;  that  the  discrimina- 
tion in  favor  of  the  various  fraternal  insurance  orders,  that 
is  not  right,  and  that  by  taking  them  all  and  placing 
them  on  a  proper  basis  and  doing  equity  and  justice  it 
would  not  be  necessary  to  make  it  so  burdensome  on  a 
few,  because  it  is  a  distribution  among  many.  Of  course, 
it  is  not  an  easy  problem. 

By  Mr.  Brown: 

Q.  If  it  is  not  too  much  trouble  or  would  necessitate  too 
much  labor,  could  you  have  some  memoranda  made, 
showing  what  the  experience  of  other  States  has  been? 

A.  Yes. 

Q.  And  submit  it  to  the  Committee? 

A.  I  can  and  would  be  glad  to  do  it. 


581 


MR.  WILSON  H.  BROWN,  representing  the  Manu- 
facturers '  Club  of  Philadelphia,  called. 

Mr.  Brown :  Mr.  Chairman  and  Gentlemen :  I  want  to 
begin  by  saying  that  the  manufacturers,  as  represented 
by  the  Manufacturers'  Club,  are  satisfied  with  the  taxes 
that  are  imposed  upon  them  at  the  present  time.  I  see 
that  that  occasions  a  little  ripple  of  laughter  from  my 
friend,  David  Dallam.  We  are  satisfied,  because  we  feel 
that  we  are  entitled  to  some  credit  for  having  made  the 
business  of  Mr.  Dallam  and  the  business  of  the  City  of 
Philadelphia  and  development  of  the  City  of  Philadelphia 
what  it  is.  I  know  it  has  been  an  old  story  that  without 
the  manufacturers  the  City  of  Philadelphia  would  not  be 
as  great  as  she  is.  That  has  been  told  and  told  so  often 
that  some  people  begin  to  look  upon  it  as  a  joke,  but  if 
you  gentlemen  will  go  back  into  the  history  of  Philadelphia 
and  pick  that  out  and  compare  the  development  of  the  City 
and  the  development  of  the  manufacturers,  you  will  find 
they  run  right  on  a  parallel.  The  State  of  Pennsylvania 
has  within  her  limits  to-day  manufacturing  corporations 
with  a  total  capitalization  of  $1,955,000,000.  That  capital- 
ization has  represented  in  increase  of  35  per  cent, 
in  the  past  five  years,  a  greater  increase  as  shown  by  the 
census  of  1900  than  any  other  State  in  the  Union.  Why 
is  this?  Years  ago  the  State  of  Pennsylvania  realized 
the  necessity  of  developing  her  natural  resources,  realized 
that  she  had  natural  resources  which  manufacturing 
alone  could  develop  and  which  would  eventually  make  the 
State  great,  and  she  passed  laws  exempting  manufactu- 
rers from  taxation.  The  only  tax  that  was  imposed  upon  a 
manufacturing  corporation  is  a  tax  upon  its  capital  stock. 
Following  our  example  you  will  find  throughout  the  coun- 
try, if  you  travel  this  great  country  as  I  have,  along 
the  railroads  you  will  find  the  communities  advertising 


582 

free  factory  sites.  Why  ?  Simply  to  get  the  manufacturers 
there  to  develop  their  country,  and  it  is  that  policy  that 
has  caused  the  great  progress  of  this  country.  The  manu- 
facturers of  the  State  produce  annually  about  twice  as 
much  as  the  total  agricultural  product  and  the  products 
of  our  mines.  In  round  figures  the  census  of  1905  says 
that  in  the  State  of  Pennsylvania  the  value  of  the  products 
of  manufacturing  was  $1,955,000,000.  For  the  same  period 
the  total  product  of  farms  was  $431,000,000,  and  the  total 
mineral  product  was  $657,000,000.  I  realize  that  the  State 
of  Pennsylvania  either  through^  insufficient  taxation  or 
unwise  expenditure  of  the  public  funds  has  to  meet  the 
question  of  a  probable  deficiency,  and  yet  I  say  to  you 
gentlemen  that  the  manufacturers,  as  represented  by  the 
Manufacturers'  Club,  are  willing  to  stand  any  just  share 
of  their  burden  of  taxation  that  may  be  determined.  They 
feel  to-day  that  they  are  in  a  position,  facing,  as  they  do, 
the  Federal  corporation  tax,  that  they  would  be  at  a 
disadvantage  if  the  tax  upon  manufacturing  corporations 
was  increased.  Some  of  you  gentlemen  know  that  the 
bills  introduced  in  the  State  Legislature  last  year  were 
opposed  by  the  manufacturing  interests  of  the  State  very 
largely,  and  reasons  were  then  given  before  the  Judiciary 
Committee  as  to  why  they  should  not  be  increased.  I 
emphatically  say  to  you  gentlemen  that  the  manufacturers 
feel  that  any  increase  of  taxation  on  manufacturers  or 
any  taxation  placed  upon  manufacturing  in  the  State 
would  be  placing  the  State  of  Pennsylvania  in  a  point 
of  retroaction;  that  the  Manufacturers'  Club  feel  that 
if  you  commence  to  tax  your  manufacturers  you  will  take 
the  first  step  towards  stopping  the  development  of  the 
State.  You  will  be  driving  manufacturers  to  other  States 
in  the  vicinity  where  they  can  have  better  conditions  and 
be  freer  of  taxation.  The  Manufacturers'  Club  of  Phila- 
delphia, whom  I  represent,  have  had  no  formal  meeting 
to  consider  this  subject,  but  a  number  of  the  gentlemen 
who  represent  the  Club  on  its  Legislative  Committee  have 


583 

met  and  requested  that  I  place  before  you  as  the  opinion 
of  the  Manufacturers'  Club  just  what  I  have  stated  here. 

In  the  course  of  conversation,  as  to  meeting  the  condi- 
tion which  you  gentlemen  have  to  meet,  raising  taxation, 
and  the  various  opinions  expressed,  I  recall  very  distinctly 
that  one  gentleman  said,  "Why  don't  you  tax  automobiles? 
Why  don't  they  tax  automobiles,  they  don't  seem  to  pay 
any  tax?"  I  said,  "I  don't  believe  the  Manufacturers7 
Club  should  go  there  and  express  themselves  as  favoring 
the  taxing  of  any  specific  thing."  "Well,"  he  says,  "I 
own  three  of  them  and  I  will  pay  and  I  think  it  would 
be  only  right  to  pay  one  dollar  per  horse  power  per  year 
for  owning  those  automobiles."  That  is  only  the  personal 
opinion  of  one  member,  and  I  am  not  authorized  here  to 
say  or  to  suggest  to  you  any  method  of  raising  the  revenue 
of  the  State. 

By  Mr.  Brown : 

Q.  Assuming  that  the  other  taxables  are  being  suffici- 
ently taxed  to-day  and  there  is  need  for  more  revenue 
for  the  purpose  of  our  State  institutions,  erecting  State 
institutions  for  the  insane  and  criminals  and  helpless  poor 
and  all  that,  or  for  State  highways  and  other  public  pur- 
poses, what  is  your  thought  on  that?  Do  you  think  these 
other  taxables  should  have  their  burdens  increased,  or 
that  the  manufacturers  should  aid  in  that?  Now,  I  am 
simply  asking  this  because  this  Committee  is  in  receipt  of 
dozens  and  dozens  of  letters  suggesting  the  taxing  of 
manufacturing  corporations  and  giving  the  reasons  of  the 
writers  why  it  should  be  done.  Have  your  folks  given 
that  any  thought? 

A.  We  have  simply  dealt  with  the  question  generally. 
There  is  not  one  of  them  that  is  in  favor  of  any  tax  being 
placed  upon  manufacturers. 

Q.  And  there  is  not  one  of  them  that  would  shirk  his 
obligation  to  his  State  for  the  support  of  her  institutions  ? 
A.  No. 


584 

i 

Q.  Now,  do  you  not  think  there  ought  to  be  some  thought 
given  to  the  general  subject,  because  every  one  on  whom 
the  tax  is  levied  is  objecting  to  it? 

A.  Surely. 

Q.  Do  you  not  think  there  should  be  some  thought  given 
as  to  how  a  general  plan  can  be  worked  out,  just  some 
general  plan  by  which  general  conditions  can  be  improved  ? 
Because  as  I  understand  you,  you  represent  a  very  large 
portion  of  the  life  of  the  Commonwealth? 

A.  I  am  speaking  for  the  Manufacturers'  Club,  which 
does  not  include  all  the  manufacturing  interests  of  the 
City. 

Q.  You  represent  two  billions  of  property  to-day  ? 

A.  Yes.  Remember  that  the  manufacturers  have  large 
investments  upon  which  they  are  paying  local  tax,  their 
factories,  they  are  paying  the  local  tax  on  that. 

Q.  We  have  exempted  their  machines  and  everything 
except  the  shell  of  the  building? 

A.  The  building  and  the  ground  is  the  only  thing  that 
is  taxed. 

Q.  Have  you  looked  into  it  in  other  States,  what  otner 
States  are  doing  in  this  direction?  I  have.  There  are  very 
few  States  in  the  United  States  that  are  exempting  manu- 
facturing corporations? 

A.  Very  few  of  them.  In  New  York  they  have  a  one 
and  one-half  mill  tax  on  their  product,  I  believe.  There 
are  other  States  that  have  only  the  capital  tax.  New  Jer- 
sey, one-tenth  of  1  per  cent.,  New  York  one-fifth. 

Q.  Is  it  not  a  fact  that  Pennsylvania  is  the  only  State 
in  the  Union  to-day  that  practically  exempts  them? 

A.  I  believe  she  is.  The  solution  of  that  question  you 
put  to  me,  I  think,  would  be  better  solved,  rather  than 
placing  upon  the  manufacturers  a  tax  such  as  was  con- 
templated last  year,  which  was  what  you  may  call  a  mixed 
tax  made  up  of  a  tax  upon  all  their  liabilities — that  is,  a 
tax  on  all  moneys  they  owed,  including  mortgages,  an 


585 

; 

annual  tax  on  that,  and  I  think  a  fair  tax  would  be  a 
yearly  capital  tax.    That  would  be  the  fairest  way. 

By  Mr.  Moyer: 
Q.  Capital  stock  tax? 
A.  Capital  stock  tax. 

By  a  Member  of  the  Committee  : 

Q.  Do  you  think  a  tax  of  one  mill  would  drive  the  manu- 
facturers to  other  States? 

A.  I  do  not.  In  speaking  for  the  Manufacturers'  Club, 
I  do  not  know  as  we  could  carry  the  endorsement  of  that 
unanimously,  but  I  think  we  would  have  a  larger  number 
of  our  manufacturers,  if  that  was  decided  to  be  their  share 
of  the  burden,  who  would  not  oppose  it. 

Q.  That  would  make  it  according  to  that  approximately 
nineteen  million  dollars? 

A.  Yes.  The  tax  bill  last  year,  you  may  recall,  involved 
practically  about  10  per  cent,  tax  upon  the  capital  stock 
per  annum. 

By  Mr.  Brown : 

Q.  The  same  as  you  tax  a  distilling  company  ten  mills? 

A.  I  am  not  mixed  on  it.  You  had  three  or  four  items 
taxed.  You  duplicated  the  tax.  It  was  duplicated  three 
or  four  times  over. 

Q.  There  were  a  number  of  bills  presented  to  the  Legis- 
lature ? 

A.  You  had  one  bill  there. 

By  Mr.  Moyer: 

Q.  "Whose  bill  was  that,  do  you  recall? 

A.  I  do  not  recall  it.    I  have  it  over  at  my  office. 

By  Mr.  Brown : 

Q.  Have  your  folks  made  any  effort  to  gather  the  senti- 
ments of  the  State  on  the  subject,  outside  of  your  own  in- 
dividual efforts? 

A.  No,  we  have  not. 
31 


586 

By  Mr.  Moyer: 

Q.  What,  in  your  judgment,  should  be  the  basis  of  cor- 
porate existence?  For  instance,  in  granting  charters  to 
manufacturing  corporations  for  profit?  I  want  to  make 
myself  clear.  Of  all  the  letters  that  have  been  sent  out 
by  this  Commission,  there  has  one  come  to  me  recently 
that  contained  this  thought,  that  the  basis  of  corporate 
existence  should  be  cheapness  of  output  when  delivered  to 
the  consumer.  What  do  you  think  of  that? 

A.  That  would  be  the  basis  of  their  corporate  exist- 
ence? 

Q.  Qualification  to  incorporate  by  the  State  of  Penn- 
sylvania ? 

A.  Well,  that  is  such  an  extreme  idea  that  I  have  not 
given  it  any  thought.  I  would  not  endorse  it  at  the  be- 
ginning. How  would  you  determine  it?  Who  would  de- 
termine it? 

Q.  I  merely  wanted  to  throw  it  out  for  what  it  was 
worth. 

A.  I  never  heard  of  it  before. 

Q.  And  then  he  goes  on  to  say  that  the  cost — if  the 
corporation  management  shall  increase  ever  so  little  the 
cost  to  the  consumer,  &  receiver  should  be  appointed  and 
the  corporation  dissolved,  and  in  that  way  you  would  solve 
the  question  of  high  living? 

A.  Well,  I  can  say  frankly  I  don't  believe  that  idea 
would  be  endorsed  by  the  Manufacturers'  Club. 

Q.  As  their  representative,  I  wanted  you  to  express  an 
opinion  on  that. 

Mr.  Dallam :  May  I  ask  Mr.  Brown  a  question  ? 

Mr.  Moyer:  Certainly. 

Mr.  Dallam:  Prof.  Thompson  asked  me  last  night  why 
New  York,  with  all  its  tax  on  manufacturers,  was  now  the 
largest  manufacturing  city  in  the  country,  and  it  far  out- 
stripped us. 

Mr.  Brown :  Do  you  ask  me  that  question? 


587 

Mr.  Dallam:  Yes. 

Mr.  Brown :  In  answer  to  that,  according  to  the  statistics 
what  makes  her  the  largest  manufacturing  city,  simply 
a  duplication  of  manufacturers  from  Philadelphia  and 
other  parts  of  the  country. 

Mr.  Dallam :  They  claim  not. 

Mr.  Brown :  And  they  take  credit  for  the  whole  of  that 
which  is  largely  manufactured  here,  or  in  fact,  in  some 
other  part  of  the  country  and  sent  there,  because  she  is 
a  great  distributing  center. 

Mr.  Dallam :  That  was  the  accusation  before  the  census 
of  1910. 

Mr.  Brown:  That  is  a  correct  statement,  as  I  gather  it 
You  take  New  York  City,  we  will  send  goods  over  there 
worth  $1.50  from  Philadelphia.  Some  little  fellow  has 
a  shop  where  he  runs  thirty  or  forty  small  sewing  ma- 
chines. They  manufacture  that  cloth  up  and  he  adds  to 
that  cloth  probably  in  his  labor  value  to  the  amount  of 
fifteen  or  twenty  cents,  per  yard,  and  he  puts  that  out 
as  his  product.  That  is  a  duplication.  That  is  what  makes 
New  York  a  great  manufacturing  State.  She  does  not 
compare  with  Pennsylvania  in  any  particular  in  the  basic 
manufacture  where  the  true  value  is  put  into  the  goods. 
There  is  where  it  comes  from,  Pennsylvania. 

By  Mr.  Brown : 

Q.  I  assume  the  subject  has  been  considered  from  the 
viewpoint  of  what  is  beneficial  to  Pennsylvania  ? 

A.  Yes,  sir. 

Q.  Entirely  independent  of  the  one  of  selfishness  ? 

A.  That  is  the  viewpoint  we  take. 

Q.  The  concensus  of  opinion  of  manufacturers,  as  I 
understand  you,  is  that  the  subject  should  be  let  alone 
insofar  as  it  applies  to  manufacturers? 

A.  Yes,  sir,  because  it  is  a  broad,  deep  subject,  and  when 
you  go  back  to  the  bottom  of  the  thing  you  will  find 
out  the  manufacturing  industries  are  the  bone  and  sinew 


588 

and  backbone  of  all  your  income  in  the  State  of  Pennsyl- 
vania. 

Q.  What  is  your  distinction  between  a  store  like  Lits' 
and  a  manufacturer  across  the  street  that  employes  the 
same  number  of  men  ? 

A.  Distinction  in  what  way? 

Q.  Why  should  one  pay  tax  and  another  not,  from  your 
standpoint  ? 

A.  They  are  not  producers.  A  manufacturer  is  a  pro- 
ducer and  produces  your  raw  material.  That  place  does 
not  produce  anything.  It  is  simply  a  market  place  where 
you  employ  people  to  stand  and  sell  the  wares  that  are 
produced.  We  produce  the  raw  material. 


589 


MR.  CHARLES  S.  PRIZER,  representing  Federal 
Furnace  League,  called. 

Mr.  Prizer:  I  come  here  this  morning  representing  a 
large  manufacturing  industry  in  Philadelphia;  also  an 
organization  of  the  manufacturers  of  warm  air  furnaces, 
known  as  the  Federal  Furnace  League.  I  am  also  a  mem- 
ber of  the  Manufacturers'  Club,  and  speaking  for  myself 
personally,  I  cannot  agree  with  Mr.  Brown  that  I  consider 
that  it  would  be  a  good  or  acceptable  thing  to  tax  the 
capital  stock  of  manufacturing  corporations  one  mill  or 
any  other  rate.  I  was  very  much  impressed  by  the  re- 
mark made  by  counsel  during  the  session  this  morning 
to  the  effect  that  in  considering  the  subject  of  taxation 
for  the  State  of  Pennsylvania  the  whole  matter  should  be 
considered  from  the  broadest  business  standpoint,  the 
intimation  being,  as  I  understood  it,  to  get  down  to  the 
fundamental  principles  which  underlie  the  subject  of  tax- 
ation and  merely  that  part  of  the  subject  of  taxation 
known  as  the  incidents  of  taxation.  Now,  we  are  opposed 
to  the  taxing  of  manufacturing  corporations  by  the  State, 
because  we  think  that  while  that  tax  in  itself  might  be 
small,  in  principle  it  is  a  wrong  thing  to  do.  As  has  been 
shown  in  your  meetings  previous  to  this,  Pennsylvania 
has  made  a  greater  progress  in  manufacturing  during  re- 
cent years  than  any  other  State  in  the  United  States. 
Pennsylvania  has  the  distinction  of  being  one  of  the  few 
States  in  the  United  States  which  exempts  manufacturing 
corporations  from  State  tax  practically.  Those  two  facts, 
it. seems  to  me,  go  together.  Personally  I  am  acquainted 
with  several  corporations  whose  offices  are  in  New  York 
and  whose  plants  are  in  Pennsylvania,  and  I  think  in  a 
number  of  those  cases  the  plants  are  located  in  Pennsyl- 
vania because  Pennsylvania  is  a  better  place  to  have  a 
manufacturing  plant  than  some  other  States. 


590 

Now,  while  a  tax  on  the  capital  stock,  or  upon  the 
revenues,  or  upon  the  goods  of  manufacturing  corpora- 
tions, or  upon  their  incomes,  would  undoubtedly  be  un- 
welcome to  manufacturers  of  this  State  on  the  principle 
that  every  man  who  is  about  to  be  taxed  does  not  wish 
to  be  taxed,  yet  a  little  thought  makes  it  perfectly  plain 
to  us  that  taxes  of  that  kind  are  not  actually  paid  by  the 
manufacturers  themselves.  In  computing  cost  of  manu- 
facturing our  goods  we  count  in  as  one  of  the  primary 
costs  the  tax  we  pay,  just  as  much  a  part  of  the  cost  of  the 
goods  as  what  we  pay  out  for  labor.  That  cost  goes  to 
determine  the  selling  price  we  make  upon  our  goods,  and 
you  may  be  certain  that  if  you  tax  manufacturing  cor- 
porations in  Pennsylvania  at  higher  rates  than  they  are 
now  taxed,  or  put  additional  burdens  upon  them,  those 
taxes  will  be  borne  eventually  by  the  consumers  of  the 
goods.  In  fact,  I  suppose  that  your  investigations  thus 
far  have  carried  you  along  in  the  subject  of  taxation  far 
enough  for  you  to  realize  that  there  are  a  large  number 
of  taxes  which  are  not  paid  by  the  nominal  taxpayer,  but 
are  paid  by  somebody  else? 

Now,  the  vice  of  taxation  upon  the  manufacturing  com- 
panies is  that  they  cost  the  community  too  much.  If  you 
levy  a  tax  upon  us  for  five  thousand  dollars,  wTe  put  it  into 
the  primary  cost  of  our  goods,  and  we  must  have  a  return 
upon  that  investment  just  the  same  as  we  have  a  return 
upon  every  other  investment,  and  we  must  add  to 
that  tax  cost  our  profit,  and  that  tax  goes  on  down  to 
the  jobber  and  the  retailer  and  the  consumer,  and  this  tax 
which  has  netted  to  the  State  $5,000,  less  its  cost  of  col- 
lection, costs  the  citizens  of  this  Commonwealth,  who  pay 
it  probably  seven  or  eight  thousand  dollars,  and  that  is 
the  vice  of  your  taxing  manufacturing  processes  or  mer- 
cantile processes. 

By  Mr.  Moyer: 

Q.  How  about  a  tax  on  the  earnings? 

A.  A  tax  on  the  earnings  will  be  treated  in  exactly  the 


591 

same  way.  If  our  earnings  are  taxed,  we  will  put  our 
taxes  as  of  1909,  into  our  costs  accounts  for  1910.  "We  will 
put  our  taxes  of  1910  into  our  costs  for  1911. 

By  Mr.  Brown : 

Q.  What  becomes  of  the  tax  on  your  part  that  is  not 
strictly  pertinent  or  incidental  to  the  manufacturing  busi- 
ness? Do  you  keep  a  separate  account  of  that? 

A.  We  charge  all  taxes  into  our  manufacturing  ac- 
counts, or  into  our  commercial  accounts.  We  keep  costs 
in  two  divisions. 

Q.  Suppose,  for  instance,  a  corporation  owns  stocks, 
bonds,  mortgages,  and  other  things  that  are  taxable.  Do 
you  mean  to  say  the  tax  they  pay  the  Commonwealth  on 
those  is  put  into  the  costs  of  the  sales? 

A.  It  certainly  is.  That  is,  any  corporation  must  charge 
all  those  into  its  costs,  including  interest. 

Q.  That  is  an  incidental  on  your  investment ;  you  have 
already  made  that  and  set  it  aside  ? 

A.  If  we  own  an  investment,  I  withdraw  that.  Manu- 
facturing corporations,  as  a  rule,  make  few  investments 
of  that  kind.  We  make  none.  We  own  lots  of  property 
that  we  are  compelled  to  take  for  certain  reasons,  but 
get  rid  of  it  as  soon  as  possible.  We  do  not  own  bonds, 
stocks  or  securities  for  the  purpose  of  investment. 

Q.  To  what  do  you  attribute  the  location  of  manufac- 
turing industries  in  Pennsylvania — not  exclusively  to  the 
exemption  from  taxation;  there  must  be  other  favorable 
conditions  here? 

A.  I  consider  the  exemption  from  taxation  a  favorable 
condition  towards  the  tendency  to  increase  the  manufac- 
turing resources  of  this  State.  The  great  resources  of  this 
State,  of  course,  are  the  primary  reason  for  the  location 
of  the  manufacturing  interests  in  this  State.  One  of  the 
speakers  adduced  low  wages  as  a  reason  for  locating  in 
this  State.  My  own  observation  is  to  the  contrary.  I  do 
not  think  manufacturing  is  most  profitably  conducted, 


592 

taking  the  United  States  as  a  whole,  in  those  sections 
where  wages  are  lowest,  but  quite  the  contrary;  and  as 
to  your  question,  I  believe  the  greatest  reason  for  our  manu- 
facturing prosperity,  relatively  speaking,  in  Pennsylvania, 
is  the  resources  of  the  State  in  coal  and  in  iron. 

By  a  Member  of  the  Committee : 

Q.  Proximity  to  raw  materials? 

A.  Proximity  to  raw  materials  is  one  powerful  factor, 
of  course. 

By  Mr.  Moyer: 

Q.  Do  you  think  the  exemption  from  taxation  would  not 
weigh  in  the  mind  of  a  man  who  was  seeking  to  establish 
a  business  in  Pennsylvania  or  any  other  State? 

A.  It  certainly  does,  and  many  small  towns  that  do 
not  give  formal  exemptions  have  understandings  with 
manufacturers  that  they  shall  treat  them  generously  in 
the  matter  of  taxation.  I  know  that  to  be  the  case  in  a 
number  of  cases  where  there  is  no  formal  provision  for 
exemption;  it  is  a  tacit  understanding. 

Q.  And  exemption  from  the  Commonwealth  would  also 
add  to  the  sum  total  of  the  investment,  would  it  not? 

A.  Yes.  Now,  anything  that  tends  to  make  manufac- 
turing more  prosperous,  or  brings  more  of  it  into  the 
State,  creates  a  value  which  you  can  get  in  a  very  much 
better  way  for  the  purposes  of  taxation  than  you  can  by 
imposing  taxes  of  the  kind  that  have  been  considered, 
viz. :  tax  upon  the  capital  stock  of  corporations.  You  in- 
crease the  manufacturing  in  Pennsylvania  and  you  in- 
crease the  land  values  of  Pennsylvania,  real  estate  values, 
and  create  a  fund  there  that  is  the  best  in  the  world  to 
go  to  for  purposes  of  revenue,  in  my  judgment. 

By  Mr.  Brown: 

Q.  You  mean  you  can  more  easily  lay  your  hands  on  it  ? 

A.  You  can  more  easily  lay  your  hands  on  it.  Not  only 
that,  the  daily  occupations  of  a  people  in  the  State,  their 


593 

general  prosperity,  their  working  and  producing  together 
and  co-operating,  are  elements  in  the  value  of  real  estate. 
When  you  attempt  to  tax  personal  property,  you  do  a 
thing  which  is  an  insult,  always,  to  the  underlying  common 
sense  of  all  men.  There  has  been  advocated  here  this  morn- 
ing the  taxation  of  pictures,  etc.,  and  all  personal  prop- 
erty. Just  as  though  that  had  not  been  tried  in  this  world 
millions  of  times  and  always  with  failure  attending  it.  Up 
to  the  present  time.  I  venture  to  state  that  attempts  to 
tax  people  according  to  their  wealth  has  never  yet  suc- 
ceeded. 

Q.  By  wealth  what  do  you  mean  ? 

A.  According  to  the  individual  wealth  of  the  subject 
of  taxation. 

Q.  That  means  money  at  interest,  mortgages  and  like 
security  a  man  may  have. 

A.  If  a  man  is  worth  $50,000,  and  you  try  to  get  at  him 
to  tax  that,  because  he  is  worth  that,  I  do  not  care  what 
general  form  it  is  in,  but  the  attempt  to  tax  personal  prop- 
erty has  always  been  a  failure. 

Q.  Suppose  I  told  you  that  in  Pennsylvania  one-half  of 
the  personal  property  tax  reached  is  equivalent  to  one-half 
the  value  of  real  estate  in  the  State,  wouldn't  you  think 
that  a  pretty  fair  result  ? 

A.  Yes,  but  I  consider  it  a  failure.  I  consider  that  it 
is  a  fight  upon  veracity,  and  it  is  a  bad  method  of  taxing 
and  it  is  a  failure  at  that.  I  will  lead  you  to  many  good 
citizens  in  Philadelphia  who  do  not  pay  upon  their 
personal  property  fairly,  and  never  will 

By  Mr.  Mover: 

Q.  Who  perjure  themselves? 

A.  You  can  have  it  as  you  will,  but  that  has  always 
been  the  state  of  affairs  that  has  followed  attempts  of  that 
kind.  A  man  buys  a  piece  of  furniture  or  a  picture,  and 
feels  that  the  State  has  no  right  to  go  and  take  part  of 
that  value  from  him,  and  I  agree  that  that  is  not  the  thing 
for  it  to  do. 


694 

Q.  But  there  was,  in  a  part  of  the  gentleman's  argu- 
ment, a  clause  referring  to  the  taxation  of  furniture, 
there  was  an  exemption  feature? 

A.  Well,  what  of  it? 

Q.  Well,  I  speak  of  it  as— 

A.  As  exempting  the  man  of  small  means? 

Q.  Yes. 

By  Mr.  Brown : 

Q.  Mr.  Prizer,  as  I  understand  you,  you  drift  back  prac- 
tically to  a  land  tax  ? 

A.  Well,  I  don't  consider 

Q.  I  mean  exclusive  land  tax? 

A.  A  purely  land  tax  I  do  not  consider  is  a  peculiar  issue 
with  this  Committee  or  this  State  at  present.  I  am  speak- 
ing of  taxes  on  real  estate. 

Q.  We  are  exempting  manufacturing  corporations, 
moneys  at  interest,  personal  property;  there  is  nothing 
left;  by  the  process  of  elimination  you  are  down  to  the 
real  estate  ? 

A.  I  consider  that  the  fairest  possible  tax,  and  I  con- 
sider that  if  we  raise  every  dollar  of  our  local  county  and 
State  revenues  from  a  tax  upon  real  estate,  we  would  tax 
the  people  of  Pennsylvania  more  justly  and  fairly  than 
we  tax  them  under  the  present  system  or  under  the  varia- 
tions that  have  been  proposed  here  to-day.  We  would 
reach  them  more  fairly,  because  a  tax  upon  real  estate 
would  be  distributed.  Nobody  lives  without  using  some  loca- 
tion, and  every  man  pays  and  contributes  his  part  to 
a  real  estate  tax,  and  I  think  when  you  work  it  out  with  a 
fairness  that  is  absent  from  attempts  to  tax  people  upon 
all  kinds  of  property — the  current  idea  among  many  people 
is  that  every  man  should  pay  according  to  what  he  is 
worth;  this  has  never  been  accomplished  and  it  is  not 
fair ;  if  it  could  be  accomplished,  and  men  who  by  industry 
and  thrift  accumulate  a  little  fortune  ought  not  to  be 
fined  by  the  State  for  doing  that,  but  the  real  estate  tax 
is  an  entirely  different  proposition. 


595 

Q.  Supposing  a  farmer,  by  industry  and  thrift,  takes  a 
farm  worth  ten  dollars  an  acre  and  makes  it  worth  $150 
an  acre.  You  think  he  ought  to  be  taxed  for  his  industry 
and  thrift? 

A.  Well,  if  you  come  down  to  that,  I  don't  think  he  ought 
to  be  taxed. 

Q.  If  you  are  going  to  tax  him  on  the  original  value, 
how  do  you  distinguish  between  the  natural  value  of  real 
estate  and  what  might  be  called  social  value,  that  is,  value 
that  has  been  contributed  by  the  community  and  with 
which  the  OAvner  has  had  nothing  to  do  ? 

A.  That  question  answers  itself.  You  have  stated  the 
two  kinds  of  value,  one  of  social  value  and  the  other  an 
improvement  value,  contributed  by  the  owner  or  occupier. 

Q.  You  would  not  tax  him  for  that? 

A.  Well,  if  I  personally  had  my  own  way,  I  would  not  tax 
him  on  the  things  he  has  placed  there  by  his  industry  and 
thrift;  but  to  answer  your  question  directly,  it  is  simply 
a  matter  of  assessment.  The  City  of  New  York  assesses 
the  social  value  of  land,  as  you  have  termed  it,  separately 
from  the  value  of  improvements,  and  it  may  be  interesting 
— I  do  not  know  whether  it  has  been  stated  here  before — 
for  you  to  know  that  the  value  of  their  land  inside  of 
Greater  New  York,  the  assessed  valuation  is  greater  than 
the  assessed  value  of  the  whole  of  the  real  estate  of  Penn- 
sylvania. Some  gentleman  referred  to  the  alleged  fact 
that  New  York  City  was  a  much  greater  manufacturing 
city  than  Philadelphia,  but  it  is  not,  in  proportion  to 
population.  Even  taking  the  explanation  given  by  Mr. 
Brown,  in  proportion  to  population  Philadelphia  is  a  much 
greater  manufacturing  city  than  New  York  City  is,  but 
there  is  no  difficulty  in  distinguishing  between  those  values. 
Of  course,  these  are  fundamental  matters.  No  manufac- 
turer or  no  citizen  of  Pennsylvania,  who  has  given  any 
thought  to  the  subject  of  taxation,  expects  this  Committee 
to  map  out  some  ideal  system  of  taxation  and  follow  it; 
but  it  does  seem  to  me  that  the  Committee  should  con- 


596 

sider  the  general  principles  that  underlie  taxation  and 
should  bend  their  efforts  in  the  direction  of  those  methods 
rather  than  the  other  way,  and  these  discussions  which 
have  arisen  can,  I  think,  be  useful,  and  it  is  very  gratifying 
to  see  that  this  Committee  is  disposed  to  study  the  fun- 
damental principles  of  taxation. 


597 


C.    STUART    PATTERSON,    ESQ.,    President,    Western 
Savings  Fund  Society,  called : 

Mr.  Patterson:  I  desire  to  say  I  am  not  appearing 
here  on  my  own  notion.  I  am  here  because  I  received  a 
very  courteous  letter  from  the  Vice- Chairman,  asking  me 
to  come,  and  therefore  I  at  once  responded,  and  I  am 
ready  to  answer  any  questions  that  may  be  asked  me. 

By  Mr.  Brown : 

Q.  Mr.  Patterson,  I  presume  your  Board  has  given  some 
serious  thought  to  the  general  law  of  Pennsylvania  regu- 
lating yours  and  similar  institutions? 

A.  Yes,  sir. 

Q.  Have  you  any  suggestions  to  make  as  to  the  amend- 
ment of  those  laws?  I  am  referring  to  the  formation  and 
regulation,  independent  of  the  question  of  revenue? 

A.  No.  I  think  that  we  have  emple  legislation  in  this  State 
on  the  subject  of  savings  funds.  The  older  savings  funds 
are  organized  under  charters  which  carefully  define  the 
powers  of  the  Board,  and  then  there  is,  as  you  know,  a 
later  savings  fund  statute  providing  for  the  general  or- 
ganization under  that  statute,  with  carefully  guarded  pro- 
visions with  regard  to  the  limits  of  investment.  I  do  not 
think  I  have  any  suggestion  to  make  on  that  subject. 

Q.  Coming  down  to  the  question  of  revenue,  it  has  been 
suggested  in  one  of  our  earlier  meetings  that  the  State 
was  not  receiving  proper  revenue  from  money  deposited 
with  your  institutions;  in  other  words,  that  thousands 
evade  the  tax.  I  refer  now  to  deposits  that  are  represented 
especially  by  certificates  of  deposit  ? 

A.  Well,  we  issue  no  certificates  of  deposit,  and  the 
same  thing  applies  with  regard  to  all  the  other  savings 
funds  not  having  capital  stock,  and  we  also  limit  the  amount 
of  deposits  that  may  be  made  during  a  given  time.  Our 


698 

general  rule  is  that  more  than  a  thousand  dollars  can  not 
be  deposited  by  one  depositor  in  the  course  of  a  year, 
and  that  rule  is  pretty  rigidly  adhered  to.  There  are 
cases,  of  course,  of  widows,  and  people  who  do  not  know 
how  they  ought  to  invest  their  money,  who  are  occasionally 
allowed  to  put  in  sums  a  little  in  excess  of  that.  We  have 
in  the  "Western  Savings  Fund  54,822  depositors,  with 
$25,894,000  on  depositors,  and  the  a^  erage  credit  to  the  de- 
positor is  $460.50,  and  23,442  depositors  have  less  than 
$100  to  their  credit;  and  the  same  thing  is  very  nearly 
true  of  the  other  savings  funds.  There  are  in  Pennsyl- 
vania nine  savings  funds  without  capital  stock.  All  the 
assets  are  held  in  trust  for  the  depositors,  and  the  direc- 
tors receive  no  compensation  for  their  services,  and  they 
give  a  great  deal  of  time  to  it. 

Q.  Have  you  made  any  return  of  the  average  amount 
of  deposits  to-day,  say  a  thousand,  how  many  would  be  in 
that  class? 

A.  "We  report  to  every  session  of  the  Legislature  detailed 
statements  on  that  subject,  and  I  would  be  very  glad  to 
furnish  to  the  Committee  a  copy  of  our  last  report.  In 
fact,  we  not  only  make  it  to  every  session  of  the  Legis- 
lature, but  we  forward  it  annually  to  Harrisburg,  and  I 
will  take  pleasure  in  sending  that  to  the  Committee. 

Q.  "What  is  the  opinion  of  your  Board  as  to  the  wisdom 
of  taxing  those  depositors  a  four  mills  tax  ? 

A.  I  think  it  would  be  a  very  great  mistake.  The  ob- 
ject of  the  whole  savings  fund  system  is  to  encourage 
thrift,  to  induce  wage-earners  to  put  aside  something  for 
the  rainy  day,  and  thereby  to  acquire  a  stake  in  the  com- 
munity, and  to  make  themselves  better  citizens.  I  will 
undertake  to  say  that  in  the  crowds  that  have  been  roam- 
ing the  streets,  more  especially  in  the  northern  part  of 
the  City,  the  last  few  days,  assaulting  property  and  firing 
upon  the  police,  you  could  not  find  one  savings  fund  de- 
positor. 

Q.  Is  your  opinion  the  same  for  those  who  have  large 


599 

sums  on  deposit?     I  do  not  mean  as  to  the  last  remark, 
but  I  mean  as  to  exemption  from  taxation? 

A.  Well,  of  course 

Q.  Say  the  one  who  has  $10,000? 

A.  Wherever  a  man  is  using  the  savings  fund  as  a  means 
for  investment  it  would  be  very  desirable  that  they  should 
be  reached  for  taxation,  but  I  do  not  see  how  you  are 
going  to  make  a  discrimination  of  that  sort,  and  the  cases 
are  so  rare  and  the  amounts  are  so  small,  generally  speak- 
ing, that  I  think  the  effect  of  taxing  as  money  at  interest 
sums  on  deposit  in  the  savings  funds  would  be  very  bad. 
In  the  first  place,  you  have  got  to  deal  with  an  enormous 
number  of  individuals  if  you  are  going  to  do  that  thing. 
In  Pennsylvania,  to-day,  there  are  nine  savings  funds 
without  any  capital  stock,  and  their  depositors  numbered 
on  the  first  of  January  450,521. 

Q.  And  their  aggregate  deposits  were  how  much? 

A.  The  aggregate  deposit  in  all  the  savings  funds  was 
$170,000,000. 

Q.  That  practically  pays  no  tax,  unless  the  individual 
depositor  chooses  to  return  it? 

A.  Remember,  that  the  savings  funds  pay  now  under  the 
existing  law  3  per  cent,  on  their  net  income. 

Q.  I  do  not  mean  them,  I  mean  the  depositors? 

A.  The  depositor  himself  pays  no  tax  upon  that  at  all. 

By  a  Member  of  the  Committee : 

Q.  Their  money  invested  in  securities  and  bonds  and 
things  of  that  kind  pays  the  tax  ? 

A.  Of  course,  the  institution  pays  the  tax. 

By  Mr.  Moyer : 

Q.  Provided  they  make  a  return  thereof? 

A.  The  individual  depositors  pay  no  tax  at  all.  The 
institution  pays. 

By  Mr.  Brown: 

Q.  The   law   contemplates   they   should   pay   a   tax   on 


600 

their  deposits.  The  law  contemplates,  I  assume,  all  money 
at  interest  should  pay  a  tax  ? 

A.  I  never  have  believed  the  existing  law  contemplates 
it.  I  do  not  think  that  money  on  deposit  at  a  bank,  evi- 
denced solely  by  a  credit  on  the  books  of  the  bank  and  by 
a  credit  upon  the  depositor's  pass  book,  is  within  the 
contemplation  of  the  statute  money  at  interest. 

Q.  Notwithstanding  it  does  bear  interest  at  a  fixed 
sum? 

A.  Notwithstanding  it  does  bear  interest  at  a  fixed 
sum,  a  sum  that  may  be  changed  from  year  to  year. 

Q.  Do  you  think  that  because  they  have  the  return  of 
the  savings  fund 

A.  I  think  the  tax  which  the  savings  fund  pays  and 
which  a  National  or  State  bank  pays  upon  its  deposits 
covers  that. 

Q.  Have  you  given  any  thought  to  the  Act  of  May  1, 
1909? 

A.  Yes,  I  have  given  a  great  deal  of  thought  to  it.  I 
had  the  honor  of  appearing  in  support  of  that  bill  be- 
fore the  Committee  of  the  House  of  Representatives  when 
the  bill  was  under  consideration,  and  I  also  had  the 
honor  of  appearing  before  the  Governor  in  support  of  :t. 
I  gave  a  great  deal  of  thought  to  it,  and  the  argument 
in  support  of  it,  and  which  convinced  the  Governor  and 
the  Committee,  and  also  convinced  the  Senate,  was  this 
that  deposits  in  savings  funds  without  capital  stock  ought 
to  be  encouraged  by  the  State.  Anything  which  induces 
a  wage  earner  to  save  money  is  of  benefit,  not  only  to  him, 
but  of  benefit  also  to  the  State.  It  makes  him  a  better  and 
more  useful  citizen.  Then  I  drew  the  attention  of  the 
Committee  and  the  Governor  to  the  fact  that  under  the 
then  existing  law  trust  companies  and  savings  funds  with 
capital  stock  paid  very  much  less  pro  rata  tax  than  savings 
funds  without  capital  stock.  Savings  funds  without 
capital  stock  then  paid  a  tax  of  four  mills  on  their  in- 
vestment and  other  investments  in  the  bonds  of  com- 


601 

panics  paying  a  capital  share  tax  to  the  State,  and  they 
also  paid  the  3  per  cent,  earnings  tax,  and  I  gathered 
a  discrimination  from  the  last  report  of  the  banking 
department.  There  is  a  savings  bank  with  a  relatively 
small  capital  stock,  upon  which  dividends  aggregating 
100  per  cent,  for  the  year  1907  were  paid  to  the  share- 
holders. Under  the  then  legislation  that  corporation  could 
have  elected  and  it  could  now  elect  to  pay  in  lieu  of  all 
other  taxes  ten  mills  on  its  capital  stock  amounting  to 
$102.  Assuming  that  any  other  savings  bank  having  no 
capital  stock  had  exactly  the  same  line  of  deposits  and 
the  same  line  of  investments,  the  savings  banks  without 
capital  stock  would  pay  $4,574.31  for  the  four-mill  tax, 
and  in  addition  thereto  a  tax  of  3  per  cent,  upon  its  net 
earnings,  whatever  those  net  earnings  might  amount  to. 
There  was  a  concrete  instance  of  injustice.  Then  atten- 
tion was  also  called  to  the  fact  that  the  savings  de- 
positors ought  to  be  put  upon  exactly  the  same  plane  as 
building  and  loan  investors.  They  are  investments  of  the 
wage-earning  classes  in  the  same  way  and  looked  at  in  the 
same  way,  and  then  we  will  have  taxation  on  savings 
banks.  Those  were  the  considerations  which  induced  the 
Legislature  to  pass  that  Act  of  1909,  and  which  induced 
the  Governor  to  sign  it. 

Q.  Supposing  the  Beading  Eailroad  were  to  issue 
twenty-five  millions  of  bonds  and  say  nothing  in  the  bonds, 
or  in  the  resolution  authorizing  the  issue  of  the  bonds, 
about  the  tax,  and  they  would  be  bought  by  your  savings 
fund ;  who  would  pay  any  tax  ? 

A.  Well,  under  the  law  of  1909  we  would  not  pay  any 
four-mill  tax  on  that. 

Q.  And  the  railroad  would  not,  either ;  who  would  pay 
the  tax? 

A.  I  wasn't  looking  at  it  from  the  point  of  the  rail- 
road. 

Q.  I  draw  your  attention  especially  to  this  Act? 

A.  I  think  you  will  find,  Mr.  Brown,  a  provision  that 
was  put  in  to  meet  that  very  question. 


602 

Q.  There  was  a  provision  put  in,  but  it  was  put  in 
against  my  judgment  at  the  time  and  I  have  never  seen 
any  reason  to  change  it.  That  is  the  reason  I  am  calling 
your  attention  especially  to  it.  As  I  understood  the  Act 
in  this  specific  instance,  unless  the  Company  agrees  to 
issue  them  clear  and  free,  or  agrees  to  pay  it,  there  is  no 
liability  on  anybody.  The  word  ''amendment"  is  used 
in  the  Act.  If  they  simply  issue  the  bonds  and  say 
nothing  about  the  tax,  then  nobody  pays  it? 

A.  I  have  a  very  distinct  recollection  that  that  was  put 
in  in  that  way  at  the  express  request  of  the  Auditor  Gen- 
eral of  the  Commonwealth. 

Q.  The  Attorney  General  ? 

A.  The  Auditor  General,  I  think.  I  know  they  for- 
mulated it.  They  spoke  to  me  about  it  and  I  said  I 
thought  it  ought  to  be  put  in  so  the  State  would  get  its 
tax  out  of  somebody. 

Q.  Your  thought  is  in  such  an  instance  as  I  have  given 
that  the  company  or  the  fund  should  pay  the  tax? 

A.  I  think  they  should.  I  think  that  is  fair.  I  do  not 
think  the  savings  fund  ought  to  pay  it. 

Q.  It  ought  to  be  paid  to  the  State? 

A.  Yes. 

By  a  Member  of  the  Committee  : 

Q.  You  are  interested  in  a  great  many  different  lines 
of  large  enterprises  giving  attention  to  the  matter  of 
revenues  and  things  of  that  kind,  and  I  would  like  to 
know,  and  I  think  the  Commission  would  like  to  hear 
from  you,  some  expression  regarding  the  tendency  of  the 
Federal  Government  to  get  more  close  direct  taxation,  to 
a  certain  extent  invading  the  prerogatives  of  the  State. 
I  would  like  to  hear  your  views  on  that  matter? 

A.  I  am  very  willing  to  talk  frankly  on  that  subject. 
I  believe  firmly  that  the  Government  of  the  United  States 
is  exactly  that  which  the  Supreme  Court  characterized  it, 
it  is  an  indestructible  union  of  indestructible  States,  and 


603 

I  believe  the  States  are  just  as  important  as  the  Union  of 
the  States.  I  think  nothing  could  be  more  dangerous  than 
to  break  down  the  State  Governments,  and  I  believe  firmly 
that  if  Federal  aggrandizement  goes  on  as  it  has  been 
going  on  of  late  years,  our  danger  will  be  that  of  cen- 
tralization. I  think  the  framers  of  the  Constitution  clearly 
intended  that  the  General  Government  should  have  re- 
course to  indirect  taxation,  and  that  the  States  should 
have  the  field  of  direct  taxation,  only  to  be  invaded  in 
cases  of  absolute  necessity.  I  think  every  lawyer  will 
agree  on  that  proposition.  Now,  the  income  tax  amend- 
ment in  its  present  shape  is  certainly  open  to  the  objec- 
tion that  was  so  forcibly  put  by  the  Governor  of  New 
York.  If  that  amendment  is  adopted  as  it  has  been  sent 
to  the  States  it  necessarily  will  empower  Congress  to  tax 
incomes  derived  from  bonds  issued  by  States,  and  bonds 
issued  by  sub-divisions  of  States,  and  I  think  the  effect 
of  that  would  be  very  bad.  Now,  the  income  tax  of  itself — 
and  exactly  the  same  remark  is  applicable  to  the  four-mill 
tax  in  this  State,  the  personal  property  tax — the  income 
tax  in  itself  is  an  unequal  and  unjust  tax,  and  any  tax 
is  unequal  and  unjust  which  depends  upon  a  return  to  be 
made  by  the  individual  taxpayer.  Every  man  in  this 
room  knows  that  all  men  are  not  equal  in  honesty  and 
in  truthfulness,  and  it  is  certainly  a  fact  that  under  every 
income  tax  and  every  personal  property  tax  wherever 
imposed  there  is  a  necessary  inequality  of  burden-bearing 
against  the  man  who  makes  an  honest  and  truthful  return, 
and  I  think  that  a  much  better  practical  result  will  be 
obtained  by  imposing  a  tax  otherwise.  I  have  always  be- 
lieved that  the  policy  of  Pennsylvania  in  taxing  profit- 
earning  corporations  was  a  very  sound  policy.  I  think 
that  when  men  combine  together  under  a  corporate  or- 
ganization they  get  certain  practical  results  therefrom 
which  are  of  great  value  to  them.  They  get,  in  the  first 
place,  a  security  in  the  shape  of  shares  which  are  readily 
transferable,  very  much  more  transferable  than  an  >n- 


604 

terest  in  a  partnership;  they  get  exemptions  from  in- 
dividual and  personal  liability,  and  they  get,  in  the  third 
place,  the  privilege  at  death  of  passing  under  their  will 
something  which  can  be  readily  transferred  without  that 
necessity  which  exists  in  the  case  of  partnership  accounts. 
I  think,  therefore,  that  every  corporation  ought  to  pay 
to  the  State  for  those  privileges. 

By  Mr.  Moyer: 

Q.  Including  manufacturing  corporations? 

A.  Yes,  I  think I  don't  think  manufacturing 

corporations  ought  to  be  absolutely  exempt.  They  get 
those  valuable  privileges. 

By  Mr.  Brown : 

Q.  In  arriving  at  the  value  of  a  corporation's  stock  to- 
day we  are  supposed  to  include  all  assets.  What  is  your 
thought  upon  the  subject  of  taxing  or  levying  a  tax  on 
all  the  assets  of  a  corporation? 

A.  I  think  the  ideal  way  of  doing  that  would  be  this 
way,  and  it  is  a  plan  which  has  received  the  approval 
of  the  Supreme  Court  of  the  United  States,  I  think,  in  two, 
and  I  think  in  three  different  cases.  If  you  take  the 
total  value  of  the  capital  stock,  you  add  to  that  the  par 
value  of  the  Company's  bonds  and  other  liabilities;  you 
then  get  at  that  which  represents  all  the  property  of  the 
corporation,  and  then  in  order  to  guard  against  double 
taxation,  you  deduct  investments  in  the  shares  of  other  cor- 
porations paying  a  tax  to  the  State,  and  if  you  deduct 
investments  in  patent  rights,  which  under  the  law  you 
cannot  touch,  I  think  you  would  then  get  at  the  fair  value 
of  the  corporate  property  in  the  easiest  possible  way. 

Q.  And  you  would  in  doing  that  exempt  local  property, 
local  real  estate,  from  State  taxation,  and  let  the  counties 
collect  that? 

A.  Well,  you  have  got  to  keep  a  revenue  for  the 
counties,  and  that  is  another  deduction  that  ought  to  be 
made.  You  are  perfectly  right.  That  deduction  ought  to 


605 

be  made,  because  the  real  estate  under  a  well-settled  policy 
of  the  State  pays  a  tax  to  the  county. 

Q.  You  were  speaking  about  your  objection  to  the  per- 
sonal property  tax  on  account  of  the  failure  of  the  taxable 
to  return  it  ? 

A.  Yes,  sir. 

Q.  Suppose,  for  instance,  we  take  certificates  of  de- 
deposit  returned  by  the  corporation  itself;  we  would  re- 
lieve the  taxable  from  that? 

A.  The  tax  is  not  open  to  the  objection  that  I  have  stated 
wherever  you  can  tax  it  at  its  source,  but  the  objection 
I  have  is  to  taxation  based  upon  a  return  to  be  made 
by  the  individual. 

Q.  Not  an  objection  to  the  taxing  of  the  thing,  but 
the  way  it  is  taxed? 

A.  No,  the  way  in  which  it  is  done. 

Q.  While  we  have  you  here,  we  do  not  want  to  impose 
upon  you,  but  we  would  like  to  have  your  thought  on  the 
subject  of  the  appropriation  of  the  State's  money  for 
institutions ;  have  you  given  that  much  thought  ? 

A.  Yes,  I  have  given  a  good  deal  of  thought  to  that,  a 
great  many  years  ago,  and  my  views  are  pretty  radical 
upon  that  subject.  I  have  always  been  of  the  opinion 
that  the  State  of  Pennsylvania  ought  not  to  appropriate 
one  dollar  to  any  institution  that  is  not  absolutely  and 
entirely  controlled  by  the  State.  I  do  not  think  the 
State  has  any  right  to  take  the  money  of  the  taxpayers 
and  give  it  to  institutions,  however  meritorious,  which 
are  not  public  institutions. 

Q.  Are  you  prompted  to  that  opinion  simply  from  a 
legal  standpoint  or  from  your  experience? 
A.  Oh,  no,  not  from  a  legal  standpoint  in  any  way. 

Q.  The  State,  of  course,  you  assume  has  the  right  to  do 
it? 

A.  The  State  has  unquestionably  a  legal  right  to  do  it. 
You  know  in  the  Constitutional  Convention  of  73  the 


606 

subject  was  under  consideration  and  there  was  a  very 
earnest  effort  made  there  to  take  the  power  away  from  the 
Legislature,  and  the  argument  which  prevailed  was  that 
these  institutions  are  relieving  the  State  by  performing  a 
duty  which  otherwise  the  State  itself  would  have  to  per- 
form. 

Q.  The  Committee  has  had  several  letters  from  differ- 
ent sections  of  the  State  advocating  the  issuing  of  State 
bonds.  Of  course,  it  would  require  an  amendment  to  the 
Constitution,  for  the  building  of  highways  and  other  State 
improvements,  rather  than  collecting  it  by  current  revenue 
control.  What  is  your  thought  on  that? 

A.  I  should  be  very  sorry,  indeed,  to  see  the  State  issue 
those  bonds.  I  do  not  believe  in  incurring  a  capital 
liability  on  the  part  of  the  State,  wherever  it  is  possible 
to  do  it  by  the  sub-divisions  of  the  State  that  are  more 
immediately  and  directly  benefited. 

Q.  Even  though  it  may  be  for  a  permanent  improve- 
ment? 

A.  Even  though  it  may  be  for  a  permanent  improve- 
ment. 

Recess  until  2.30  P.  M. 


607 


Philada.,  Ta.,  Feb.  25,  1910. 
The  session  was  re-convened  at  2.30  P.  M. 

ME.  J.  M.  WILCOX,  representing  the  Philadelphia 
Saving  Fund  Society,  was  called. 

Mr.  Wilcox :  Mr.  Chairman  and  Gentlemen  of  the  Com- 
mission :  I  am  here  in  much  the  same  position  as  was  Mr. 
Patterson,  at  the  invitation  of  the  Commission.  I  will  be 
very  glad  to  answer  any  questions  you  wish  to  propound. 

Mr.  Brown :  Mr.  "Wilcox,  you  heard  what  Mr.  Patterson 
said  before  the  Commission  this  morning  about  the  taxing 
of  deposits.  Have  your  folks  given  any  thought  to  the 
taxing  of  the  deposits  of  your  depositors  ? 

Mr.  Wilcox :  Well,  yes ;  but  it  has  never  been  discussed 
by  the  Board.  Personally,  I  have  always  been  under  the 
impression  that  saving  fund  deposits  were  subject  to 
taxation. 

Mr.  Brown :  Do  you  know  whether  or  not  your  depositors 
have  returned  these  deposits  for  taxation? 

A.  That  I  don't  know.  Some  may  have  been  returned 
to  us;  but  I  imagine  a  vast  number  of  depositors  have 
not  returned  them,  because  that  is  probably  all  they  have. 

Q.  What  would  be  the  objection  of  the  saving  fund  itself 
returning  these — say,  taking  the  average  for  the  year, 
and  then  paying  in  a  lump  sum  to  the  State  the  four  mills 
tax  on  your  deposits  drawing  interest? 

A.  Well,  there  would  be  the  objection  on  the  part  of 
a  general  policy  to  not  disclose  anything  about  our  business 
or  the  business  of  our  depositors ;  and  the  same  argument 
would  apply  to  that  as  has  applied  to  the  exemption  of 
the  four  mills  tax;  it  would  so  hinder  us  that  we  would 
be  very  much  confined  in  our  investing.  That  was  the 
main  reason  on  which  the  four  mills  exemption  was 


608 

granted,  apart  from  the  consideration  that  the  class  of 
people  who  use  a  saving  fund  are  the  people  that  you  need 
to  increase  thrift,  and  a  great  amount  of  them  have  their 
all  in  the  saving  fund. 

Q.  What  is  the  amount  of  your  deposits? 
A.  Something  over  ninety-five  millions  now. 

Q.  Do  you  carry  a  surplus? 
A.  Yes,  about  nine  millions. 

Q.  What  is  the  object  of  the  surplus  ? 

A.  Simply  to  fortify  the  institution  in  case  of  trouble. 

By  a  Member  of  the  Commission : 

Q.  Against  loss  in  investments? 
A.  Yes. 

By  Mr.  Brown : 

Q.  What  is  the  average  of  your  annual  deposits? 
A.  The  average  of  our  deposits  at  the  beginning  of  this 
year  was  $358.70. 

Q.  That  is  the  average  annually? 

A.  Yes,  sir;  distributed  among  over  two  hundred  and 
sixty-five  thousand  accounts. 

Q.  Have  you  any  suggestions  to  make  as  to  any  in- 
adequacy in  the  present  laws? 

A.  No.  We  think  when  the  last  Legislature  exempted 
us  from  the  payment  of  the  four  mills  tax,  it  did  all  we 
could  ask. 

Q.  What  does  this  exemption  of  the  four  mills  tax  save 
you  annually? 

A.  The  last  tax  we  paid  amounted  to  between  sixty  and 
seventy  thousand  a  year. 

By  the  Chairman : 

Q.  What  had  you  paid  prior  to  that? 
A.  It  varied  from  sixty  to  seventy  thousand.     It  all 
depended  on  the  character  of  investments. 


609 

By  Mr.  Brown : 

Q.  That  exemption  has  gone  to  the  benefit  of  whom,  Mr. 
Wilcox? 

A.  To  the  benefit  of  the  depositors,  because  we  were 
enabled  to  put  up  the  rate  of  interest  payable  to  depositors. 
Within  the  last  four  years  we  put  the  rate  up  from  3  to 
3.65  per  cent. 

Q.  Did  you  make  any  increase  after  the  exemption  of 
this  tax? 

A.  We  made  an  increase,  January  1,  1909,  from  three 
fifty  to  three  sixty-five. 

Q.  You  heard  Mr.  Patterson's  remarks  relative  to  the 
Act  of  May,  1909.  Do  you  place  the  same  construction 
upon  that  Act  as  he  does? 

A.  I  am  not  sure  I  understand  Mr.  Patterson's  construc- 
tion of  the  Act.  My  understanding  is  that  under  the  Act 
of  1885  it  was  made  the  duty  of  the  treasurers  of  private 
corporations  to  deduct  the  tax  in  cases  where  interest  is 
paid  to  residents.  Of  course,  they  never  have  done  it  in 
cases  of  non-residents.  The  Act  of  1909  applies  to  us  in 
the  same  clause — not  as  non-residents,  but  simply  on 
the  broad  ground  of  general  policy,  as  residents — but  we 
do  not  have  to  pay  the  tax.  It  seems  it  is  a  matter  of 
personal  opinion  whether  the  Act  of  1885  applies  to  cor- 
porations like  a  railroad  company — whether  they  should 
compute  the  interest  and  deduct  the  tax.  Of  course,  I 
really  don't  see  the  object  of  putting  that  clause  in  the 
Act  of  1909,  unless  it  was  meant  by  implication  to  exempt 
them 

Q.  Your  society  has  not  taken  the  position  that  they 
can  invest  in  bonds  irrespective  of  the  tax? 
A.  We  do  not  consider  the  tax,  no. 

Q.  You  don't  see  any  advantage  in  buying  taxless 
bonds? 

A.  No.  It  was  not  in  order  that  we  would  be  enabled 
to  buy  some  of  the  various  bonds  issued  by  municipalities 
32 


610 

of  this  Commonwealth  which  were  not  taxables  that  it 
was  necessary  to  get  the  exemption,  but  that  we  were  prac- 
tically precluded  from  buying  these  bonds.  All  that  Mr. 
Patterson  has  said  about  the  property  or  advisability  of 
the  exemption  of  saving  fund  deposits  from  the  four  mill 
tax  I  think  we  would  heartily  endorse  on  general  prin- 
ciple; not  because  we  wish  to  avoid  the  tax,  but  it  is 
just  a  question  as  to  whether  it  is  not  advisable  to  en- 
courage thrift. 

Q.  Who  are  your  largest  depositors,  Mr.  Wilcox? 

A.  Our  deposits  run  this  way:  According  to  a  state- 
ment given  out  the  first  of  January,  1908 — but  I  have 
some  data  here  (reads)  :  We  had  two  hundred  and  sixty 
five  thousand  accounts.  Those  of  one  thousand  dollars 
and  over  amounted  to  14,987  at  the  end  of  1909;  two 
thousand  dollars  and  over,  3,752;  three  thousand  dollars 
and  over,  1,467;  four  thousand,  601;  five  thousand,  316; 
six  thousand,  146 ;  seven  thousand,  81 ;  eight  thousand,  45 ; 
nine  thousand,  41 ;  ten  thousand,  27 ;  ten  thousand  is  the 
limit  of  deposit  that  anyone  can  make  in  the  in- 
stitution. That  is  by  a  resolution  of  the  Board.  Under 
our  charter  we  are  not  allowed  to  take  more  than  five 
hundred  dollars  from  any  one  individual  in  any  one  year ; 
so  that,  to  accumulate  a  fund  of  ten  thousand  dollars 
would  take  somewhere  between  nineteen  and  twenty  years, 
owing  to  the  accumulation  of  interest. 

Q.  Do  these  accounts  over  two  thousand  dollars  repre- 
sent what  might  be  termed  the  poorer  class  ? 

A.  There  are  3,752  of  two  thousand  and  over. 

Q.  Whom  do  they  represent? 

A.  It  would  be  hard  to  say.  I  think  many  of  them 
belong  to  the  housekeeping  class — some  who  take  in 
boarders.  Many  are  women  depositors  and  a  number  are 
well-to-do  people.  The  latter  would  come  in  the  higher 
classes,  say  seven,  eight,  nine  and  ten  thousand  dollars. 
Most  people  when  they  get  a  deposit  amount  to  five  hun- 
dred dollars  or  over  draw  it  out  to  get  better  investments. 
That  is  always  our  advice  to  them. 


611 

Q.  Your  object  is  the  promotion  of  thrift? 
A.  Yes.     We  would  rather  confine  our  business  to  the 
poor  people  who  need  a  saving  fund. 

Q.  What  amount  has  your  society  received  in  the  way 
of  unclaimed  deposits? 

A.  Since  the  formation  of  our '  society  we  have  paid 
over  to  the  State  somewhere  between  thirty  and  forty 
thousand  dollars  in  unclaimed  deposits,  although  there  is 
a  general  impression  that  we  have  a  vast  accumulated 
fund  there. 

Q.  Yes,  I  remember  the  litigation  you  had. 

A.  Under  the  law,  we  pay  over  to  the  State  every  year 
all  deposits  unclaimed  for  the  preceding  thirty  years.  Of 
course,  we  are  getting  in  a  larger  class  of  depositors  all 
the  time.  As  soon  as  ten  years  elapse  we  begin  a  system- 
atic search  in  order  to  locate  our  depositors. 

Q.  As  I  understand  it,  you  advertise  for  the  depositors? 
A.  Not  only  that,  but    we  employ    counsel    to    make 
searches  and  hunt  up  clues  to  locate  our  depositors. 

Q.  Is  that  observed  by  other  similar  institutions  ? 
A.  I  think  so,  but  I  do  not  think  it  is  to  the  extent  that 
we  do. 

By  the  Chairman: 

Q.  Of  the  sixty  or  seventy  thousand  dollars  saved  an- 
nually by  the  exemption  of  the  four  mills  tax,  what  per 
cent,  reverts  to  the  benefit  of  the  depositors  ? 

A.  You  might  say  all  of  it.  It  was  not  so  much  to  us 
at  one  time  as  it  is  now,  when  it  is  of  value  to  us  for  in- 
vestment, or  when  it  was,  when,  in  very  exceptional  cases, 
we  could  go  out  of  the  City  and  buy  outside  securities.  In 
looking  ahead,  we  saw  that  in  ten  or  eleven  years  a  great 
many  very  high  rate  securities  would  be  paid  for;  they 
would  mature,  and  we  would  either  have  to  take  a  new 
bonus  at  a  very  much  higher  rate  or  take  the  money  and 
reinvest  it.  It  was  a  great  deal  easier  when  we  were 
exempted  by  the  Legislature,  because  we  could  give  our 


612 

depositors  3.65;  and  we  don't  see  why    we    cannot    be 
exempted  indefinitely. 

By  Mr.  Brown: 

Q.  Has  the  Commission  any  more  questions? 

The  Chairman: 
A.  No,  sir. 


613 


GEORGE  STEVENSON,  of  the  Private  Bankers'  Associa- 
tion, spoke  as  follows: 

Mr.  Chairman  and  Gentlemen  of  the  Commission:  As 
was  stated  this  morning  by  one  of  the  gentlemen  who 
spoke,  I  am  not  here  to  ask  for  any  exemption  on  account 
of  the  private  bankers  and  brokers,  but  simply  to  ask 
that  they  be  treated  exactly  as  all  other  business  men  are 
treated.  While  I  represent  in  my  authority  simply  the 
Private  Bankers'  and  Brokers'  Association  of  Philadel- 
phia, having  no  delegated  authority  from  anybody  else 
outside  of  the  City,  I  have  been  on  this  question  for  our 
people  here  so  long  that  I  am  sure  our  interests  are  all 
one. 

The  bankers  and  brokers  have  for  years  been  singled 
out  by  legislative  enactments  for  special  taxation,  to 
which  any  of  our  unincorporated  private  brokerages  have 
been  subjected. 

At  one  time  there  were  on  the  statue  books  five  differ- 
ent acts  of  the  Legislature  which  made  us  liable  to  pay 
about  12  per  cent,  income  tax  after  we  had  taken  out  our 
licenses. 

The  Act  of  1841  classified  a  license  tax  of  $100  on  us 
as  bankers  and  as  exchange  brokers.  As  you  know,  the 
business  of  a  broker  and  the  business  of  a  private  banker 
can  hardly  be  separated.  We  then  had  to  pay  a  3  per 
cent,  tax  at  the  beginning  of  the  year  in  the  matter  of 
licenses  under  the  Act  of  1850.  The  assessors,  in  order 
to  get  at  it,  would  figure  on  the  amount  we  made  the 
year  before ;  and  every  year  we  would  have  to  go  to  them 
and  tell  them  that,  if  they  would  guarantee  us  that  we 
would  make  the  same  money  in  the  present  year  that 
we  did  in  the  last  year,  we  would  not  hesitate  to  pay  it, 
but  that  we  did  not  think  it  was  right  for  us  to  be  com- 
pelled to  pay  the  3  per  cent,  for  the  coming  year,  because 


614 

we  might  die;  but  they  enforced  that,  although  they  did 
not  enforce  it  to  the  fullest  extent. 

Then  there  were  the  Acts  of  1861,  1868  and  1879,  all 
of  which  required  us  to  make  a  sworn  statement  to  the 
Auditor  General  and  pay  3  per  cent,  of  our  net  income. 
The  first  acts  existing  were  either  repealed  or  changed. 
The  Act  of  1868  added  something  to  the  list  of  those  who 
were  taxable  and  the  Act  of  '89  added  some  more. 

We  had  these  questions  up  several  years  ago  before  a 
committee  in  the  House  of  Representatives,  and  also  at 
another  time  when  it  met  in  the  Senate  chamber,  and 
also  again  before  a  Tax  Commission  that  was  formed  here 
and  of  which  Mr.  Patterson  was  one  of  the  members.  In 
all  these  cases,  both  before  the  Committee  of  the  House 
and  the  Tax  Commission,  this  was  cited  as  an  injustice; 
and  in  all  these  cases  they  incorporated  in  their  report 
a  paragraph  which  was  intended  to  relieve  us  of  these. 
The  Tax  Commission  passed  an  Act  suggesting  that,  so  far 
as  we  were  concerned,  we  should  pay  a  tax  for  license  at 
the  commencement  of  the  year,  and  that  we  should  pay 
no  other  tax.  That  passed  the  House  of  Representatives 
and  it  finally  passed  the  Senate.  Eventually,  after 
working  a  number  of  years,  we  secured  the  repeal  of  the 
license  tax  of  four  mills,  but  we  now  pay,  under  the 
Act  of  1907,  a  graded  license  tax  of  five,  ten,  fifteen, 
twenty — up  to  one  hundred  dollars.  Now,  we  have  to 
pay  this  income  tax,  which  nobody  else  pays  in  the  State 
except  ourselves,  but  they  did  make  it  1  per  cent,  upon 
our  gross.  Now,  today,  we  are  paying  a  license  tax  the 
same  as  everybody  else,  but  we  are  also  compelled  to  pay 
a  tax  of  1  per  cent,  on  our  gross  receipts.  I  think  it  is 
very  unjust  that  we  should  have  to  do  it  when  nobody 
else  does.  No  sooner  is  the  return  made  than  it  is  spread 
out  in  the  newspapers,  which,  you  can  understand,  is  a 
very  serious  thing  for  the  business,  more  especially  if  each 
year  is  better  than  the  year  before.  Then,  in  addition  to 
that,  within  the  last  four  or  five  years  we  have  had  to 


615 

make  a  return  of  our  personal  property.  So,  if  the  per- 
sonal property  tax,  the  four  mills  tax  on  money  at 
interest,  and  the  others  are  enforced,  there  is  no  question 
but  what  we  would  have  to  close  up  shop,  simply  because, 
as  you  are  aware,  the  four  mills  tax  is  from  8  to  10  per 
cent,  income  tax  on  our  money  coming  in,  while  the  rate 
for  money  is  from  4  to  5  per  cent.  In  our  business  our 
earnings  are  largely  from  money  at  interest,  and  it  comes 
from  money  at  interest  largely  which  is  not  our  own.  It 
would  be  impossible  for  us  to  resume  the  return.  It 
might  at  some  time  of  the  year  catch  us  with  a  large 
amount  of  securities  passing  through  our  hands  on  which 
we  may  not  have  had  interest  for  more  than  twenty-four 
years.  Now,  if  that  was  the  time  we  had  to  make  the 
return,  we  would  have  to  pay  the  four  mills  tax. 

I  had  these  questions  up  before  and  I  propounded  them 
to  persons  whom  I  thought  might  assist  me,  but  they 
all  said  they  could  not  answer  the  questions. 

Take  a  case  like  this :  Take  a  man  with  $100,000  capital 
in  his  business.  If  he  borrows  $300,000  from  someone  to 
loan  to  somebody,  he  has  to  pay  the  four  mills  tax  on 
the  $300,000,  when  he  only  owns  but  $100,000.  The 
comparison  could  be  made  much  wider  than  that.  There 
are  a  great  many  questions  I  could  propound  to  you.  The 
nature  of  our  business  is  such  that  all,  or  a  very  large 
amount,  of  our  profits  come  from  money  which  we  loan, 
and  if  we  have  to  pay  the  four  mill  tax  that  is  more  than 
the  profit  on  the  whole  thing.  With  these  taxes,  the  rates 
for  money  and  the  rates  for  loans  being  low,  after  we  take 
out  our  expenses  there  is  nothing  left. 

It  seems  to  me  that  the  Legislature  should  class  us  the 
same  as  everybody  else,  making  us  pay  a  license  tax,  but 
not  compel  us  to  pay  taxes  that  nobody  else  is  required 
to  pay.  This  is  the  burden  of  our  argument. 

By  Mr.  Brown: 

Q.  What  has  been  the  cause  of  the  addition  of  this  tax 
upon  your  class? 


616 

A.  The  first  tax? 

Q.  All  of  them. 

A.  The  first  tax  was  passed  away  back  about  forty 
years  ago,  I  think.  I  can  see  no  reason  tor  it.  I  have 
heard  reasons  suggested,  but  I  cannot  say.  There  was  a 
suit  brought  about  forty  years  ago  before  the  Supreme 
Court  to  have  it  set  aside,  but  I  believe  the  decision  was 
against  us  and  we  have  had  to  pay  it  ever  since.  The 
reason  for  the  enforcement  of  the  four  mills  tax  against 
us  in  the  last  year  arose  out  of  a  decision  of  the  Supreme 
Court  in  a  very  peculiar  case;  but,  of  course,  it  would 
be  very  unwise  for  me  to  question  the  decision  of  the 
Supreme  Court.  There  was  a  case  where  a  banker  had 
a  ten  thousand  dollar  mortgage  at  5  per  cent,  and  sought 
to  be  excused  from  payment  of  the  four  mills  tax  because 
he  paid  a  3  per  cent,  income  tax.  The  Court  made  the 
argument  that  the  four  mills  tax  was  forty  dollars,  while 
the  3  per  cent,  income  tax  would  amount  to  one  dollar  and 
fifty  cents.  I  believe  they  had  the  privilege  of  carrying 
it  to  the  Supreme  Court,  and  it  was  argued  that  where 
a  man  had  a  mortgage  of  ten  thousand  dollars  and  re- 
ceived five  hundred  dollars,  he  should  pay  forty  dollars. 
What  he  objected  to  was  that  he  paid  not  only  3  per  cent, 
on  that,  but  3  per  cent,  on  every  cent  he  made.  That 
was  the  reason  it  was  enforced. 


617 


MR.  J.   HAMPTON  BARNES  spoke   as  follows,  under 
interrogatory  of  Mr.  Brown: 

Q.  Do  you  think  the  tax  on  trust  companies  today 
is  as  heavy  as  it  should  be,  Mr.  Barnes? 

A.  Yes,  sir. 

Q.  What  about  the  trust  companies  that  are  earning 
3  per  cent,  dividends.  Do  you  think  the  State  would  be 
justified  in  levying  additional  tax  upon  trust  companies, 
assuming  that  they  could  or  are  able  to  earn  dividends 
of  that  size? 

A.  As  I  understand  it,  the  basis  of  the  taxation  is  the 
property  owner,  and  that  is  the  business  on  which  the 
trust  companies  are  now  taxed. 

Q.  What  is  your  thought  on  the  return  by  the  com- 
panies of  the  deposits  for  which  certificates  have  been 
issued  so  as  to  secure  the  payment  of  the  tax? 

A.  There  are  practically  no  certificates  issued  now. 
The  deposits  of  a  trust  company  are  payable  on  demand 
and  not  on  time.  They  have  the  same  relation  to  the 
depositor  that  his  bank  book  has — merely  a  form  showing 
that  he  has  placed  money  in  the  hands  of  others  who 
are  accountable  to  him. 

Q.  That  is  an  evidence  of  money  bearing  interest? 

A.  No  more  than  a  bank  book  is. 

Q.  Why  should  not  such  money  at  interest  be  taxed 
just  the  same  as  money  that  is  invested  in  a  mortgage? 

A.  That  is  a  question  I  cannot  discuss.  The  usual 
answer  is  that  it  is  current  money  and  not  money  invested. 
One's  bank  account  is  subject  to  draft,  and  it  may  belong 
to  you  or  it  may  belong  to  the  depositor,  or  it  may  be 
money  for  which  he  is  accountable  to  others,  and  he  could 
not  be  said  to  own  any  property  in  the  sense  that  it  should 
be  taxed. 
33 


618 

Q.  There  seems  to  be  a  general  complaint  in  the  City 
that  on  money  at  interest  some  want  two  weeks  time  when 
they  ought  to  pay  it  right  away.  That  is  what  we  are 
trying  to  ascertain — whether  or  not  that  could  be  effec- 
tively and  fairly  done? 

A.  Your  rate  advances  and  creates  principal  nearly 
always,  and  until  the  balance  is  found  you  could  not  say 
what  represented  the  property  of  the  hundreds  of  per- 
sons. 

Q.  Why  couldn't  the  company  return  the  average  de- 
posit to  him  and  then  deduct  the  tax  before  paying  him 
the  interest? 

A.  It  might  be  so  with  an  individual  who  kept  up 
his  personal  account  and  did  not  carry  on  a  business.  If 
he  made  collections  and  deposits  from  time  to  time,  it 
would  only  be  the  difference  between  his  tranactions,  or, 
in  other  words,  his  profits,  which  would  represent  some- 
thing that  should  be  taxed. 

Q.  Is  there  any  difference  in  saving  fund  deposits  and 
those  of  a  trust  company? 

A.  I  am  not  very  familiar  with  saving  fund  organiza- 
tions. 

Q.  We  would  be  very  glad  to  hear  any  thought  you 
may  have  on  the  subject. 

A.  I  have  none  that  I  think  would  be  of  value  to  you. 

By  the  Chairman: 

Q.  Mr.  Barnes,  I  understand  you  are  a  lawyer? 
A.  Yes,  sir. 

Q.  You  are  called  upon  in  your  capacity  to  make  up 
the  reports  for  the  tax  year? 
A.  Yes,  sir. 

Q.  Would  you  find  it  more  advantageous  to  have  that 
report  made  up  at  the  close  of  the  year  and  have  it  close 
the  31st  of  December,  instead  of  the  beginning  of  No- 
vember? 


619 

A.  Yes,  it  would  be  more  advantageous  to  have  the 
fiscal  year  end  with  the  tax  year. 

Q.  So  that  the  treasurers  of  corporations  would  be 
better  able  to  ascertain  the  profits  for  the  year,  when 
closing  December  31,  than  they  could  otherwise,  because 
many  corporations  have  their  business  close  on  the  31st 
on  December? 

A.  That  is  true. 

Q.  Then  you  think  that  would  be  a  commendable 
change  in  the  law? 

A.  1  think  so. 


620 


MR.  HENRY  B.  BARTOW,  of  the  Farmers'  and 
Merchants'  Bank,  called. 

By  Mr.  Brown: 

Q.  Is  there  any  thought  you  have  as  to  any  changes 
in  the  laws. 

A.  I  don't  think  it  would  be  practical  to  tax  certificates 
of  deposit.  They  are  in  and  out  and  bearing  interest 
at  the  same  time  and  the  depositor  can  come  in  and  take 
the  money  out  and  invest  it,  and  that  money  should  not 
be  taxable. 

Q.  Are  there  many  of  these  deposits  in  your  bank? 

A.  "We  have  fourteen  to  fifteen  million  deposits  and 
only  fifteen  thousand  certificates  of  deposit. 

Q.  Is  the  average  about  the  same  as  other  banks? 

A.  "Well,  averaging  the  Philadelphia  National  Banks, 
their  certificates  of  deposits  won't  amount  to  twelve 
thousand. 

Q.  They  are  infinitesimal? 

A.  Yes. 

Q.  Is  there  any  other  feature  of  the  State  laws  relating 
to  National  banks  that  you  think  should  be  gone  into? 

A.  I  think  not. 

Q.  You  think  this  is  the  consensus  of  opinion  among 
the  National  banks? 

A.  We  pay  four  mills,  which  I  think  is  a  fair  return. 

Q.  And  that  is  what  they  all  think? 

A.  I  cannot  speak  for  others;  I  am  only  speaking  for 
our  institution. 

Q.  Our  object  is  to  get  the  thought  of  those  who  are 
interested.  I  thought  the  opinion  of  your  folks  would  be 
a  fair  criterion. 

A.  I  have  never  heard,  but  I  would  be  glad  to  get  the 
Secretary  of  the  Clearing  House,  Mr.  Boyd,  to  write  you 
on  the  subject. 


621 

Mr.  Moyer,  Chairman : 

On  the  question  of  certificates  of  deposits,  I  assume 
that  in  the  City  of  Philadelphia  there  is  not  a  great  deal 
of  that  done  with  the  banks  and  trust  companies;  that 
is  done  principally  through  the  saving  fund  societies. 

Mr.  Brown : 

I  think  you  will  find  this  done  in  the  trust  companies. 

Q.  Take  the  Girard  Trust  Company,  for  an  illustration  ? 

A.  The  amount  of  certificates  of  deposit  is  six  thousand 
in  round  figures.  Then  there  are  others,  of  course,  that 
are  higher. 

By  the  Chairman : 

Q.  Do  you  mean  six  thousand  certificates? 

A.  Six  thousand  dollars. 

Q.  It  is  not  done  with  money  on  two  weeks'  notice? 

A.  No. 

Q.  Do  the  State  officials  ever  make  any  special  effort 
to  ascertain  if  the  returns  made  by  the  banks  are  true  ? 

A.  We  are  examined  by  the  National  Bank  Commission. 

Q.  I  know,  but  do  the  State  officials  ever  make  any 
efforts  to  prove  the  correctness  of  the  reports  made? 

A.  They  take  our  return  as  we  file  it — they  accept  it. 

Q.  That  is  the  way  with  all  the  banks? 

A.  Yes,  sir. 

Mr.  Brown : 

Have  any  of  the  gentlemen  of  the  Commission  any 
questions  to  ask  Mr.  Bartow? 

Mr.  Moyer,  the  Chairman: 

No. 

ADJOURNED  3.30  P.  M.  Next  meeting  to  be  held  in 
Pittsburgh,  Penna.,  on  March  24,  1910. 


622 


Public  meeting  held  at  the  Chamber  of  Commerce, 
Keenan  Building,  Pittsburgh,  Pa.,  Morning,  March  24, 
1910. 

Meeting  called  to  order  by  Vice  Chairman  Gabriel  H. 
Moyer,  at  11.15  A.  M.,  March  24,  1910. 

Vice  Chairman  Moyer:  Gentlemen: — This  Committee 
was  created  by  the  last  Legislature  for  the  purpose  of  hold- 
ing hearings  and  making  certain  recommendations  to  the 
next  Legislature  as  the  result  of  those  hearings,  to  see  what 
could  be  done  to  revise  the  present  taxation  laws  wherein 
they  are  defective.  We  have  selected  as  our  counsel  Francis 
Shunk  Brown,  of  the  Philadelphia  Bar,  who  will  outline 
the  work  of  this  Commission  more  fully. 

Mr.  Brown:  Mr.  Chairman  and  Gentlemen: — As  you 
have  stated,  this  Committee  has  been  appointed  for  the  pur- 
pose of  considering  the  regulation  of  corporations,  and  also 
the  collection,  taxation  and  appropriation  of  State  moneys. 
The  Committee  organized  shortly  after  the  adjournment 
of  the  last  Legislature  in  June  last,  and  it  was  deemed 
expedient  at  that  time  to  commence  active  work  for  the 
reason  that  the  Government  had  been  passing  Federal  laws 
covering  the  same  subject  as  was  in  the  purview  of  this 
resolution.  Nothing  was  done  until  in  January  or  Decem- 
ber, when  the  Secretary  promulgated  laws,  and  regulations 
for  the  collection  of  the  taxes.  It  was  then  considered  wise 
to  proceed  with  our  hearings  so  that  the  sentiment  of  the 
people  who  testify  could  be  had  on  this  subject.  I  think,  if 
I  mistake  not,  that  this  is  the  first,  probably  not — com- 
mittee of  the  Legislature  which  has  gone  about  from  place 
to  place  for  the  purpose  of  gathering  information,  which 
would  be  of  benefit  in  framing  any  new  laws  which  would 
be  proposed  to  the  General  Assembly. 


623 

We  have  met  in  Philadelphia  and  had  several  meetings 
there,  and  we  have  had  before  us  practically  all  the  in- 
terests concerned.  We  first  called  the  charitable  institu- 
tions and  hospitals  to  ascertain  from  them  whether  or  not 
it  is  wise  for  the  State  of  Pennsylvania  to  appropriate 
money  to  take  care  of  institutions  not  under  her  control. 

We  also  called  before  us  the  manufacturing  interests, 
banks,  trust  companies,  practically  every  activity  that  there 
was  in  that  City.  We  are  here  to-day  and  to-morrow  and 
as  long  as  may  be  necessary  to  gather  from  the  people  here 
their  thoughts  and  views  upon  these  subjects.  There  seems 
to  be  an  impression  that  this  Committee  was  appointed  for 
the  purpose  of  increasing  the  revenues  of  the  State,  in 
other  words,  to  increase  the  funds  of  the  State.  It  was 
simply  to  consider  the  present  laws  as  to  the  formation  and 
regulation  of  corporations,  whether  our  laws  were  suffi- 
ciently liberal,  or  whether  they  should  be  corrected  as  to 
the  formation,  regulation  and  taxation,  and  not  for  the 
purpose  of  finding  more  subjects  upon  which  taxes  should 
be  levied.  Now,  as  I  say,  we  are  here  in  your  midst  for  the 
purpose  of  asking  your  assistance  and  co-operation,  so  that 
this  Committee  may  give  to  the  next  Legislature  your  views 
on  the  subject.  You  gentlemen  are  fully  aware  that  these 
subjects  are  being  considered  all  over  the  world  to-day  for 
the  purpose  of  treating  with  these  matters,  and  Pennsyl- 
vania is  simpl^y  in  line  with  the  progressive  movement  that 
is  being  made  in  this  direction. 

We  will  be  very  glad  to  hear  from  those  who  are  especi- 
ally qualified  and  interested  to  speak  upon  the  subjects 
involved  in  this  resolution. 

Mr.  Chairman,  I  have  no  list  except  ten  or  twelve  who 
have  written  to  me  expressing  a  desire  to  be  heard,  and  I 
presume  until  we  get  formally  going,  we  will  have  to  do  the 
best  we  can.  Mr.  Frank  Stephens,  who  represents  the 
Single  Tax  Society  of  Pennsylvania,  is  here  and  desires  to 
be  heard,  and  I  suggest  we  hear  Mr.  Stevens  first,  and  take 
up  the  others  later. 


624 

Frank  Stephens,  representing  the  Single  Tax  Society  of 
Pennsylvania:  Mr.  Chairman  and  Gentlemen  of  the  Com- 
mission : — The  Commission  has  to  do  with  the  consideration 
and  reporting  upon  the  corporation  laws  of  this  State  and 
its  taxes,  and  will  not  have  gone  very  far  in  its  great  work 
without  hearing  the  complaint  that  the  present  taxation 
laws  are  unduly  burdening  real  estate  owners.  I  wish  to 
ask  the  privilege  of  speaking  to  you  about  that,  and  then 
briefly  about  those  taxes  that  are  proposed  to  relieve  real 
estate  owners. 

I  desire  then,  gentlemen,  to  take  so  much  of  your  time 
as  may  be  necessary  to  speak  of  this  complaint,  that  real 
estate  is  already  overburdened,  to  speak  upon  the  sub- 
ject of  property  taxation,  and  what  has  been  considered  in 
that  regard  and  suggested  by  the  Single  Tax  Society  of 
Pennsylvania. 

The  Auditor  General  in  his  last  report  has  called  atten- 
tion to  two  things  relating  to  overburdened  real  estate  at 
the  present  time,  under  the  present  law,  and  many  pro- 
posals have  been  made  to  lessen  that  to  the  last  General 
Assembly  in  its  last  session.  There  were  many  propositions 
offered  to  effect  a  change  in  this  regard.  The  Pennsylva- 
nia State  Grange  called  for  the  equitable  taxation  of  per- 
sonal and  corporate  property,  and  the  complaint  was  made 
that  under  the  present  system  of  real  estate  owners  are 
annually  robbed  of  about  $35,000,000,  and  that  this  policy 
of  the  State  has  driven  from  the  State  over  one  hundred 
thousand  farmers,  from  twenty-two  counties.  If  that  is 
so,  it  is  a  very  serious  matter.  We  are  not  here  to  con- 
tend that  the  farmer  is  not  handicapped.  But  we  think 
there  are  other  elements  entering  into  it. 

The  Grange  brings  for  the  illustration  of  the  hardship 
of  the  present  law.  We  may  suppose  naturally  that  this 
illustration  is  as  strong  as  any  the  Committee  can  show. 

Take  two  citizens  of  the  Commonwealth.  A  buys  a  home 
for  $1,000,  and  is  required  to  pay  a  tax  from  $20  to  $30 
for  the  support  of  the  schools,  roads,  poor,  etc.  B  invests 


625 

his  $1.000  in  personal  property,  bonds  and  mortgages,  and 
is  taxed  $4  for  the  support  of  the  State,  and  nothing  for 
the  home  government,  the  benefit  of  which  he  enjoys 
equally  with  the  other. 

Presumably  these  citizens  are  each  worth  one  thousand 
dollars,  and  live  substantially  on  the  same  plane.  B,  the 
$1,000  bondholder,  it  may  be  assumed,  rents  from  X  a 
house  worth  $1,000  in  which  to  live;  for  this  house  the 
landlord,  X,  charges  rent,  which  rent  includes  interest  on 
the  investment,  prospective  repairs  and  taxes,  $20  to  $30. 
A  and  B,  therefore,  pay  equal  sums  in  support  of  the  home 
government.  We  might  contend  that  B  in  paying  to  the 
government  at  Harrisburg  the  four  mills  tax,  is  paying 
that  much  more  than  A  pays,  but  this  is  not  true.  B  does 
not  actually  pay  the  $4,  although  he  appears  to  do  so.  He 
lent  his  $1,000  on  mortgage  to  a  widow,  on  a  little  house 
assessed  at  $1.000.  B  would  be  satisfied  with  5  per  cent,  net, 
but  as  the  State  penalizes  him  four  mills  for  helping  the 
widow,  he  adds  that  charge  to  the  interest  rate.  The 
widow  therefore  pays  him  5.4  per  cent.,  and  he  pays  the 
State  four-tenths.  Finally,  the  burdens  are  thus  adjusted : 
A  pays  $30,  B  pays  $30,  and  the  widow  pays  $34. 

Thus  the  State  of  Pennsylvania,  indirectly,  unintention- 
ally, but  surely,  mulcts  the  widow  of  an  extra  $4  yearly. 
Why?  Not  because  the  State  has  done  her  a  service,  but 
because  B  has  done  so.  Four  dollars  will  buy  sixty-five 
pounds  of  sugar,  which  is  the  widow's  forced  contribution 
in  excess  of  that  made  by  A  and  B.  Let  us  see  what  be- 
comes of  the  $4.  It  goes  to  Harrisburg,  but  in  due  time  the 
State  Treasury  returns  $3  to  the  county,  according  to  the 
Act  of  June,  1891,  for  the  equalization  of  taxation  and  the 
relief  of  local  taxation  in  real  estate.  Actually,  therefore, 
the  widow  pays  $1  to  support  the  State  Government,  while 
A,  B  and  X  pay  nothing.  Furthermore,  the  widow's  $3 
return  to  relieve  the  unincumbered  dwelling  owned  by  A 
and  X.  So  the  State  tax  on  mortgage  is  a  tax  upon  her 
poverty  to  relieve  their  prosperity. 


626 

Consider  further,  X,  the  landlord  of  B,  himself  lives  in 
his  own  house  assessed  for  $5,000,  though  he  owns  several 
houses  whose  total  assessment  is  $20,000.  It  might  be 
thought  that  he  would  pay  $600  in  taxes,  yet  he  actually 
pays  only  $150  on  the  house  which  he  occupies.  The  bal- 
ance, $450,  of  his  tax  bill  of  $600  is  paid  by  his  various 
tenants,  concealed  in  their  several  monthly  rents.  Each 
tenant  contributes  taxes  to  the  county  in  proportion  to  the 
value  of  the  real  estate  actually  occupied. 

Consider  further :  one  of  the  X  properties  is  occupied  by 
Mrs.  Blank,  who  takes  boarders.  The  boarders  are  charged 
alike  for  food,  but  the  charges  for  lodging  vary.  A  $1,000 
clerk  pays  high  for  the  second  floor  front,  but  a  seamstress 
pays  low  for  an  attic  room.  X,  the  owner,  does  not  actually 
pay  the  tax  upon  that  house,  nor  does  the  landlady,  Mrs. 
Blank,  pay  it ;  it  is  paid  by  the  various  tenants  in  propor- 
tion to  the  value  of  the  real  estate  occupied  by  each.  As 
with  merchandise,  so  with  real  estate,  the  consumer,  tenant, 
pays  all  charges,  including  interest,  profit  and  taxes.  It 
follows  therefore  that  if  all  local  taxes  were  drawn  from 
real  estate  each  citizen,  owner,  tenant  or  sub-tenant  would 
contribute  in  proportion  to  the  value  of  the  real  estate 
actually  occupied  by  him  or  her,  whether  that  real  estate 
were  a  house  or  only  a  room  in  a  house.  Every  person  uses 
real  estate,  must  use  it,  and,  unless  he  is  a  criminal  or  a 
pauper,  must  pay  the  taxes  upon  it.  Furthermore,  people 
in  general  live  on  a  plane  befitting  their  means;  it  follows, 
therefore,  that  an  equitable  real  estate  tax  for  all  purposes 
would  approximate  with  reasonable  closeness  to  that  plaus- 
able  formula  of  taxation  laid  down  by  Louis  Blanc,  viz. : 
"From  each  according  to  his  ability."  Nevertheless,  our 
school  of  thought  improves  upon  that  formula.  The  great 
law  of  Nature  is,  "Service  for  service,"  and  the  State  is 
not  absolved  from  natural  law.  The  most  modern  justifica- 
tion for  taxation  is  by  the  benefit  received  theory.  Purdy 
explains  it  concisely  thus:  "There  is  no  reason  why  differ- 
ent principles  should  be  advanced  to  justify  payments  to 


627 

the  State  from  those  which  justify  business  dealings  between 
man  and  man.  All  ordinary  business  dealings  are  based 
on  the  exchange  of  equivalents.  The  storekeeper  does  not 
grade  his  prices  according  to  the  income  of  the  purchaser, 
but  exacts  the  payment  in  proportion  to  the  value  of  the 
article  sold.  This  is  the  natural  principle  to  be  applied  in 
the  affairs  of  State,  and  each  taxpayer  should  be  called  on 
for  the  equivalent  of  the  pecuniary  benefits  he  receives 
from  the  State — no  more  or  less." 

Concerning  this  pecuniary  benefit  I  shall  speak  later. 

The  study  of  the  incidence  of  taxation  and  its  effect  is 
limitless.  I  can  touch  only  a  few  subjects,  first  asking 
attention  to  recent  proposals  for  increasing  State  revenues. 
As  a  means  towards  such  increase,  and  the  relief  of  real 
estate  locally,  it  was  proposed  to  increase  taxes  upon  mort- 
gages, money  at  interest,  banks  and  savings  funds  having 
capital  stock,  and  upon  ordinary  business  corporations; 
also  upon  manufacturing  corporations  whose  capital  stock 
is  now  exempt  except  as  regards  its  real  estate  locally.  Let 
us  consider  whether  such  proposals  are  politic ;  afterwards, 
if  they  are  possible. 

A  mortgage  is  practically  a  partial  title  paper  to  real 
estate.  The  real  estate  itself  being  taxed,  it  would  appear 
to  be  unjust  to  tax  also  the  paper  title.  It  is  unquestionable 
that  the  tax  is  almost  invariably  shifted  to  the  borrower. 
It  imposes,  therefore,  double  taxation ;  and  incumbered 
property  pays  more  than  a  free  one.  The  impropriety  of 
taxing  mortgages  annually  has  been  acknowledged  by  New 
York  State,  which  in  1906  abolished  the  annual  tax,  sub- 
stituting a  recording  tax  of  five  mills,  paid  once  for  all.  Nor 
are  mortgages  taxed  in  Baltimore. 

Defining  the  word  "capital"  as  wealth  used  in  business 
for  profit,  it  is  an  axiom  of  political  economy  that  taxes 
upon  capital  are  shifted,  will  not  stay  put,  and  are  finally 
borne  by  consumers.  Note  the  advertisements  of  mortgages 
at  5.4  per  cent.  The  report  on  taxation,  1871,  to  Philadel- 
phia City  Councils,  refers  to  mortgage  agreements,  that  the 


628 

borrower  shall  pay  all  taxes  levied  upon  the  principal,  in- 
terest and  rents.  The  Act  of  June  1,  1889,  made  it  un- 
lawful to  require  borrowers  to  pay  the  tax.  Therefore, 
since  that  date  no  law-abiding  citizen  has  required  the 
borrower  to  pay  the  tax;  he  has  simply  raised  the  rate  of 
interest  enough  to  cover  the  tax,  and  then  has  himself  paid 
the  tax  to  the  State.  The  Assembly  of  1889  might  just  as 
effectively  have  passed  a  bill  requiring  the  Susquehanna 
River  to  run  northwest  instead  of  southeast. 

A  bill  to  increase  the  tax  upon  mortgages  and  money  at 
interest  might  justly  be  entitled  "A  bill  to  decrease  the 
supply  of  capital/'  The  Wells  report  to  the  New  York 
Legislature,  referring  to  the  days  when  mortgages  in  some 
counties  of  Pennsylvania  were  exempted  from  taxation, 
said :  ' '  The  influence  of  the  exemption  has  been  most  bene- 
ficial to  the  districts  affected  by  it,  so  much  so,  to  use  the 
words  of  one  conversant  with  the  question,  'that  if  it  were 
possible  to  take  in,  as  from  an  eminence,  a  view  of  the  whole 
State,  the  counties  in  which  mortgages  were  exempt  from 
taxation  would  be  as  readily  distinguished  from  the  others 
as  would  be  a  field  of  luxuriant  wheat  or  corn  from  a  field 
of  scrub  oak  or  brush  wood. '  ' ' 

Vice  Chairman  Moyer : 

Q.  Mr.  Stephens,  you  refer  in  your  argument — you  state 
that  the  State  returns  $3  out  of  $4  to  the  several  counties 
in  this  Commonwealth.  Do  you  think  that  under  the  law 
that  that  really  works  a  hardship  on  the  several  commu- 
nities affected? 

A.  In  what  regard? 

Q.  By  referring  to  the  several  counties,  taxes  raised — 

A.  It  can't  refund  any  more  than  it  gets  from  the  sev- 
eral counties.  As  I  understand,  the  State  collects  and  re- 
funds about  nine  millions  of  dollars.  I  mean  collects  about 
that  and  refunds  about  seventeen  millions  to  the  different 
counties. 

Q.  What  would  you  say  as  to  a  man  having  all  his 


629 

money  invested  in  real  estate,  and  his  neighbor  having  all 
invested  in  personal  property — what  obligation  his  neigh- 
bor who  has  no  money  invested  in  real  estate — what  obli- 
gation is  he  under  to  the  State  ? 

A.  His  money  is  invested  either  in  business  or  in  real 
estate  values;  that  is  where  these  investments  go.  If  you 
tax  these  real  estate  values,  then  these  investments  of  his 
are  paying  revenues  to  the  Government  of  the  State  di- 
rectly and  not  indirectly. 

Q.  Suppose  he  has  $100,000  invested  in  a  business  hav- 
ing no  form  of  taxation,  is  it  fair  that  a  man  should  be 
relieved  from  paying  any  tax? 

A.  It  is  absolutely  fair  from  our  point  of  view,  because 
believing  that  these  things  that  are  right  are  the  only 
things  that  pay  in  the  community,  and  we  believe  that  the 
only  tax  levied  upon  real  estate  is  a  tax  that  is  levied 
upon  a  certain  privilege  which  the  Government  gives 
and  takes  which  he  can  pay  with  no  loss  to  himself.  We 
believe  it  is  no  function  of  the  Government  to  find  out 
how  much  a  man  has,  or  say  a  man  shall  not  have  any 
more  than  this  or  that,  and  that  we  will  take  this  much 
from  him,  and  it  seems  to  us  wholly  misleading  in  this 
connection. 

A  bank  is  a  labor  saving  invention,  a  blessing  to  any 
community,  a  clearing  house  to  a  neighborhood,  and,  as 
most  of  the  transactions  of  banks  are  accomplished  by 
credits  and  debits,  a  bank  is  the  bookkeeper  for  a 
neighborhood.  Why  tax  a  blessing?  Why  not  invite  it? 
If  banks  make  money,  they  do  it  by  giving  service.  The 
present  four  mill  tax  does  not  sound  big,  but  if  my  bank, 
with  $100,000  capital,  has  earned  6  per  cent.,  it  is  an  in- 
come tax  of  6  2-3  per  cent. 

Mr.  Brown: 

Q.  Mr.  Stephens,  taxation  should  be  based  on  the  pro- 
duction that  a  man  has? 

A.  Yes,  sir. 


680 

Q.  What  is  the  difference  in  production  of  a  man  who 
owns  a  house  and  his  next  door  neighbor  who  does  not 
own  any  property,  but  has  the  same  value  in  securities? 

A.  He  must  live  somewhere,  and  where  he  lives  there 
he  is  paying. 

Q.  He  is  living  in  this  house  next  door  that  is  taxed, 
provided  he  is  a  boarder,  and  is  paying  probably  $4  or 
$5  a  week 

A.  Because  he  is  already  paying  for  the  production  in 
the  rent  he  pays,  and  where  he  pays  for  board,  he  is 
charged  for  what  the  owner  of  the  house  is  paying. 

Q.  Do  you  say  tax  should  be  on  the  land? 

A.  All  of  it. 

Q,  How  do  you  value  land  for  taxation — putting  it  to 
natural  value  or  social  value? 

A.  It  would  have  its  worth  in  the  market,  let  the  mar- 
ket determine  that.  Such  a  valuation  is  made  today  by 
every  assessor.  He  says  this  land  is  worth  so  much,  in 
other  words,  it  will  be  commensurate  with  its  rental  value. 
This  land  will  rent  for  so  much  and  that  rent  is  at  the 
present  rate  of  interest. 

Q.  Do  you  know  that  in  Pennsylvania  today  there  is 
a  billion  and  a  half  of  intangible  assets  taxed? 

A.  Yes,  sir,  I  have  heard  that. 

Q.  The  total  value  of  real  estate  in  Pennsylvania  today 
is  about  three  millions  of  dollars? 

A.  Yes,  sir. 

Q.  Now,  isn't  it  a  fact  that  those  who  think  like  you 
have  about  come  to  the  conclusion  that  in  view  of  the 
experience  of  Pennsylvania,  there  is  no  reason  why  they 
should  not  tax  the  intangible  as  well  as  the  tangible 
property  of  Pennsylvania,  because  she  has  reached  one- 
half  of  them  and  the  percentage  is  increasing  far  away 
ahead  of  real  estate? 

A.  Is  it  so  that  she  has  reached  one-half  of  them  ? 

Q.  One-half  of  it. 


631 

A.  Your  assumption  is:  if  these  figures  are  correct,  or 
that  says  you  have  a  return  for  personal  property  to  the 
extent  of  one-half  the  real  estate  value,  but  that  does 
not  prove  that  it  is  to  the  extent  of  one-half  the  true  per- 
sonal valuation.  Our  claim  is  that  no  power  in  the  world 
can  say  what  the  true  value  is. 

Q.  Pennsylvania  has  certainly  surprised  all  other  Com- 
monwealths; isn't  that  a  fact? 

A.  I  can't  give  you  any  information  from  other  States. 

Q.  Let  me  ask  you  how  would  you  tax  this  lot  with  a 
house  off  it? 

A.  I  would  tax  it  at  exactly  the  same  amount  whether 
the  owner  used  it  or  kept  it. 

Q.  What  amount  would  you  tax  it  at,  in  comparison 
with  the  lot  next  door  with  a  twenty-story  building  on  it  ? 

A.  How? 

Q.  Would  you  tax  it  the  same? 

A.  Yes,  sir.  A  real  estate  man  in  estimating  these 
values,  estimates  the  value  of  the  improvement  so  much 
according  to  the  value  of  the  land,  as  distinct  from  the 
land. 

Q.  How  can  he  estimate  the  improvement  without  any 
improvement  on  it? 

A.  Then  he  doesn't  have  to  estimate  it.     He  always 
estimates  the  value  of  the  land  as  a  separate  item. 
Vice  Chairman  Moyer: 

Q.  What  do  you  think  of  the  present  liberal  policy  of 
the  State  appropriating  about  fifteen  millions  of  dollars 
for  the  support  of  the  public  schools  of  the  Commonwealth 
bi-annually,  about  seven  millions  of  dollars  for  charitable 
institutions  and  several  millions  for  the  purpose  of  main- 
taining better  road  systems?  Do  you  believe  that  that 
liberal  policy  could  be  maintained  by  taxing  real  estate 
alone  in  the  Commonwealth? 

A.  I  believe  it  would  far  exceed — I  believe  that  the 
maintenance  of  these  roads  is  a  State  function — I  mean 


632 

a  Government  function.  I  don't  believe  it  is  the  function 
of  the  State  to  give  to  private  institutions. 

Q.  You  mean  charitable  institutions? 

A.  Yes,  sir.  But  there  is  no  question  in  my  mind  if 
such  an  assessment  were  made  on  the  system  that  is  in 
use  in  so  many  places  now,  as  Massachusetts,  New  York, 
New  Jersey,  Ohio,  and  the  principal  cities  of  this 
country,  it  would  bring  up  the  revenues  in  this  State. 

Q.  Your  argument  is  that  the  present  system  is  faulty 
because  of  its  inequity? 

A.  Yes,  and  that  that  is  the  essential  part  of  it. 

Mr.  Hunter:  "We  would  be  very  glad  to  take  you  into 
our  consideration  if  you  would  submit  a  brief.  Is  that 
your  thought,  Mr.  Brown? 

Mr.  Brown:  Yes. 

Mr.  Stephens:  While  it  appears  to  us  that  taxes  upon 
personal  property  are  in  their  nature  unwise  and  inequit- 
able, let  us  consider  the  possibility  of  collecting  them 
equitably.  It  is,  of  course,  possible  to  collect  from  a  per- 
son property  which  is  a  matter  of  public  record,  such 
as  the  capital  stock  of  corporations,  mortgages,  judg- 
ments, etc.  Pennsylvania  collects  large  sums  from  such 
evidences  of  property,  yet  our  methods  are  so  clumsy 
and  puerile  that  evasions  are  coming.  They  will  increase 
ii*  the  temptation  be  increased.  Of  course,  a  bank  cannot 
escape  an  increase  upon  capital  stock,  but  if  the  burden 
becomes  discouraging  there  will  be  fewer  banks.  It 
would  require  a  large  clerical  force  to  audit  the  taxes 
upon  mortgages  and  money  at  interest,  but  if  the  work 
could  be  done  successfully,  then  either  the  rate  of  interest 
would  be  permanently  stiffened,  or  else  such  capital  would 
flow  to  neighboring  States,  where  it  would  be  free  from 
espionage. 

Mr.  Brown: 

Q.  Has  your  society  endeavored  to  secure  the  consensus 
of  opinion  of  the  land  owners  on  this  subject? 

A.  No,  sir. 


633 

Q.  Do  you  think  you  voice  fairly  the  consensus  of 
opinion  of  the  land  owners  of  this  Commonwealth? 

A.  Not  for  one  moment. 

Q.  They  are  practically  unanimous  against  it? 

A.  I  never  saw  a  body  of  people  who  were  not  practi- 
cally unanimous  against  putting  tax  on  them — the  privi- 
lege they  receive  from  the  State.  They  try  to  shift  the 
burden  upon  somebody  else. 

When  Benjamin  Franklin  was  examined  before  the 
British  House  of  Commons  relative  to  taxation,  he  was 
asked,  "Do  not  they  as  much  as  possible  shift  the  tax 
off  from  the  land  to  ease  that,  and  lay  the  burden  heavier 
on  trade?"  He  answered,  "I  have  never  understood  it 
so.  I  never  heard  such  a  thing  suggested.  And,  indeed, 
an  attempt  of  that  kind  could  answer  no  purpose.  The 
merchant  or  trader  is  always  skilled  in  figures  and  ready 
with  his  pen  and  ink.  If  unequal  burdens  are  laid  on 
his  trade,  he  puts  an  additional  price  on  his  goods,  and 
the  consumers,  who  are  chiefly  land  owners,  finally  p^y 
the  greatest  part,  if  not  the  whole." 

From  the  dawn  of  time  men  have  evaded  the  tax  upon 
personalty.  What  is  the  remedy?  There  is  none.  Ten 
thousand  Governments  have  attempted  the  impossible ; 
none  have  succeeded.  When  English  tax  collectors,  to 
induce  correct  returns,  courteously  pulled  the  teeth  of  the 
Jews,  did  they  succeed?  A  previous  witness  has  quoted 
Gibbon,  who  tells  of  the  rack  and  the  scourge  and  horrid 
deaths,  those  persuasive  but  fruitless  methods  of  the 
Roman  tax  gatherer.  Josephus  tells  us  of  a  tax  gatherer 
who,  to  induce  correct  returns,  beheaded  20  leading  citi- 
zens. Have  any  such  Governments  succeeded?  F^om  the 
horrible  terms  of  Lancaster  county  to  the  horrid  deaths 
of  Rome,  every  device  has  failed.  Everything  and  every- 
where. You  tell  us  this  is  ancient  history.  I  call  modern 
witnesses.  The  present  Mayor  of  New  York  City  a  few 
weeks  ago  characterized  the  operation  of  the  general 
property  tax  law  as  grotesque,  calling  for  the  abolition 


684 

of  the  law.  The  State  of  New  York  is  financially  pros- 
perous only  because  its  outrageous  laws  taxing  personal 
property  are  systematically  despised  and  evaded,  except, 
alas,  by  the  widow  and  orphan,  whose  legacies  are  taxed 
in  the  Orphans'  Court.  Upon  them,  says  Purdy,  "The 
cruelty  is  sometimes  heartbreaking." 

I  don't  want  to  claim  everything  for  single  tax.  I 
would  call  your  attention  to  these  quotations  from  certain 
authorities;  for  instance,  William  Penn;  he  says  in  a 
certain  discussion  of  his  that:  "If  all  men  were  so  far 
tenants  to  the  public  that  the  superfluities  of  gain  and 
expense  were  applied  to  the  exigencies  thereof,  it  would 
put  an  end  to  taxes,  leave  never  a  beggar,  and  make  the 
greatest  bank  for  National  trade  in  Europe." 

Public  attention  has  recently  been  called  to  Franklin's 
letter  in  1768  to  Dupont,  whose  name  is  borne  by  the 
powder  works  in  Delaware,  where  Dupont  died.  Ben- 
jamin Franklin  was  an  able  speaker  and  a  single  taxer. 
In  this  letter  Franklin  declared  his  adherence  to  the  new 
French  doctrine  known  as  the  "impot  unique,"  the  one 
tax,  afterward  developed  and  preached  by  Henry  George 
under  the  name  of  Single  Tax.  Franklin,  as  I  have  al- 
ready said,  was  a  single  taxer.  At  the  settled  age  of  62, 
Franklin  claimed  that  he  was  perfectly  charmed  with  it, 
because  it  was  such  a  mixture  of  goodness  and  wisdom, 
and  that  he  hoped  it  would  increase  and  grow  until  it 
should  govern  the  whole  race. 

In  conclusion,  this  matter  will  either  be  a  tax  of  labor 
or  what  labor  does,  or  of  privilege  and  the  many  privi- 
leges that  the  State  gives  to  any  individual,  the  privilege 
of  certain  land  that  in  reality  was  not  made  by  any  man 
and  .that  no  man  has  any  title  to  it. 

I  thank  you  very  much. 


635 


DR.  SAMUEL  B.  McCORMICK,  Chancellor  of  the 
University  of  Pittsburgh. 

Mr.  Chairman:  As  I  understand  Mr.  Brown  and  the 
Committee,  the  purpose  is  two  or  three  fold  of  this  Com- 
mittee. From  your  statement  one  is  with  reference  to 
the  classes  of  institutions  which  are  the  recipients  of  this 
tax,  which  is  levied  upon  various  interests  of  the  State. 

I  represent,  speaking  entirely  upon  that  point — I  repre- 
sent the  University  of  Pittsburgh.  It  is  well  known  that 
in  the  State  of  Pennsylvania  there  are  the  two  Universities : 
one  in  the  City  of  Philadelphia  and  the  other  in  the  City 
of  Pittsburgh — these  two  apart  from  the  State  School  at 
State  College,  and  that  these  institutions  have  been  re- 
ceiving some  support  from  the  State  on  the  ground  of 
public  utility  by  service  to  the  State ;  and  the  justification 
for  this  lies  both  in  the  fact  that  these  institutions  are 
doing  charitable  work,  and  that  they  are  doing  an  educa- 
tional work,  which  can  be  done  alone  by  institutions  of 
this  kind  and  under  the  support  of  the  State.  It  is  well 
known  that  in  many  of  the  States  of  the  East,  all  States 
in  the  South  and  West,  very  large  appropriations  are 
made  to  what  is  called  the  State  University,  sometimes  in- 
cluding all  educational  interests,  and  sometimes  stand- 
ing by  itself,  with  the  State 's  School  mechanical  and  agri- 
cultural, as  well  as  the  larger  department  of  education  in 
the  normal  schools;  sometimes  these  are  all  together  .In 
one,  sometimes  separated  in  three.  In  the  State  of  Penn- 
sylvania, it  has  come  about  in  the  process  of  time  that 
two  universities  were  found  to  be  necessary,  and  these 
were  established  in  a  great  distance  one  from  the  other — 
—in  Philadelphia,  I  think,  about  1740,  and  the  University 
in  1787.  This  is  because  of  the  fact  that  the  natural  fea- 
tures of  the  State  practically  demand  that  there  shall 
be  two  institutions  instead  of  one.  And  it  is  to  be  re- 


636 

membered  that  the  appropriations  are  to  be  made  to  these 
institutions,  excepting  the  State  School,  which  stands  by 
itself,  because  of  the  fact  that  they  do  serve  the  State. 
They  are  not  colleges,  nor  in  either  case  is  any  of  the 
money  appropriated  used  for  the  college  of  this  University, 
it  is  used  properly  with  reference  to  that  part  of  the  in- 
stitutions that  serve  the  State. 

Now  I  wish  to  call  attention,  in  the  very  briefest  form, 
to  the  work  which  the  University  of  Pittsburgh — and 
it  is  exactly  the  same  as  in  the  Eastern  part  of  the  State 
— which  the  University  of  Pittsburgh  is  doing.  In  the 
first  place,  I  wish  to  mention  the  local  charitable  work 
that  has  been  done.  I  want  to  call  attention  to  three  of 
these  things,  and  these  really  are  matters  of  information, 
not  only  to  your  Committee  or  Commission,  but  to  the  com- 
munity itself,  because  so  much  of  this  work  is  done  with- 
out the  general  public  knowing  it.  First  of  all  I  want 
to  refer  to  the  dental  school,  and  there  are  very  few 
people  who  realize  how  essential  the  dental  school  is  to 
the  health  and  well-being  of  the  community.  With  refer- 
ence to  the  infirmary  at  the  dental  school — the  clinic, 
we  call  it — there  were  three  thousand  patients,  charity 
patients,  treated  last  year.  At  the  present  time  the 
charitable  institution,  or  say  the  dental  school,  is  doing 
work  for  the  children  of  the  Industrial  Home  for  Cripples, 
the  Home  of  the  Good  Shepherd,  Pittsburgh  Free  Dis- 
pensary, as  well  as  the  public  schools  in  the  poorer  dis- 
tricts of  the  city.  And  in  these  institutions  free  atten- 
tion is  given  to  the  teeth  and  instruction  in  regard  to  them. 
In  one  institution  a  room  has  been  fitted  up  for  this  class 
of  patients,  and  a  chair  has  been  installed  in  another. 
Now,  the  faculty,  in  addition  to  all  this,  is  arranging  to 
extend  the  work  to  all  public  schools  who  are  not  able 
to  pay  for  it.  Now,  not  only  that,  but  all  over  Western 
Pennsylvania  there  are  difficult  cases,  and  often-times 
charitable  cases,  where  the  patients  are  unable  to  pay  and 
the  school  of  dentistry  receives  these  people  from  all  over 


637 

the  county  from  points  150  miles  from  the  city,  and  many 
interesting  cases  which  I  have  in  mind  have  been  it- 
attended  to  absolutely  free  of  charge.  And  this  work 
will  go  right  on  so  as  to  cover  all  parts  of  this  work,  which 
must  be  done  on  a  charity  basis.  I  speak  rapidly,  and  I 
speak  with  reference  to  this  thing  which  is  least  thought 
of.  I  suppose  there  are  no  two  men  who  know  anything 
about  the  tremendous  important  work  that  has  been  done 
and  is  being  done  by  the  University  of  Pittsburgh.  I  am 
sure  the  University  of  Philadelphia  is  doing  for  the  pub- 
lic along  this  line.  Now,  in  the  next  place,  we  have 
the  Kaufmann  Clinic  in  connection  with  another  depart- 
ment of  the  University.  Many  things  have  been  added 
during  this  year  that  have  increased  the  usefulness  of  that 
department.  A  resident  physician  has  been  employed 
and  a  large  number  of  daily  prescriptions  are  given,  and 
650  patients  are  treated  monthly  absolutely  without  a 
penny  of  expense  on  their  part,  mostly  people  who  are 
unable  to  entirely  take  care  of  themselves  along  this 
line. 

Then,  with  reference  to  the  maternity  hospital :  a  build- 
ing has  been  erected,  and  many,  many  things  have  been 
done,  and  a  resident  physician  has  been  employed,  and 
the  fourth  year  students  in  the  medical  department  are 
put  in  there  on  duty  in  the  hospital,  and  I  do  not  need 
to  describe  that  all  these  patients  are  charity  patients. 
I  do  not  think  there  are  more  than  2  per  cent,  that  are 
anything  else  but  charity  patients,  and  when  we  stop  to 
think,  gentlemen,  there  are  five  thousand  children,  babies, 
in  the  City  of  Pittsburgh,  delivered  without  a  physician 
at  all,  with  no  service,  or  simply  the  services  of  a  mid- 
wife, and  think  of  the  facilities  that  we  have  at  our 
disposal  for  doing  this  work,  only  able  to  do  a  little  part 
for  these  unfortunate  persons,  just  a  few  hundredths  of 
all  that  five  thousand,  we  can  see  how  essential  is  this 
maternity  hospital,  and  the  kind  of  work  that  it  is  doing. 
And  now  something  must  be  done  for  the  City  of  Pitts- 


638 

burgh  to  bring  up  a  number  that  are  to  be  cared  for 
properly.  A  great  work  must  be  done,  and  it  can  only 
be  done  through  the  service  of  the  State.  Now,  those  are 
some  of  the  features  of  the  work,  done  on  a  charitable 
basis,  of  the  Infirmaries  of  the  State.  It  is  a  fundamental 
charity  work,  a  work  that  is  limited  only  by  the  amount 
of  money  that  is  at  our  disposal  for  this  purpose. 
Vice  Chairman  Moyer: 

Q.  Have  you  an  endowment? 

A.  It  is  practically  nothing.  It  is  so  inadequate — it  is 
a  mere  trifle,  comes  from  friends'  gifts. 

Now,  with  reference  to  the  work  indicated  which  is 
done  in  the — I  have  no  doubt  at  all  the  same  thing  is 
true  of  the  University  of  Pennsylvania.  The  work  done 
in  the  University  is  for  the  entire  community,  which  is 
not  a  local  work.  None  of  the  appropriation  ever  goes 
to  our  college.  It  goes  to  aid  the  several  lines  of  pro- 
fessional education  which  the  University  supplies  in  the 
matter  of  law,  medicine,  pharmacy,  dentistry,  engineering. 
I  refer  now  to  that  part  of  the  work  of  instruction  for 
teachers  which  is  not  done  by  normal  schools.  In  all 
these,  as  well  as  economics,  it  is  done  for  the  entire  Western 
part  of  the  State,  having  no  reference  at  all  to  any  local 
duty. 

I  will  refer  to  one  or  two  things.  The  University  has 
been  organized  completely  in  separate  schools,  eleven  in 
all;  the  college  proper  one,  and  our  observatory  as  two, 
which  is  entirely  scientific;  there  are  only  four  studies 
there;  omitting  those  two,  we  have  the  graduate  school 
for  the  entire  State,  we  have  the  engineering  school  which 
is  for  the  entire  "Western  part  of  the  State,  school  of  mines, 
school  of  education,  school  of  economics,  medicine,  law, 
pharmacy  and  dentistry,  making  nine  in  all,  nine  de- 
partments of  the  University,  but  are  serving  not  only 
local  interests  but  interests  of  the  State,  and  rendering 
that  service  to  the  State  which  is  the  basis  upon  which 
appropriations  are  made  by  the  Legislature  for  educa- 
tional purposes. 


639 

In  our  economic  school  we  have  developed  a  system, 
which  is  designed  to  meet  the  needs  of  young  men  who 
cannot  spare  the  time  during  the  day,  and  Philadelphia  has 
passed  us  in  that,  for  they  have  been  at  it  longer  than  we, 
by  rendering  a  service  to  the  State  in  this  way  in  the 
evening  work,  and  this  is  true  also  in  the  department  of 
education,  which  is  of  infinite  value.  The  practical  value 
of  that  work  among  young  men  cannot  be  over-estimated. 
In  the  development  of  the  University  along  these  several 
lines  we  have  brought  students  from  every  part  of  the 
Western  part  of  the  State  of  Pennsylvania.  Some  twelve 
or  fourteen  hundred's — I  don't  remember  exactly  whether 
it  was  twelve  or  fourtten  hundred — of  students  will  be 
or  have  been  enrolled  in  the  University  this  year;  all, 
with  the  exception  of  about  one  hundred  and  fifty,  cover- 
ing these  departments  which  belong  to  the  entire 
State — the  departments  which  are  of  public  benefit. 

Now,  it  is  for  this  reason,  and  for  the  additional  reason 
that  such  universities,  expensive  as  they  are,  cannot  pos- 
sibly be  maintained  by  private  beneficence,  such  as 
Chicago  and  Leland  Standford,  which  have  some  one  per- 
son who  is  able  to  furnish  the  enormous  sum  of  money 
required.  It  is  because  of  the  absolute  necessity  of  these 
institutions  and  the  community  that  the  University  o? 
Pennsylvania — the  two  of  them — have  heretofore  asked 
and  have  very  generously  received  the  aid  of  the  State. 
It  would  be  a  public  calamity,  when  we  come  to  think  of 
what  poorly  educated  physicians  mean  to  a  community, 
poor  dentists,  poor  men  along  all  these  lines,  poor  en- 
gineers to  do  our  work,  poor  teachers  in  our  high  schools, 
and  when  we  consider  what  poorly  educated  men  in  these 
things  mean  in  the  community,  we  can  see  how  absolutely 
necessary  these  two  institutions  are  to  the  State.  The 
other  one  I  do  not  speak  for,  because  it  rests  on  a  different 
basis. 

I  call  your  attention  to  a  final  thought— that  is,  these 
institutions  are  necessary  in  large  cities  because  it  is 


640 

only  in  large  cities  that  they  can  have  the  surroundings 
to  do  their  work.  In  our  medical  department  it  is  the  big 
clinic  that  makes  it  so  valuable  to  the  students.  The 
economic  conditions  around  the  engineer — we  are  familiar 
with  the  fact  that  Pittsburgh  is  the  greatest  center  of  en- 
gineering in  the  world,  such  conditions  furnish  tremendous 
liberality  for  that  kind  of  work.  These  two  institutions 
have  been  established  in  Pittsburgh  and  Philadelphia  not 
because  they  were  the  first  two  large  communities  in  his- 
tory, but  because  they  furnish  the  environment  for  such 
institutions.  That  is  the  general  scheme.  I  have  covered 
it  rapidly,  so  that  I  may  not  unduly  take  your  time.  That 
is,  in  general,  the  organization,  and  the  work  that  we  are 
doing :  first,  fundamentally,  charitable ;  and,  secondly, 
educational  for  the  whole  community,  not  part,  this  is 
essentially  fundamental  to  the  well-being  of  the  State. 

I  will  be  very  glad  to  answer  questions. 

Mr.  Brown :  You  have  spoken  of  the  benefit  resulting  to 
the  whole  community — what  do  you  mean?  What  is  the 
extent  of  the  community? 

A.  From  the  mountains  west,  that  is  the  community  in 
general. 

Q.  I  ask  you  if  your  graduates  come  from  all  over  the 
State? 

A.  I  can  say  they  do.  I  do  not  mean  to  say  that — we 
represent  a  dozen  States  for  that  matter,  and  students  come 
from  every  part  of  the  State  of  Pennsylvania  and  from 
other  States  also.  Of  course,  when  you  get  those  who  come 
from  other  States  out,  you  still  have  the  major  portion  of 
them.  The  students  mostly  come  from  the  western  end 
of  Pennsylvania,  but  in  addition  to  that,  some  come  from 
all  over  the  State  of  Pennsylvania. 

Q.  What  is  your  thought  as  to  what  extent  the  State  of 
Pennsylvania  should  appropriate  money  to  support  your 
University  ? 

A.  If  to  the  furthest  possible  limit  to  enable  the  Uni- 
versity to  do  its  work. 


641 

Q.  Well,  has  the  receipt  of  State  appropriations  tended 
to  diminish  the  private  contribution  to  your  University? 

A.  On  the  contrary,  just  the  opposite  of  that.  It  is  true, 
besides,  that  the  larger  appropriation  of  the  State  of  Penn- 
sylvania increases  the  amount  of  private  gifts.  That  not 
only  has  been  so,  but  is  bound  inevitably  to  be  so,  but 
the  State  and  private  are  both  essential  to  keep  pace  with 
the  work. 

Q.  What  portion  do  the  private  bear  to  the  State  ap- 
propriations ? 

A.  Pretty  fair  pace.  They  go  a  little  differently  but 
pretty  nearly  equal  in  the  last  four  years.  Last  year,  for 
instance,  we  raised  between  $250,000  and  $300,000  for  the 
University,  and  the  appropriation  for  the  two  years  was 
$325,000.  That  will  give  you  a  good  idea.  This  year 
we  are  trying  to  raise  an  equal  amount  of  $250,000 ;  that, 
of  course,  would  mean  that  the  private  would  be  much 
in  excess  of  the  State  appropriation. 

Q.  Do  you  feel  you  have  attained  your  limit  on  private 
appropriations  ? 

A.  We  hope  to  increase  that  very  much,  and  we  shall 
get  it  very  much  larger  after  awhile.  Sometime  we  may 
get  to  a  place  where  the  people  will  become  particularly 
generous,  and  we  could  lessen  the  amount,  but  not  with- 
out decreasing  the  efficiency  of  the  kind  of  service  ren- 
dered by  this  University.  The  time  will  never  come,  I 
think,  when  the  State  should  not  make  its  appropria- 
tion to  this  work.  It  is  the  work  for  the  State  so  directly 
that  the  health  of  the  State  is  involved  in  it.  All  these 
things  are  so  essentially  important  to  the  health  of  the 
State  that  the  State  should  support  the  work  of  the  Uni- 
versity. I  am  not  speaking  for  the  main  college,  that  is 
a  matter  for  private  individuals.  But  those  things  that 
involve  professional  education,  wherein  a  man  practices 
on  the  people,  wherein  the  public  welfare  depends  on  the 
knowledge  and  skill  of  the  practitioner,  this  is  our  thought ; 
that  the  State  should  make  its  contribution,  and  I  think 
34 


642 

that  is  so,  gentlemen,  and  I  trust  it  will  never  be  lost  sight 
of  for  the  University  of  Pennsylvania  and  Pittsburgh, 
and  the  necessity  of  having  the  State's  direct  interest  in 
the  institution. 

Vice-Chairman  Moyer: 

Q.  Does  the  State  hold  title  to  this  property? 

A.  No,  except  in  both  cases  the  State  appropriated  tho 
charter;  in  1787  the  State  chartered  the  Pittsburgh  Acad- 
emy. In  1819  the  State  chartered  the  University  of  Pitts- 
burgh, University  of  Western  Pennsylvania,  and  gave  in 
that  act,  or  supplemental  act,  the  ground  upon  which  it 
should  be  built,  which,  as  it  happened,  was  the  park  in 
Allegheny,  which  at  that  time  the  rights  of  the  lot  holders 
were  such  that  they  were  not  willing  to  surrender  up  the 
ground,  and  the  State  commuted  the  original  grant  to 
money.  And  it  will  be  seen  that  the  State  of  Pennsylvania 
not  only  chartered  but  established  the  University  of  Pitts- 
burgh. 

Q.  What  would  be  your  thought  of  the  consolidation 
of  these  universities? 

A.  That  cannot  be  an  account  of  the  natural  features 
of  Pennsylvania. 

Q.  What  kind  of  an  obligation  do  you  think  rests  upon 
the  State? 

A.  That  is  an  obligation,  I  would  say,  as  the  corpora- 
tion is  in  both  cases  a  direct  charter  of  the  State,  it  is 
not  under  a  general  law,  it  does  not  hold  title  to  these 
buildings,  but  the  State  is  back  of  the  organization,  I 
understand. 

Q.  Only  so  far  as  it  appropriates  money  for  its  main- 
tenance ? 

A.  I  mean,  in  the  matter  of  creating  it,  and,  therefore, 
being  back  of  it,  it  is  purely,  not  directly,  under  some 
general  law,  it  is  under  the  direct  act  of  the  Legislature 
itself.  These  universities  have  been  brought  into  exist- 
ence, but  that  is  merely  managing  for  the  State,  no  indi- 


643 

vidual  can  ever  claim  title  in  these  institutions.  The 
State  is  managing  these  institutions  through  the  Board  of 
Trustees,  which  it  has  created.  The  obligation  is  just  what 
I  referred  to,  the  obligation  to  the  public  health.  These 
institutions  were  created  directly  by  the  State  of  Penn- 
sylvania. The  State  has  its  own  institution,  managed  by 
Boards  of  Trustees,  which  are  under  the  direction  of  the 
charter,  and  the  State,  by  its  own  men,  controls  them, 
and  the  work  that  they  are  doing  is  purely  for  the  well- 
being  of  the  community,  and  it  is  on  that  ground,  I  think, 
it  is  necessary  for  the  State  to  appropriate  money  for 
these  institutions. 

Q.  There  is  a  great  deal  of  discussion  favorable  to  with- 
drawing State  appropriations  to  our  institutions? 

A.  I  should  think  that  would  be  very  unfortunate  if 
that  should  be  done.  These  hospitals  are  created  not  for 
any  private  interests — I  refer  to  the  real  hospitals — I  don 't 
refer  to  private  hospitals,  but  I  refer  to  hospitals  that 
are  managed  by  a  Board  of  Trustees,  who  have  no  private 
interest  in  them,  and  the  experience  of  the  past  has  shown 
that  the  poor  and  unfortunate  are  cared  for  only  through 
public  aid.  If  you  were  to  throw  it  over  upon  private 
beneficence,  it  would  be  done,  there  is  something  in  the 
nature  of  man  which  responds  to  any  demand  made 
upon  him,  but  it  would  not  be  done  as  it  is  being  done 
to-day.  It  would  be  one  of  the  most  unfortunate  things 
that  would  ver  happen  anywhere  if  that  help  should  be 
withdrawn  from  those  hospitals  which  are  properly  char- 
tered and  have  no  personal  or  private  interest  in  them. 
The  argument  is  still  more  profound,  because  these  insti- 
tutions are  serving  their  community.  Their  whole  reason 
is  for  the  service  they  can  render  to  increase  the  knowl- 
edge, not  only  educationally,  but  turning  out  skilled  men 
and  women  in  these  several  departments,  and  without  them 
the  community  would  just  go  down,  down,  down,  down. 
The  State  has  a  direct  obligation.  It  cannot  discharge 
that  obligation  without  distributing  its  money  equitably. 
It  is  your  place  to  make  it  as  equitable  as  possible. 


644 

By  Mr.  Brown : 

Q.  Is  there  any  reason  why  there  should  not  be  a  con- 
solidation of  these  hospitals?  Could  better  results  be  ob- 
tained by  having  fewer  and  each  better  qualified? 

A.  I  have  never  given  thought  to  that.  Hospitals  should 
be  in  different  parts  of  the  city. 

Q.  That  is  included. 

A.  Yes,  for  the  reason  there  is  also,  in  a  city  located 
like  this,  centers  of  population  that  require  hospitals,  and 
I  would  imagine  that  our  relation  to  these  hospitals  is 
very  close,  you  understand,  because  of  the  essential  be- 
tween the  two. 

Q.  Does  your  university  use  these  hospitals  for  clinic 
purposes  ? 

A.  Yes,  sir,  practically  all  of  them,  that  is  one  thing 
that  makes  the  special  department  of  our  university  al- 
most of  priceless  value  to  the  vicinity,  because  of  the  fa- 
cilities it  has  for  teaching  these  young  men,  the  very 
best  that  can  be  gotten  in  the  State  of  Pennsylvania. 

Q.  I  ask  you  this  question  because  I  have  received  a 
number  of  letters  saying  that  there  are  too  many  of  these 
hospitals. 

A.  You  will  have  to  get  some  person  better  posted  on 
that.  That  may  be  true  for  the  moment,  and  not  for  the 
future.  There  may  be  at  any  particular  moment  an  in- 
crease, but  a  community  like  this  will  soon  catch  up  to 
the  overflow. 

Q.  Do  these  institutions,  so  far  as  you  know,  give  prefer- 
ence to  any  class  of  physicians? 

A.  Not  that  I  know  of. 

Q.  Complaint  was  made  in  Philadelphia  that  prefer- 
ence was  shown  to  some  physicians  ? 

A.  I  do  not  think  that  that  is  true  in  this  community. 
It  has  never  come  to  my  ears. 

Q.  How  do  you  keep  tab  on  the  State  money  ? 

A.  Every  dollar  of  it,  in  all  institutions — in  our  insti- 
tution ? 


645 

Q.  Yes. 

A.  Every  dollar  of  it.  The  auditor  comes  there  four 
times  a  year  and  goes  over  the  accounts. 

Q.  How  about  the  present  method  of  payment,  are  you 
handicapped  ? 

A.  No,  sir. 

Q.  I  have  letters  suggesting  that  there  should  be  a 
State  Board,  which  should  purchase  all  supplies  in  bulk 
and  then  furnish  these  supplies  upon  requisition,  the  idea 
being  that  the  State  <?ould  buy  them  more  cheaply  than 
institutions  ? 

A.  That  might  be.  That  would  be  a  matter  of  experi- 
ence. Let  each  individual  institution  get  under  the  di- 
rection of  the  State  and  take  its  place  and  get  the  lowest 
price.  The  things  are  not — there  is  not  very  much  profit 
in  them. 

Q.  Get  a  dollar's  worth  for  every  dollar  expended? 

A.  Yes,  sir. 

Q.  Under  the  present  system — assuming  the  merits  01 
distribution  of  charity  in  the  way  you  are  putting  it — 
assuming  that  certain  State  institutions  which  should  be 
built,  ought  the  State  to  first  finish  these  before  she  dis- 
tributes this  money  to  private  institutions? 

A.  My  theory  is  better  go  right  on  doing  part  and  grad- 
ually working  up. 

Q.  Do  you  think  the  greatest  good  and  the  greatest  worK 
could  be  accomplished  under  the  present  system? 

A.  Yes,  sir. 

Q.  You  do  not  use  ahead? 

A.  Oh,  no. 

Vice-Chairman  Moyer: 
Q.  Isn't  it  necessary? 

Mr.  "Woodward: 

Q.  The  auditor  comes  generally  each  quarter  T 
A.  That  is  true  about  that.    I  think  that  is  true. 


646 

Mr.  Brown : 

Q.  Knowing  the  character  of  these  institutions,  is  there 
any  reason  why  they  shouldn't  have  the  money  paid  just 
as  well  in  advance  as  in  the  end? 

A.  So  far  as  I  know,  there  is  no  reason  at  all. 

Q.  Do  these  men  serve  without  pay? 

A.  Absolutely  so,  and  that  is  one  of  the  marvels — ren- 
dering service  without  absolutely  a  penny  of  pay — not  a 
penny,  directly  or  indirectly,  which  is  one  of  the  greatest 
things  in  the  world. 

Q.  Have  you  folks  made  any  effort  to  ascertain  the  differ- 
ence in  price  paid  for  your  supplies  as  compared  with  the 
price  paid  by  others  ? 

A.  We  watch  it  very  carefully  in  our  hospitals. 

Q.  By  equitable  proportions  to  each  institution? 
A.  Yes,  sir.    It  is  like  doing  all  the  work  at  home  before 
you  do  work  in  a  foreign  county. 

Q.  Suppose  I  say  that  in  thirty-four  States  in  the  Union 
not  a  dollar  is  contributed,  and  in  ten,  one  of  which  is 
New  York,  no  money  is  appropriated  for  private  institu- 
tions, and  Pennsylvania  is  practically  exclusive  in  that, 
what  conclusion  would  you  draw  from  that? 

A.  One  conclusion  would  be,  that  it  is  about  time  that 
Pennsylvania  began  to  toot  her  own  horn. 

Q.  That  it  is  about  time  the  other  States  are  getting  in? 

A.  Yes ;  they  are  beginning  to  see  the  necessity  for  doing 
these  things,  and  even  old  New  England  is  waking  up.  I 
have  been  in  the  Middle  West  and  West,  part  of  my  life — 
Colorado  and  Missouri — and  I  am  not  very  old  yet ;  there 
is  a  good  deal  of  reflection  on  Pennsylvania  along  certain 
lines.  I  want  to  tell  you  that  there  is  a  whole  lot  of  things 
in  which  Pennsylvania  is  so  far  ahead  of  the  others  that 
it  is  about  time  people  were  making  them  known,  and  that 
is  one  of  them,  Mr.  Brown.  It  would  be  almost  impossible  to 
have  all  these  things  universally  established.  That  would 
not  be  reasonable,  you  could  not  expect  that.  But  the 


647 

tremendous  work  that  Pennsylvania  is  doing  along  cer- 
tain lines,  is,  in  my  opinion,  it  is  about  time  the  rest  of 
the  country  was  thinking  about  getting  in  the  same  band 
wagon. 

Q.  You  think  that  the  money  appropriated  for  charity  is 
fairly  expended? 

A.  Yes ;  that  is  just  what  I  mean. 

By  Vice-Chairman  Moyer: 

Q.  So  far  as  you  know? 

A.  Yes,  sir;  so  far  as  I  know  that  is  true.  It  certainly 
would  be  possible,  with  the  large  amounts  of  money  ap- 
propriated— it  would  be  possible — it  would  be  impossible 
that  some  would  not  be  misappropriated  and  misspent, 
you  cannot  get  perfection  anywhere,  but  I  think  most  of 
the  institutions  are  managed  in  the  best  manner,  and  Pitts- 
burgh here  demonstrates  these  features,  and  for  the  most 
part,  I  should  say  they  are  wisely  and  economically  handled. 

Q.  Assuming  that  these  monies  are  all  wisely  expended, 
and  that  the  State  is  in  need  of  more  funds,  do  you  think 
that  these  people,  the  representative  business  men  of  this 
City,  that  they  would  be  willing  to  have  the  taxables  in- 
creased ? 

A.  I  do  not  know.     I  never  asked  them  that  question. 

Q.  If  the  State  performs  these  services,  do  you  think 
more  revenues  should  be  raised  for  these  purposes? 

A.  I  presume  that  would  be  true.  I  think  it  is 
fundamentally  necessary.  I  do  not  know  any  more  im- 
portant matter  before  us  than  the  matter  of  taxation — 
than  the  matter  of  proper,  wise,  just  and  equitable  admin- 
istering of  the  laws  of  taxation.  But,  on  the  other  hand, 
the  causes  for  which  this  money  is  given  are  so  eminently 
necessary  and  good,  that  I  feel  that  good  men  everywhere 
would  be  ready  to  respond  to  proper  taxation  to  support 
it.  That  would  be  my  idea  in  that  matter.  I  have  never 
been  a  single  taxer,  and  am  not  up  on  it,  I  want  to  ask 
Mr.  Stephens  this  question:  If  this  lot  here  is  compared 


648 

with  a  corresponding  lot  about  twenty  miles  from  Pitts- 
burgh on  a  farm,  what  is  it  that  gives  this  lot  its  larger  social 
value  if  he  disregards  the  buildings  altogether  ? 

By  Mr.  Stephens : 

A.  That  which  gives  it  land  value  is  not  anything  which 
the  owner  of  that  land  has  done.  It  is  not  the  building  on 
that  particular  plot  that  gives  it  value.  If  the  building 
were  entirely  torn  down,  the  value  of  the  land  would  re- 
main. Therefore,  the  value  of  that  lot,  which  makes  it 
more  valuable  than  the  one  twenty  miles  hence,  is  the  social 
value. 

By  Dr.  McCormick: 

Q.  But,  Mr.  Stephens,  that  social  value  is  made  by  the 
very  thing  that  you  disregard. 

Mr.  Brown :  In  other  words,  he  is  taxing  the  social  value ; 
his  idea  is,  that  if  we  took  that  off  there  would  be  no  oc- 
casion to  tax  anything  else. 

Here  recess  was  taken  until  2  o  'clock. 


649 


Public  meeting,  Pittsburgh,  Pa.,  afternoon,  March  24, 
1910. 

And  now,  the  hour  of  2  P.  M.  having  arrived,  the  Com- 
mission met  pursuant  to  adjournment. 

A.  M.  IMBRIE,  representing  the  Allegheny  County  Bar 
Association,  spoke  as  follows : 

The  Bar  Association  received  a  communication  from  your 
Committee,  which  was  sent  to  several  other  people.  This 
communication  was  referred  to  the  Legislative  Committee, 
of  which  I  have  the  honor  to  be  Chairman.  The  Committee 
is  composed  of  Mr.  Hall,  Mr.  Dalzell,  Mr.  Miller  and  Mr. 
Acheson.  We  took  the  matter  up  and  came  to  the  con- 
clusion that  in  view  of  the  great  subject,  the  question  of 
taxation  would  be  discussed  by  other  people.  We  dropped 
that  and  didn't  consider  it.  We  were  more  concerned 
about  matters  relating  to  corporations,  which  we  took  up — 
not  many  of  them — but  what  we  have  are  simply  some  sug- 
gestions to  the  Committee  for  the  correction  of  some  errors 
and  troubles  which  naturally  arise;  and  in  order  that  you 
may  have  it  in  full,  these  are  the  subjects  that  were  as- 
signed to  the  different  members :  To  W.  S.  Miller,  Esq.,  the 
subject  of  requiring  the  production  to  the  Auditor  General 
of  proper  evidence  of  valuable  assets  representing  the  stock 
and  bonds  of  a  foreign  corporation,  before  allowing  it  to 
do  business  within  the  State ;  to  M.  W.  Acheson,  Esq.,  was 
referred  the  question  of  the  proper  recording  of  the 
charters  of  foreign  corporations;  to  William  S.  Dalzell, 
Esq.,  was  referred  the  subject  of  having  something  in  the 
name  used  by  a  foreign  corporation  within  the  State  of 
Pennsylvania  to  indicate  the  state  of  its  incorporation,  also 
the  subject  of  service  upon  joint  stock  companies,  limited 
or  joint  partnerships  organized  under  the  laws  of  certain 
35 


650 

States ;  to  William  M.  Hall,  Esq.,  was  referred  the  question 
of  amendments  to  the  laws  of  taxation  of  corporations. 

The  subject  assigned  to  Mr.  Miller  was  discussed  by  him, 
using  as  a  basis  the  Act  of  1901,  which  is  an  Act  that  re- 
quires the  payment  by  foreign  corporations  of  certain  large 
bonuses,  and  further  prescribes  the  terms  in  which  foreign 
corporations  make  application  at  Harrisburg.  That  being 
prescribed  by  the  terms  of  the  statute,  of  course  the  Auditor 
General  has  nothing  at  all  to  do  with  it.  Now  the  fifth 
paragraph  of  that  act  is  described  as  follows : 

1  'The  amount  of  its  bonded  indebtedness," 

which  only  calls  for  the  statement  that  the  bonded  indebted- 
ness is  a  certain  amount.  That  amount  may  mean  some- 
thing, and  it  may  mean  nothing,  but  it  goes  there  on  the 
record.  I  will  give  you  a  practical  suggestion  of  the  case 
when  I  have  finished.  This  letter  of  Mr.  Miller's  suggests 
that  that  should  be  amended  as  follows : 

"The  amount  of  its  bonded  indebtedness  and  how 
said  indebtedness  was  incurred  and  created,  and 
whether  for  money,  labor  or  services  or  property,  and 
if  for  labor,  services  or  property,  a  full  description  of 
such  property,  labor  or  services," 

the  idea  being  to  place  on  record  actually  what  this  in- 
debtedness represents,  which  is  not  required  at  the  present 
time. 

The  seventh  clause  is  as  follows: 

"The  amount  of  capital  paid  in." 

That  may  mean  something  or  may  mean  nothing.  Mr. 
Miller  suggests  that  this  be  amended  as  follows: 

"The  amount  of  capital  paid  in,  and  how  such  pay- 
ment was  made,  and  whether  such  payment  was  made 
in  money  or  property  actually  received  or  services 
rendered,  stating  the  amount  of  money  so  paid,  if  any ; 
the  character  and  description  of  the  property  used  in 
making  such  payment,  if  any;  and  the  value  thereof 


651 

and  the  labor  and  services  rendered  for  such  payment, 
if  any;  and  the  price  thereof." 

If  a  corporation  makes  a  return  to  the  Auditor  General, 
representing  its  capital  as  five  hundred  thousand  dollars, 
if  the  Auditor  General  finds  out  that  such  is  not  the  case, 
and  finds  out  exactly  what  that  amount  is,  it  would  be  a 
very  great  protection  to  every  citizen  in  the  Commonwealth 
who  had  business  dealings  with  that  corporation.  Then  in 
addition  to  that,  this  would  follow : 

"The  amount  of  capital  stock  issued  and  whether 
such  stock  was  issued  for  money,  property,  labor  or 
services,  and  the  description,  character  and  value  of 
such  money,  property,  labor  and  services. " 

Then  there  should  be  added  to  the  ninth  clause  a  section 
that  would  provide  that  the  Auditor  General  should  have 
the  authority  to  make  an  examination  of  the  condition  of 
the  corporation  with  reference  to  its  stock  and  bonded  in- 
debtedness, and  if  after  such  examination  he  was  con- 
vinced that  it  did  not  represent  a  true  valuation,  he  would 
thereupon  refuse  to  allow  it  to  do  business  in  the  State  of 
Pennsylvania.  The  clause  reads  as  follows: 

"That  if  upon  investigation  of  such  report  to  the 
Auditor  General,  it  shall  appear  to  him  that  the  in- 
debtedness of  such  foreign  corporation  has  not  been 
incurred  or  created  in  good  faith,  or  for  value  received, 
or  that  the  capital  claimed  by  it  to  be  paid  in  has  not 
been  fully  paid  in  good  faith,  or  that  the  capital  stock 
issued  has  not  been  issued  in  good  faith  and  for  money, 
property,  labor  or  services  of  the  value  represented 
by  such  stock,  the  A.uditor  General  shall  refuse  to  issue 
to  said  foreign  corporation  a  certificate  that  it  has  com- 
plied with  the  laws  of  this  Commonwealth,  and  such 
foreign  corporation  shall  not  be  entitled  to  engage  in, 
or  carry  on,  business  within  this  Commonwealth  until 
it  has  complied  with  all  the  requirements  and  pro- 
visions of  this  act, ' ' 


652 

The  second  subject  arises  from  the  effect  that  a  failure 
to  record  the  certificate  of  incorporation  or  the  permit  to 
a  foreign  corporation  granted  by  the  State,  in  the  county 
in  which  its  business  is  carried  on,  shall  not  forfeit  the  right 
of  such  corporation  to  maintain  suits.  That  is  done  under 
the  present  law,  and  a  foreign  corporation  is  prohibited 
from  doing  business  in  the  State  of  Pennsylvania.  Ex- 
actly what  that  term  means  is  a  matter  of  very  great  dis- 
cussion and  of  many  decisions  in  our  Courts.  A  corpora- 
tion will  come  in  and  make  a  contract  to  erect  a  building. 
After  it  his  finished  its  work  often  some  dispute  arises,  and 
the  party  who  gets  the  benefit  of  that  work — and  I  will 
give  you  a  practical  illustration  shortly — availing  itself  of 
this  condition,  says,  "You  are  not  authorized  to  do  busi- 
ness in  the  State  of  Pennsylvania/'  The  corporation 
comes  into  Court,  and  the  Court  decides  against  it,  and  it 
loses  that  whole  contract. 

On  this  question  of  authorizing  a  corporation  to  do  busi- 
ness in  the  State  of  Pennsylvania,  without  any  investiga- 
tion being  made  of  its  bonded  indebtedness,  stock  and  cap- 
ital— some  years  ago  there  was  a  corporation  organized 
under  the  laws  of  the  State  of  New  Jersey.  First  it  went 
into  a  neighboring  State  and  bought  real  estate,  for  which 
it  paid  less  than  fifteen  thousand  dollars.  It  gave  a  pur- 
chase money  mortgage  for  some  ten  or  twelve  or  fifteen 
thousand  dollars,  and  then  went  to  New  York  and  gave  a 
mortgage  for  five  hundred  thousand  dollars,  which  repre- 
sented its  capital  stock  of  five  hundred  thousand  dollars.  It 
was  placed  on  record,  all  the  property  which  they  had,  and 
which  cost  between  ten  and  fifteen  thousand  dollars.  Bonds 
were  issued  and  placed  in  the  market,  and  quoted  in  the 
stock  market,  and  these  bonds  were  run  up  to  a  hundred 
and  five  or  a  hundred  and  ten.  A  financial  institution, 
supposing  that  it  was  all  right  that  these  were  the  true 
values,  loaned  a  large  amount  of  money.  After  these  peo- 
ple got  the  bonds  disposed  of  the  bank  had  the  bonds  and 
the  other  people  had  the  money.  Now  if  such  an  arrange- 


653 

ment  was  made,  and  the  Auditor  General  had  the  authority 
to  investigate  these  corporations,  he  would  have  found  the 
conditions  that  existed,  and  then  not  allowed  them  to  do 
business  in  the  State,  and  such  a  thing  would  not  have 
happened,  which  cost  somewhere  between  fifty  and  a  hun- 
dred thousand  dollars. 

Now,  as  an  illustration  of  the  other  point:  I  think  it 
was  a  Delaware  corporation,  erected  a  plant  for  a  party 
here  in  Allegheny  county.  It  spent  large  sums  of  money, 
and  after  the  thing  was  completed  there  was  still  a  balance 
due  of  twenty-five  or  thirty  thousand  dollars.  A  dispute 
arose  about  the  payment.  Suit  was  brought  in  the  United 
States  Court.  The  defence  was  set  up  that  it  was  doing 
business  in  the  State  of  Pennsylvania  without  having  been 
properly  registered.  It  had  been  advised  by  its  own  coun- 
sel that  it  was  not  doing  business  under  that  statute.  The 
Court  decided  that  it  was,  and  while  they  had  gotten  a 
verdict  of  between  twenty-five  and  thirty  thousand  dollars 
— for  the  amount  still  due — the  Court  directed  that  the 
verdict  be  entered  for  the  defendant.  Now  it  has  been  sug- 
gested that  that  works  a  very  great  hardship  to  a  corpora- 
tion that  of  necessity  comes  into  the  State  of  Pennsylva- 
nia in  a  single  transaction,  and  through  a  failure  to 
properly  register  loses  the  amount  of  the  contract  that  is 
justly  due  it.  And  we  have  suggested  that  that  may  be 
remedied  by  the  imposition  of  a  penalty,  heavy  if  you  want, 
to  take  it  out  of  the  hands  of  someone  to  take  advantage  of 
and  actually  pilfer  from  those  who  have  done  the  work. 

By  Mr.  Cox: 

Q.  What  purpose  would  the  foreign  corporation  have  in 
not  complying  with  the  law? 

A.  They  are  here  only  for  a  single  contract  in  Pennsyl- 
vania, and  do  not  see  the  necessity  of  registering,  and  a 
great  many  do  not  know  or  suspect  that  there  is  such  a 
statute  here. 

Q.  You  refer  to  the  Michigan  cases? 


654 

A.  No,  I  think  the  case  came  from  Buffalo,  and  was  tried 
in  the  United  States  Court,  where  twenty-six  thousand  dol- 
lars was  actually  cut  out. 

Q.  There  was  a  case  from  Michigan  tried? 

A.  Yes,  sir.  I  had  a  concrete  example  of  my  own.  A 
client  of  mine  came  from  a  sister  State  and  had  a  claim  of 
some  twenty-five  thousand  dollars,  and  there  was  a  little 
dispute,  and  I  advised  a  settlement  at  a  loss  rather  than 
risk  the  Courts. 

By  Mr.  Brown: 

Q.  Don't  you  think  in  the  first  case  it  was  the  careless- 
ness of  the  trust  company  in  not  making  an  investigation? 

A.  You  can  put  it  that  way  if  you  want.  It  is  true,  but 
here  is  a  case  if  the  Auditor  General  had  the  authority  and 
had  taken  the  trouble  to  make  an  examination,  he  would 
have  found  a  five  hundred  thousand  dollar  mortgage  on  a 
piece  of  property  that  cost  less  than  fifteen  thousand  dol- 
lars, and  would  have  thereby  protected  the  citizens. 

By  Mr.  Moyer : 

Q.  Do  you  know  any  good  reason  why  a  foreign  cor- 
poration should  not  be  permitted  to  hold  property  in  the 
State? 

A.  No,  sir. 

Mr.  Brown :  I  think  the  trouble  is  that  there  are  some 
difficulties  about  the  present  law  on  the  subject.  The  sev- 
eral Acts  of  1881,  1887,  1891  and  1893  prohibited  the 
manufacture  of  certain  things  and  withheld  certain  rights 
from  them,  and  one  of  the  reasons  why  the  Governor  did 
not  sign  the  latest  bill  drafted  on  the  subject  was  because 
it  did  not  clear  things  up. 

Mr.  Imbrie :  A  client  of  mine  in  Youngstown  came  over 
into  Lawrence  county,  and  bought  a  large  amount  of 
limestone  property.  After  they  were  in  possession — 
never  supposing  that  there  was  anything  else  than  that 
they  had  a  perfect  right  to  hold  the  property — after 


655 

taking  title  he  heard  about  this  statute  and  sent  his  at- 
torney to  Pittsburgh  to  see  me,  and  make  an  examination 
to  see  what  could  be  done.  As  long  as  the  thing  was 
in  that  shape  he  could  not  get  the  stone  out.  There  was  a 
way — the  only  possible  way  would  be  to  make  a  convey- 
ance to  some  one  that  could  hold  it  in  this  State.  We 
should  have  passed  an  Act  which  would  allow  foreign 
corporations  to  hold  real  estate  in  this  State. 

Mr.  Brown :  I  think  it  would  be  highly  helpful  if  your 
association  would  do  something  in  this  matter. 

Mr.  Imbrie :  I  can  see  no  reason  why  a  foreign  corpora- 
tion once  registered  should  not  be  a  citizen,  and  prevent 
the  necessity  of  a  foreign  attachment  against  them, 
considering  them  as  non-residents.  I  see  no  reason  why 
they  should  not  be.  The  Auditor  General  could  find  out 
whether  they  were  the  real  thing  or  not.  If  such  an 
examination  as  suggested  were  to  be  made,  you  could 
depend  on  your  records. 

Mr.  Brown : 

Q.  Your  idea  is  to  place  them  on  the  same  standing 
as  a  domestic  corporation  1 

A.  Yes,  sir. 

Mr.  Brown:  I  think  that  would  give  them  a  power 
which  they  ought  not  to  have. 

Mr.  Mover: 

Q.  This  proposed  legislation  would  cure  it? 
A.  Yes,  sir. 

Mr.  Brown :  My  idea  is  this :  if  those  specially  qualified 
in  this  matter  would  give  their  ideas  in  some  concrete 
form  and  if  we  got  it  from  several  sources,  then  we  will 
be  able  to  get  the  best  out  of  it. 

Mr.  Imbrie :  That  is  what  we  tried  to  give  you  on  this 
particular  subject. 

Mr.  Brown:  You  are   going  to  draft  the   act? 


656 

Mr.  Imbrie:  I  am  not  certain  about  that.  It  would 
be  a  good  deal  of  work.  However,  I  will  refer  it  to  the 
Committee. 

Mr.  Cox :  It  would  not  be  difficult  to  embody  the  sug- 
gestions in  an  Act. 

Mr.  Mover:  If  your  Committee  holds  stock  in  these 
foreign  corporations,  I  venture  to  say  that  we  will  have 
some  semblance  of  an  act. 

Mr.  Imbrie :  Our  association  has  instructed  the  Legis- 
lative Committee  to  render  any  possible  assistance  we 
can. 

The  next  question  with  reference  to  foreign  corpora- 
tions is  that  of  the  ^registering  or  the  recording  of  the 
charter.  A  domestic  corporation,  desiring  to  do  business 
in  Allegheny  county,  is  required  to  record  its  charter 
here.  This  is  not  required  of  foreign  corporations.  They 
register  at  Harrisburg. 

If  a  domestic  corporation  does  business  in  the  City  of 
Pittsburgh,  and  a  man  wishes  to  know  anything  about 
that  corporation,  he  can,  in  a  half  an  hour,  go  to  the 
Recorder's  Office  and  find  out  the  condition  of  that  com- 
pany, and  what  it  is  authorized  to  do.  It  seems  there 
ought  to  be  no  distinction  between  a  foreign  and  a  domes- 
tic corporation  with  reference  to  the  recording  of  the  char- 
ter, and  Mr.  Acheson's  letter  suggests  an  Act  requiring 
foreign  corporations  doing  business  or  owning  property  in 
Pennsylvania  to  record  their  charters  in  every  county 
where  the  corporation  owns  land  or  has  an  office;  if  in 
Pittsburgh,  it  should  be  recorded  here.  Wherever  its 
principal  office  or  place  of  business  is,  it  ought  to  have  its 
charter  recorded  in  that  county. 

The  next  point  which  came  up  for  discussion  is  this :  a 
foreign  corporation  may  execute  an  agreement  or  enter 
into  a  contract,  and  yet  there  is  nothing  in  this,  or  any- 
thing that  the  paper  may  contain,  to  indicate  the  State 
under  which  its  acts — under  whose  laws.  Now,  that  can 


667 

be  cured  at  the  time  of  the  registering  of  the  company 
by  stating  this:  "The  State  of  New  York,"  if  it  was 
organized  there,  or  the  "State  of  New  Jersey, "  if  organ- 
ized there.  So  that  every  contract  which  it  makes  will 
show  exactly  from  which  State  it  comes.  To  give  an 
example  of  that :  Not  very  long  ago  a  client  of  mine  was 
very  anxious  to  find  out  about  the  organization  of  a  cer- 
tain company.  It  was  with  the  very  greatest  difficulty 
that  I  ascertained  in  what  State  it  was  organized.  It  took 
about  three  weeks.  I  finally  did  get  the  information  that 
it  was  organized  in  the  State  of  Iowa.  If  that  company 
had  been  required  to  add  to  its  signature  that  it  was 
organized  under  the  laws  of  the  State  of  Iowa,  or  organ- 
ized in  the  State  of  Iowa,  that  difficulty  would  have  been 
done  away  with. 

Mr.  Cox: 

Q.  Doesn't  the  certificate  at  Harrisburg  disclose  that, 
if  you  write  there  ? 

A.  But  this  company  was  not  even  registered  in  Har- 
risburg, although  it  had  made  a  contract  here.  I  take 
it  that  if  our  own  State  would  require  this,  it  would  only 
be  a  short  time  until  the  other  States  adopted  it,  and 
every  contract  made  would  indicate  the  State  from  which 
the  company  comes. 

There  is  one  other  point.  There  are  certain  partner- 
ships and  joint  stock  associations,  etc.,  doing  business  in 
this  State,  and  who  obstruct  the  administration  by  tech- 
nical objections.  I  refer  to  certain  express  companies — 
the  Adams  Express  Company  and,  I  believe,  the  United 
States  Company,  which  are  simply  partnerships.  In  one 
instance,  I  think,  three  suits  were  brought  against  the 
Adams  Express  Company  before  one  was  finally  gotten 
that  would  hold. 

If  there  was  a  law  requiring  partnerships  that  were 
organized  under  a  special  law  of  the  State  of  New  York 
or  the  State  of  Colorado,  to  register  the  same  here  in  our 


658 

own  State,  that  would  protect  the  citizens  from  this 
difficulty  in  obtaining  service,  or  in  bringing  suit,  and 
not  being  able  to  get  service  at  all.  In  Mr.  Dalzell's 
letter  on  that  point  he  has  suggested  some  method  by 
which  that  can  be  remedied.  He  suggests  that  there 
ought  to  be  a  provision  of  law  with  regard  to  them,  to 
the  effect  that  no  foreign  joint  stock  company,  limited  or 
joint  partnership,  or  other  unincorporated  society  or 
association,  shall  do  any  business  with  this  Common- 
wealth until  it  shall  have  established  an  office  or  offices 
and  appointed  an  agent  or  agents  for  the  transaction  of 
business.  And,  further,  that  it  shall  not  be  lawful  for 
any  such  joint  stock  association,  etc.,  to  do  any  business 
within  this  Commonwealth  until  it  shall  have  filed  in  the 
office  of  the  Secretary  of  the  Commonwealth  a  statement 
showing  the  title  under  which  it  does  business,  the  char- 
acter of  its  organization,  the  location  of  its  office  or 
offices,  and  the  name  or  names  of  the  authorized  agent  or 
agents  within  the  State  of  Pennsylvania  upon  whom  ser- 
vice can  be  had.  And,  further,  that  when  said  joint 
stock  association,  partnership,  etc.,  shall  have  so  desig- 
nated its  title,  or  the  name  under  which  it  is  to  do  business, 
it  shall  be  sufficient  for  the  purpose  of  maintaining  litiga- 
tion against  it  to  name  it  as  defendant  under  its  registered 
name ;  and  no  reference  shall  be  necessary  «o  any  individ- 
uals who  may  be  partners  in  such  association,  whether 
such  partners  be  residents  of  Pennsylvania  or  elsewhere. 

Since  our  report  was  prepared,  there  was  a  communica- 
tion sent  to  the  Committee  with  reference  to  public  service 
corporations.  I  have  simply  attached  that  here.  We 
have  not  discussed  it,  nor  do  I  propose  doing  so.  It  is  a 
very  large  subject,  into  which  I  don't  care  to  go.  I  will 
leave  it  with  your  Secretary. 

By  Mr.  Brown : 

Q.  Have  you  any  information,  or  any  views,  as  to  the 
length  of  time  elapsing  between  the  application  and  the 


659 

granting  of  the  charter?  Other  States  do  it  practically 
all  at  once,  and  we  take  several  weeks. 

A.  I  do  not  see  how  any  particular  advantage  accrues 
by  all  this  delay.  I  can  give  you  an  example  of  that. 
Some  clients  of  mine  desired  to  enter  into  a  contract. 
They  did  not  want  to  do  it  individually,  or  as  individuals. 
They  wanted  a  corporation  organized  at  once.  I  left 
here  that  night  and  went  to  Jersey  City,  arriving  there 
the  next  morning,  and  that  evening  I  left  Jersey  City 
with  a  charter  in  my  pocket.  I  came  home  here,  and  the 
next  day  the  transaction  was  closed. 

Q.  You  could  just  as  easily  have  domesticated  that 
corporation  in  another  week? 

A.  Yes,  sir.  I  can  see  no  advantage  coming  from  this 
publication,  or  of  this  delay  after  the  application  is  pre- 
sented. I  don't  know  that  any  corporation  was  ever 
knocked  out  by  any  person  appearing  against  them  after 
the  fact  was  advertised  that  "A"  &  "B"  so-and-so  were 
going  to  Harrisburg  to  make  an  application  there  for  a 
charter. 

Mr.  Cox :  Some  of  our  street  railway  companies  were. 

Mr.  Imbrie :  I  am  speaking  of  joint  business  corpora- 
tions. In  regard  to  public  service  corporations,  I  think 
the  law  is  very  good.  Of  course,  it  prevents  the  incorpora- 
tion of  passenger  railways  and  street  car  companies, 
without  regard  to  the  needs  of  the  public. 


660 


B.  Z.  SMITH,  Esq.,  representing  the  Board  for  Assess- 
ment and  Revision  of  Taxes,  Pittsburgh,  Pa.,  spoke 
as  follows : 

I  represent  here  the  Board  for  the  Assessment  and 
Revision  of  Taxes  of  Allegheny  county.  My  special  ca- 
pacity is  Chairman  of  the  Board,  and  I  speak  for  it.  I 
do  not  desire  to  present  myself  here  as  an  expert  in  the 
matter  of  taxation,  as  my  experience  only  extends  to  the 
time  that  I  accepted  the  appointment — three  years  ago — 
yet  in  three  years  we  have  had  opportunity  to  observe 
some  of  the  phases  of  the  assessment  of  taxation  under  the 
present  laws  of  Pennsylvania,  and  one  or  two  phases  of 
that  subject  I  would  like  to  present  here.  As  to  the  taxa- 
tion of  real  estate,  the  present  system  in  Pennsylvania  is  a 
good  one,  and  it  has  been  proved  by  many,  many  years 
of  experience  that  it  is  a  good  one.  I  believe  that  real 
estate  in  Pennsylvania,  under  the  present  system,  is  fairly 
equitably  taxed. 

I  listened  with  a  great  deal  of  interest  to  Mr.  Stevens, 
the  President  of  the  Single  Tax  Society  of  Pennsylvania. 
I  don't  confess  any  allegiance  to  that  doctrine,  which  is 
only  so  far  a  doctrine.  But  there  were  some  things  he 
said  to  which  we  will  all  agree,  and  one  was  that  the  main 
object  in  taxation  was  equality  and  certainty.  A 
little  investigation  will  show  what  interest  the  people  take 
in  the  equality  of  taxation.  They  do  not  always  know 
what  the  taxes  are  for.  They  do  not  know  whether  they 
are  too  great  or  too  little  for  the  object  intended,  but 
they  are  quite  willing  to  pay  their  shares,  provided  they 
are  not  more  than  their  neighbors;  so  we  have  in  our 
office,  in  which  we  do  a  very  large  business,  we  have  con- 
tinually the  experience  of  a  man  coming  in  to  examine 
his  real  estate  assessment  in  the  office,  and  their  investi- 
gation goes  this  far:  "What  is  my  neighbor  assessed  on 


661 

this  side  of  me,  and  on  that  side  of  me,  and  across  the 
street,  and  around  the  corner?  Is  it  the  same  as  mine? 
If  so,  I  am  satisfied. "  And  he  is,  and  he  goes  away  satis- 
fied that  he  is  assessed  equably  with  his  neighbor.  He 
is  not  a  real  estate  expert,  and  could  not  compare  his 
property  with  a  city  lot,  nor  a  city  lot  with  a  rural  lot,  but 
he  knows  what  he  paid  for  it,  and  if  he  believes  he  is 
treated  with  equality,  he  goes  away  satisfied.  And,  as  I 
said  before,  generally  speaking,  the  taxation  of  real  estate 
in  the  State  of  Pennsylvania  is  fairly  equable  and  equably 
administered.  It  now  comes  to  the  very  question  that  he 
raised  here — the  other  subject  that  I  wish  to  speak  about 
to  you,  and  discuss  with  you — and  that  is  the  matter  of 
the  taxation  of  personal  property.  This  is  a  much  more 
difficult  matter.  The  question  is  how  we  can  obtain 
equality,  and  how  can  we  obtain  certainty. 

We  cannot  obtain  equality  unless  every  man  who  owns 
taxable  securities  and  mortgages,  bonds,  or  stock,  or 
moneys  at  interest  in  savings  banks — unless  every  man  is 
taxed.  And  you  and  I  know  that  every  man  is  not  taxed. 
I  have  had  this  matter  frequently  under  discussion  with 
the  head  clerk  or  what  we  call  our  State  Department. 
Our  board  is  a  State  Board,  or  at  least  the  Supreme  Court 
has  so  decided.  I  don't  know  whether  you  know  the  law 
that  constituted  us.  The  Board  was  constituted  by  the 
Legislature  to  assess  for  county  taxation,  and  also  per- 
sonal property  for  State  taxation,  under  the  four  mill 
revenue  act.  The  act  provided  that  the  Board  should  be 
appointed  by  the  Common  Pleas  judges  of  the  county,  and 
it  was  a  question  whether  or  not  the  act  was  constitu- 
tional. I  believe  the  Bar  was  practically  unanimous  that 
it  was  not,  and  the  Supreme  Court  was  just  as  unanimous 
that  it  was,  and  as  they  had  the  last  say,  it  so  happened, 
and  that  is  the  reason  this  present  Board  exists. 

But,  as  I  began  to  say  before  my  explanation  of  the  Act 
governing  us,  in  conversation  with  the  chief  clerk  of  our 
department — and  he  has  been  in  that  office  for  many 


662 

years,  and  long  before  we  took  hold — I  asked  him  as  to 
his  opinion  of  the  amount  of  personal  property  that  es- 
caped taxation  under  the  present  Act,  and  he  said  about 
one-third.  That,  as  you  understand,  is  merely  a  matter 
of  guesswork.  There  is  no  such  machinery  at  the  dispo- 
sition of  the  assessor  to  enable  him  to  ascertain  just  the 
amount  of  personal  property  in  this  county.  In  the  first 
place,  we  know  we  do  not  get  a  return  from  all  owners 
of  personal  property,  and  in  the  second  place  the  returns 
are  not  always  correct  or  honest.  More  than  once,  when 
one  of  the  men  who  had  been  returning  for  some  time  a 
certain  amount  of  money  passed  to  the  Great  Beyond,  and 
when  we  come  to  have  a  return  from  the  executor  of  the 
estate,  we  find  that  it  far  exceeded  the  amount  ever  re- 
turned by  the  decedent.  Again,  we  know  there  are  a 
number  of  people  who  are  not  assessed,  because,  plainly 
speaking,  they  cannot  be  caught  under  the  present  ma- 
chinery. If  methods  can  be  devised  by  which  every  man 
who  is  subjec  to  taxation,  as  to  this  class  of  property, 
can  be  assessed,  then  it  becomes  an  equitable  law  in  its 
action,  and  a  certain  law  in  its  action  so  far.  I  must 
confess  when  it  comes  to  that  point  I  cannot  offer  you 
many  suggestions.  We  have  under  the  system  here  a 
great  many  assessors.  We  have  the  best  men  we  can  get 
at  three  dollars  a  day  to  do  the  work.  As  to  this  par- 
ticular act  of  personal  taxation,  we  try  to  make  this  im- 
pression on  our  assessors,  each  of  them  individually,  be- 
fore they  got  out,  that  there  is  a  great  deal  of  personal 
property  in  the  county  that  is  neither  returned  nor  taxed, 
and  that  we  look  to  them  to  see  that  this  is  corrected.  In 
our  preliminary  journal,  in  which  we  take  the  occupation 
tax  and  some  others,  we  say  in  that  preliminary  journal, 
"You  are  not  called  upon  to  make  assessment  on  real 
property.  Not  only  are  you  to  collect  the  names  for  the  oc- 
cupation tax,  but  you  are  to  find  out  in  every  way  you 
can  the  names  of  the  people  who  have,  or  you  have  reason 
to  think,  have  personal  property,  and  you  are  to  serve 


663 

these  people  at  the  proper  time  with  notices  from  this 
office,  and  you  are  to  find  out  and  see  if  they  make  re- 
turns ;  and  if  they  do  not  make  returns,  you  are  to  report 
it  to  this  office,  and  we  will  make  the  assessment  author- 
ized by  law, ' '  and  so  it  is  followed  out.  This  is  what  we  do 
and  we  do  it  with  all  the  vigor  we  are  capable  of,  and  yet 
we  knoAv  a  very  large  amount  of  personal  property  owned 
in  Allegheny  county,  taxable  under  the  revenue  act,  is  not 
assessed,  and  no  tax  is  paid.  How  much  there  is  of  it  is 
a  matter  of  great  conjecture.  I  asked  the  head  clerk 
what  his  opinion  was,  and  he  said  that  he  believed  at  least 
one-third  of  the  property  that  was  taxable  escaped  taxa- 
tion. And  he  is  a  man  familiar  with  the  work,  and  most 
faithful  and  competent  as  Mr.  Cox,  who  knows  him  per- 
sonally, wrill  testify. 

By  Mr.  Hunter : 

Q.  Is  an  individual,  say  holding  ten  thousand  dollars 
worth,  or  any  amount  of  corporation  bonds  or  securities — 
is  he  required  to  make  a  return  to  you  or  to  your  Board  of 
those  holdings,  provided  he  knows  that  the  corporation  is- 
suing those  securities  pays  the  tax  ? 

A.  He  is  not  obliged  to  return  them  for  taxation,  unless 
they  are  stocks  or  bonds  of  a  foreign  corporation  that 
come  under  the  Taxation  Act.  Under  the  Act  authorizing 
a  four-mill  revenue  tax  every  man  is  supposed  to  make  a 
return.  ,  ;j 

Q.  Provided  he  knows  the  company  paid  the  tax  on 
them? 

A.  No,  he  is  not  obliged  to  return  them.  Every  citizen 
may  make  a  return,  because  it  is  the  duty  of  the  assessor 
to  serve  them  with  notices  to  make  returns.  Of  course, 
laws  are  sometimes  so  stringent  that  they  cannot  be  carried 
out.  It  is  plain  that  it  is  impossible  to  get  a  return  from 
every  citizen. 

Q.  He  is  obliged  to  make  that  return? 

A.  He  is  obliged  to  make  a  return.    He  is  not  obliged 


664 

to  return  anything  not  taxable.  He  would  have  to  fulfill 
under  the  law,  and  if  he  had  no  other  taxable  property  he 
would  not  have  to. 

Q.  You  say  that  a  certain  party  had,  during  his  life- 
time, made  certain  returns,  and  after  his  death  you  dis- 
covered you  he  was  the  possessor  of  a  larger  amount. 
Don't  you  think  it  was  probable  he  was  doing  all  he 
thought  was  right  and  required  at  the  time,  due  to  the 
fact  that  the  securities  which  he  didn't  return  were  taxed 
and  the  taxes  paid  by  the  corporation  that  issued  them? 

A.  Any  man  might  be  mistaken? 

By  Mr.  Cox: 

Q.  Is  he  allowed  to  inquire  into  the  fact  of  whether 
they  are  so  taxed  by  the  State,  the  stock  of  a  corporation? 
What  I  want  to  get  at  is  whether  he  has  a  right  to  con- 
sider the  question  of  double  taxation,  the  man  making  the 
return?  If  I  have  ten  thousand  dollars'  worth  of  bonds, 
have  I  a  right  to  inquire  whether  they  are  taxed  by  the 
State,  in  addition  to  the  tax  by  the  county? 

A.  Undoubtedly.    He  is  the  judge  of  that. 

Q.  He  is  the  judge  of  that? 

A.  Yes,  sir. 

By  Mr.  Moyer : 

Q.  Isn't  he  generally  a  poor  judge? 

A.  Generally. 

Q.  And  he  doesn't  pursue  the  inquiry  further? 

A.  No,  sir.  I  merely  stated  that  as  a  fact.  It  has  de- 
veloped in  that  way,  where  personal  taxes  are  levied  after 
a  man  has  died,  and  his  estate  is  found  to  hold  more  per- 
sonal property  than  he  returned.  I  merely  stated  that  as 
one  instance. 

By  Mr.  Cox : 

Q.  You  have  no  remedy  ? 

A.  As  to  what  should  be  done,  I  must  confess  to  be  at  a 


665 

By  Mr.  Brown : 

Q.  Mr.  Smith,  you  say  the  taxable  is  obliged  to  make 
a  return.  You  don't  mean  that  there  is  a  legal  application 
which  is  enforced?  He  is  not  obliged  to  do  it? 

A.  He  is  obliged  by  law. 

Q.  You  cannot  force  him? 
A.  No,  sir. 

By  Mr.  Cox : 

Q.  You  add  50  per  cent,  for  that? 

A.  The  law  provides  that.  It  is  a  double  duty — one  of 
the  assessors  and  one  of  the  assessed.  It  is  a  duty  laid  on 
him  to  make  a  return,  and  it  is  the  duty  of  the  assessor 
to  make  him  make  a  return. 

By  Mr.  Brown : 

Q.  How  do  you  start  with  the  returns,  how  do  you  know 
the  number  ?  I  mean,  how  do  you  know  the  number  that 
goes  to  each  one? 

A.  That  is  a  matter  that  is  governed  largely  by  the 
experience  we  have  gained  of  the  number  of  people  in 
every  district. 

Q.  You  get  so  many  blanks  sent  to  you? 

A.  Yes,  sir. 

Q.  Then  those  are  given  to  the  assessors? 

A.  Yes,  sir. 

Q.  What  check  do  you  keep  on  the  assessor  to  see  that  he 
either  brings  back  the  return  of  the  taxable,  or  accounts 
for  it? 

A.  We  don't  check. 

Q.  Why  don't  you? 

A.  For  this  reason:  we  know  that  there  are  a  certain 
number  of  taxables  of  this  class. 

Q.  Suppose  he  doesn't  bring  them  back?  You  issue  so 
many  blanks? 

A.  Yes,  sir. 


666 

Q.  He  brings  back  a  portion  of  them.  Why  shouldn't 
he  account  for  the  balance? 

A.  Well,  in  this  county — take,  for  instance,  ?m 
assessor  in  a  district  in  which  there  are  ten  or  fifteen 
thousand  citizens,  nine-tenths  of  whom  own  no  property 
at  all,  would  be  served  with  notices  and  cannot  be  made  to 
make  returns.  The  law  provides — it  is  required  that 
every  man  shall  be  served,  but  if  nineteen  out  of 
twenty  have  no  property  at  all,  the  assessor  would  be  doing 
nothing  at  all  but  chasing  men  who  had  no  property  at 
all,  to  get  them  to  make  returns. 

Q.  You  say  that  one-third  are  escaping;  taxables  to 
the  extent  of  one-third  are  not  paying  taxes? 

A.  Yes,  sir. 

Q.  What  check  is  made  of  the  returns  of  the  assessors 
to  see  just  who  these  people  are  ? 

A.  We  have  the  names  of  every  property  owner,  about 
every  property  holder,  and  owner  of  personal  property— 
every  man  with  real  estate.  Outside  of  this  we  have  no 
check,  because  a  great  many  of  them  have  no  permanent 
residence.  And  a  great  many  are  not  known  to  the  as- 
sessor except  by  name  or  reputation,  and  just  the  instruc- 
tions which  we  give  to  them,  to  get  in  everybody  they 
can,  or  have  reason  to  think  are  the  holders  of  property. 
The  alternative  is  to  absolutely  serve  everybody  with  a 
notice,  and  to  take  a  return  from  everybody.  I  mean  to 
serve  everyone  in  the  county  with  a  blank,  and  have  every 
man  make  a  return,  whether  or  not  he  owns  any  taxable 
property. 

By  Mr.  Moyer : 

Q.  As  I  understand  it,  there  is  no  penalty? 
A.  Nothing,  except  the  assessor  can  go  ahead  and  make 
an  assessment,  and  add  50  per  cent,  to  it. 
Q.  How  are  your  assessors  chosen? 
A.  By  our  Board. 
Q.  They  are  pretty  faithful? 


667 

A.  In  a  large  degree,  yes,  sir.  We  have  attempted,  and 
I  think  succeeded,  in  organizing  a  thorough  body  of  dis- 
trict assessors.  There  are  weak  spots,  but  the  personnel  of 
the  Board  has  improved. 

Q.  What  are  they  paid  ? 

A.  Three  dollars  a  day. 

Q.  Do  you  consider  that  enough  for  a  good  man? 

A.  In  some  places,  yes,  and  in  some,  no.  It  is  not  enough 
in  a  city,  but  in  the  country  districts  it  is.  You  can  get 
a  good  man  to  give  his  time  in  the  country  for  that  amount, 
but  not  in  the  city. 

Q.  Are  you  aware  of  the  fact  that  in  rural  districts 
assessors  are  elected? 

A.  Yes,  sir. 

Q.  Do  you  think  that  the  assessors  should  be  appointed 
by  the  Courts  in  the  county  in  which  they  serve  and  paid 
five  dollars  a  day,  their  term  to  be  four  years,  and  only 
permitted  to  serve  one  term?  Do  you  think  that  would 
remedy  it? 

A.  It  would  undoubtedly  remedy  the  general  adminis- 
tration of  the  taxation  system  to  have  more  permanence 
of  the  assessor  in  his  office. 

Q.  This  is  what  I  have  in  mind,  that  a  few  of  the  as- 
sessors frequently  make  no  returns  because  of  the  fact  that 
it  might  handicap  their  re-election.  I  mean  in  the  rural 
communities? 

A.  I  wouldn't  like  to  give  an  opinion  on  that.  In  our 
county  we  have  rural,  suburban  and  city  communities, 
and  deal  with  all  classes,  and  as  I  said,  I  think  we  get 
fairly  good  assessors  in  the  rural  communities  for  three 
dollars  a  day.  It  is  difficult  to  get  the  right  kind  in  large 
boroughs  and  cities  for  three  dollars,  men  competent  to 
assess  very  large  property  holdings.  For  instance,  in  a 
ward  in  the  city  where  there  is  property  of  the  value  of 
thirty  or  forty  or  fifty  millions  of  dollars,  it  would  be 
evident  to  you  you  can't  get  a  man  for  three  dollars  a 
day  to  assess  that,  and  it  requires  a  great  deal  of  work 


668 

on  our  part,  not  so  much  in  the  country  or  rural  districts 
as  in  the  large  boroughs  and  cities. 

By  Mr.  Cox : 

Q.  Do  you  think  that  to  increase  the  Board  would  help 
matters  ? 
A.  No,  sir. 

By  Mr.  Hunter : 

Q.  Under  your  present  system  you  appoint  assessors 
for  temporary  service  only? 

A.  We  appoint  assessors  during  good  behavior. 

Q.  What  length  of  time? 

A.  Well,  lasts  to  the  end  of  our  term. 

Q.  Do  I  understand  that  he  is  constantly  employed? 

A.  Only  when  necessary. 

Q.  How  long  is  that? 

A.  During  the  triennial  assessment,  from  the  middle  of 
June — about  six  months'  work. 

Q.  In  what  length  of  time  ? 

A.  Six  months  every  year  in  a  large  district,  and  in  some 
places  not  more  than  two. 

Q.  It  is  of  a  temporary  character? 

A.  Yes,  sir. 

Q.  That  would  mean  that  the  personnel  of  the  office 
of  the  assessors  would  be  changed  almost  every  year? 

A.  No,  sir. 

Q.  Isn't  that  the  case? 

A.  No,  sir.  I  said  we  appointed  the  assessors  practically 
during  good  behavior,  as  long  as  our  term  would  last.  We 
say  to  them,  ' '  if  you  are  satisfactory  to  us,  you  will  con- 
tinue to  be  our  assessor  on  that  district  as  long  as  we  hold 
office.  If  not,  we  will  get  another."  These  assessors  are 
chosen  from  all  classes,  and  work  as  long  as  necessary. 
Most  of  them  have  other  employment.  Some  have  other 
occupations,  and  some  don 't  have  to  work,  and  some  don 't 
work,  and  so  forth. 


669 

Q.  Would  that  indicate  that  the  assessors,  as  appointed 
by  you,  are  what  you  might  term  two  dollar  men? 

A.  Not  at  all.  We  have  a  class  of  men  that  I  think  are 
better  than  the  average. 

Q.  Do  you  mean  those  in  the  boroughs  and  cities? 

A.  In  the  country  districts  you  can  get  a  farmer  for 
three  dollars  a  day  to  do  the  work,  and  get  a  good  man, 
but  when  you  come  to  the  boroughs  and  cities,  where  the 
rents  and  cost  of  living  are  higher,  it  is  harder  work,  and 
you  cannot  get  a  good  man. 

By  Mr.  Moyer : 

Q.  At  one  of  the  hearings  held  in  Philadelphia  we  had 
Simon  Gratz,  the  president  of  the  Board  in  Philadelphia, 
with  us,  and  he  made  the  statement  that  millions  of  dollars 
were  not  being  returned  for  taxation,  property  owned  by 
suburban  residents  living  in  New  Jersey,  or  Delaware  or 
adjacent  counties,  and  that  there  was  no  way  of  telling 
why  this  was  not  returned  ?  Does  that  prevail  here  ? 

A.  Not  to  any  appreciable  extent,  for  the  reason  that 
local  conditions  are  different  here  than  they  are  in  Phila- 
delphia. There  are  possibly  a  few  persons  whose  residence 
is  not  fixed.  We  have  some  here  who  made  or  inherited 
their  pile,  and  will  want  a  residence  in  Pittsburgh — 
do  not  live  here,  but  live  in  Florida,  or  New  York,  or 
Colorado.  A  great  many  of  those,  in  order  to  preserve 
their  residence,  make  their  returns  here. 

By  Mr.  Brown : 

Q.  Tax  dodging  is  not  prevalent? 
A.  No,  sir. 

By  Mr.  Cox : 

Q.  W^hat  per  cent,  is  actually  lost? 

A.  That  is  a  mere  matter  of  conjecture.  I  gave  you 
our  chief  clerk's  opinion  on  that. 

Q.  What  would  that  amount  to  in  dollars  and  cents! 

A.  The  amount  of  property  returned  for  taxation  here 


670 

is  about  a  hundred  and  eighty  millions  of  dollars.  It  has 
been  about  that.  It  has  been  increasing  slightly  each  year, 
except  in  the  last  year,  and  I  would  be  inclined  to  agree 
with  the  chief  clerk  that  we  don't  get  more  than  one-half 
of  the  amount. 

Q.  It  ought  to  be  about  two  hundred  and  sixty  millions  ? 

A.  Yes,  sir.  If  we  got  two  hundred  and  fifty  millions 
we  would  get  very  nearly  all  we  would  be  entitled  to. 

Q.  What  would  the  loss  be  in  dollars  and  cents? 

A.  Take  the  $180,000,000  at  four  mills,  and  that  would 
be  $720,000.  I  believe  the  delinquent  tax  office  shows  only 
a  loss  of  2  per  cent.,  and  that  is  a  very  significant  fact 
when  you  consider  that  the  machinery  for  the  collection  is 
deficient.  There  is  no  law,  and  they  have  no  legal  remedy 
if  the  man  refuses  to  pay  his  taxes.  This  is  about  the  size 
of  it.  The  total  tax  is  about  $720,000,  and  that  is  sent  to 
the  State.  They  keep  $180,000,  and  the  rest  is  sent  back 
to  Allegheny  county. 

Q.  About  a  loss  of  about  half  a  million1? 

A.  Say  about  $200,000.  That  is  mere  conjecture,  be- 
cause there  is  no  way  of  determining  how  many  are  not  re- 
turned and  how  many  make  a  false  return. 

By  Mr.  Moyer: 

Q.  During  your  three  years  have  you  ever  had  a  case  of 
a  man  whom  you  had  every  reason  to  believe  was  falsifying 
his  returns? 

A.  Yes,  sir. 

Q.  What  efforts  have  you  made  to  prosecute  him? 

A.  We  don't  prosecute  him,  because  we  can't  be  sure 
about  it,  but  if  we  have  any  good  reason  to  think  that  that 
is  the  case,  we  revise  his  return  and  put  it  at  the  place 
where  we  think  it  ought  to  be. 

Q.  Do  you  think  an  arrest  or  two  might  have  a  whole- 
some effect? 

A.  It  might.  The  law  is  indefinite,  and  the  remedies  are 
not  strong.  When  there  is  doubt  in  the  office  of  the  De- 


671 

linquent  Tax  Collector  to  enforce  the  payment  of  taxes,  we 
are  not  going  to  arrest  a  man  for  making  a  false  return. 
We  believe  that  if  a  man  does  not  make  the  proper  return, 
and  we  do  make  what  we  consider  the  proper  return,  and 
add  to  that  50  per  cent.,  that  it  brings  him  to  time. 

Q.  The  Commission  has  had  a  goob  deal  of  testimony 
along  this  line,  and  nowhere  has  there  been  an  example 
made  of  a  man  who  falsifies  his  return. 

A.  It  places  the  assessors  in  a  peculiar  position,  but  I 
don't  think  the  Board  would  hesitate  on  that  account  if 
they  thought  they  had  the  power. 

By  Mr.  Brown : 

Q.  Are  interest  bearing  deposits  assessed  here? 

A.  Yes,  sir,  those  bearing  interest  in  savings  accounts. 

Q.  In  trust  companies  and  banks? 

A.  As  far  as  we  can. 

Q.  What  measure  of  success  have  you  had  in  that  direc- 
tion ? 

A.  Well,  we  get  a  good  deal.  A  great  many  make  re- 
turns and  a  great  many  do  not. 

Q.  How  would  it  be  to  amend  the  law  and  compel  the 
trust  company  to  pay  the  taxes  and  deduct  it  from  the 
interest? 

A.  I  don't  know  how  it  would  be  exactly.  It  has  come 
to  our  knowledge  time  and  time  again,  and  I  have  called 
bank  officials  to  account  for  it — that  they  and  their 
cashiers  have  influenced  depositors  not  to  make  a  return  of 
the  deposits  in  savings  accounts,  saying  that  if  they  didn't 
make  a  return  they  wouldn't  be  taxed.  If  that  is  the  case, 
I  believe  the  remedy  you  proposed  would  be  a  good  one. 

Q.  Do  you  think  there  would  be  anything  unfair 
about  it? 

A.  No,  sir.  The  objection  of  the  banks  is  as  to  giving 
information  as  to  the  private  deposits.  I  myself  think  it 
would  be  a  good  remedy,  and  would  go  far  toward  reliev- 
ing the  situation. 


672 

Q.  Have  you  any  information  as  to  the  character  of  these 
people  who  have  these  accounts,  whether  they  are  the  richer 
or  poorer  people? 

A.  All  classes,  Mr.  Brown,  I  do  not  think  that  you  could 
classify  them.  I  think  it  is  a  matter  of  individual  con- 
science, or  knowledge  or  ignorance  of  the  law.  There  are 
the  three  classes. 

Q.  Have  you,  in  the  performance  of  your  duty,  obtained 
any  information  as  to  the  taxation  of  corporations? 

A.  I  think  the  sentiment  would  be  against  it. 

Q.  Have  you  made  the  same  inquiry  with  regard  to  an 
inheritance  tax? 

A.  I  think  there  would  be  no  objection — not  to  a  just 
one. 

Q.  What  would  you  say  as  to  the  taxation  of  other 
articles  besides  those  already  taxed — say,  for  instance,  au- 
tomobiles? Some  people  think  there  ought  to  be  a  tax  on 
them  to  be  used  for  the  development  of  the  State's  high- 
ways. One  man  said  he  would  pay  a  hundred  dollars  a 
year,  and  that  others  ought  to  do  the  same  thing. 

A.  I  could  not  answer  that. 

Q.  What  is  the  sentiment  of  this  community  as  to  the 
mercantile  taxes? 

A.  I  think  there  is  a  strong  sentiment  against  it. 

Q.  What  is  the  reason? 

A.  Well,  the  average  merchant  is  taxed  very  well  on 
other  classes  of  property,  and  there  is  no  reason  why  he 
should  be  taxed  on  his  business  when  others  are  not,  and 
the  tax  does  not  fall  equably. 

Q.  Does  the  method  used  by  your  Board  tend  to  drive 
taxables  from  this  county  to  residences  elsewhere  ? 

A.  I  do  not  know  of  any  such  case. 

Q.  Do  you  think  a  lower  rate  would  produce  more  in- 
come? 

A.  I  doubt  it. 

Q.  The  rate  is  not  too  high? 

A.  No,  sir. 


673 

Q.  What  would  you  say  as  to  the  taxing  of  public 
service  corporations?  Did  you  look  into  that? 

A.  It  is  the  custom  of  our  assessors  to  examine  every 
piece  of  property  owned  by  the  public  service  corporations, 
whether  it  is  needed  for  their  actual  operations,  and  if  not 
we  put  it  on  the  tax  rolls.  We  make  as  strict  an  investi- 
gation as  we  can,  and  we  always  get  an  application  for  the 
exemption  of  this,  that  and  the  other  property. 

By  Mr.  Hunter : 

Q.  I  want  to  ask  a  question  about  the  appointing  of  the 
assessors.  I  was  wondering  what  you  would  think  about 
the  question  of  using  a  smaller  number  of  assessors,  and 
giving  them  permanent  employment,  whether  they  would 
become  more  efficient  than  if  employed  only  temporarily? 

A.  In  answering  that  I  would  say  that  anything  in  that 
direction  would  be  for  the  betterment  of  the  service.  As 
you  know,  in  Philadelphia  the  assessor  is  a  permanent  in- 
stitution ;  the  assessors,  I  believe,  are  appointed  by  the  Board 
there.  They  are  permanent  officers,  are  salaried  officers, 
and  go  on  assessing  all  the  time.  I  think  that  is  the  proper 
way.  I  think  the  assessors  should  be  more  permanent. 
The  difficulty  in  Allegheny  county  and  the  other  counties 
is  the  triennial  assessment  of  all  the  real  estate,  and  the 
third  year  is  a  very  strenuous  year  for  the  assessor  and 
for  everybody  connected  with  the  assessor's  office,  and  if 
that  is  the  case  we  could  have  larger  districts  and  have  per- 
manent assessors,  and  could  get  much  better  men. 

By  Mr.  Brown: 

Q.  Are  they  influenced  by  local  associations?  What 
would  you  say  about  taking  a  man  from  one  district  and 
working  him  in  another  where  he  is  not  so  well  known? 
What  would  you  say  about  changing  them  around  ? 

A.  We  always  take  a  man  from  the  district  in  which  he 
lives  to  work  in  that  district,  on  account  of  his  knowledge 
of  values  there. 

Q.  It  has  been  suggested  that  these  assessors  should  be 
36 


674 

State  appointments,  and  sent  as  strangers  into  a  locality, 
so  as  not  to  be  influenced  by  local  influences. 

A.  I  do  not  think  that  would  do,  because  there  you  have 
the  old  case  of  the  revenue  collectors.  The  men  that  live 
in  the  districts  have  a  knowledge  that  no  stranger  can  have, 
especially  in  the  rural  districts — which  no  stranger  could 
get.  As  I  said  before,  the  triennial  assessment  could  be 
done  away  with,  and  the  continual  assessment  would  be 
the  proper  thing.  I  think  the  triennial  assessment  is  an 
obsolete  institution.  It  throws  all  the  work  into  six  months 
of  each  three  years,  and  throws  such  an  amount  of  work 
upon  the  Board  and  the  assessors  that  the  work  cannot  be 
done  with  care  and  in  the  careful  manner  in  which  it 
should  be  done.  Our  Board  has  been  working  since  the 
twentieth  of  December,  since  we  took  up  this  matter,  and 
has  worked  every  day  since  then,  practically,  until  a  week 
ago.  To  do  it  right  is  a  difficult  matter. 

By  Mr.  Moyer: 

Q.  You  have  the  entire  county  of  Allegheny  county? 
A.  Yes,  sir. 

Q.  What  is  the  assessed  valuation  of  the  realty? 

A.  A  little  over  one  billion. 

Q.  What  is  the  valuation  of  the  personal  ? 

A.  One  hundred  and  eighty  million  last  year. 

Q.  That,  in  your  judgment,  is  a  fair  valuation  of  the 
worth  of  Allegheny  county? 

A.  Not  as  to  the  personal  property. 

Q.  How  much  personal  property  do  you  think  is  es- 
caping taxation? 

A.  As  I  say,  Mr.  Moyer,  I  said  our  chief  clerk  gave  it 
as  his  opinion  that  one-third  is  not  taxed — is  escaping  tax- 
ation. 

By  Mr.  Cox : 

Q.  If  you  knew  where  it  was  you  would  go  after  it? 
A.  Yes,  sir.      Guessing  at  it,  I  would  say  that  we  don 't  get 


675 

at  least  25  per  cent.,  perhaps  more.  Supposing  we  get  ninety 
thousand  or  one  hundred  thousand  of  these  blanks  from 
the  Auditor  General,  and  we  distribute  ninety  thousand 
to  our  assessors,  to  be  used  under  our  direction;  we  get 
thirty  thousand  returns  out  of  these;  twenty  thousand  re- 
turn property  for  assessment,  and  ten  thousand  return 
nothing.  Of  the  twenty  thousand  returned,  we  get  about 
a  hundred  and  eighty-six  million  dollars  worth  of  property 
for  assessment.  Two-thirds  of  this  one  hundred  and  eighty- 
six  millions  of  dollars  worth  of  property  returned  for  tax- 
ation in  Allegheny  county  consists  of  mortgages.  You  will 
see  that  we  get  practically  all  of  the  mortgages,  because 
they  are  a  matter  of  record,  and  the  Recorder  is  bound  to 
certify  to  them,  and  we  can  watch  them  closely.  The  other 
one-third  is  composed  of  such  elements  as  the  law  includes — 
money  at  interest,  and  I  do  not  think  we  get  anything  like 
all  of  that.  That  is  money  held  on  notes  by  private  indi- 
viduals, and  moneys  in  savings  banks  bearing  interest, 
articles  of  agreement  for  the  sale  of  land,  and  that  all  de- 
pends upon  the  conscience  of  the  owner  and  the  presistence 
of  the  assessors,  the  amount  of  that  we  get. 

But  returning  to  the  question  of  the  taxation  of  mort- 
gages, I  was  interested  this  morning  by  the  argument  of 
the  man  who  thought  that  the  taxation  should  be  levied 
upon  the  real  estate  alone.  I  believe  that  everybody  should 
be  taxed  upon  everything  that  they  own,  and  equably 
taxed,  and  it  is  the  effort  of  our  Board  to  see  that  they  are. 
But  I  do  not  believe  that  under  our  present  system  that  we 
are  getting  equality  in  this  matter  of  taxation — that  at 
least  one-third  of  the  taxable  property  is  not  taxed.  There 
you  have  a  case  of  where  two-thirds  are  paying  taxes,  will- 
ingly or  unwillingly,  upon  personal  property,  and  one- 
third  are  not.  You  can  see  if  that  case  were  applied  to 
the  ownership  of  real  property  there  would  be  no  equality 
if  two-thirds  were  taxed  and  one-third  were  not.  But  I 
think  so  far  as  the  taxation  of  real  property  is  concerned 
the  tax  is  equable,  and  the  reason  that  is  not  the  case  in 


676 

regard  to  personal  property  is  because  of  the  vagueness  of 
the  laws  and  that  people  don't  pay  those  taxes.  It  is  very 
evident  that  that  law  doesn't  work  entire  equality  if  a 
number  who  own  personal  property  are  taxed,  and  only  a 
portion  owning  property  are  not  taxed.  The  question  has 
been  raised  very  often  and  discussed;  that  is,  the  question 
of  the  taxing  of  invested  capital,  and  in  some  of  the  items 
that  are  taxed  I  do  not  believe  it  reaches  the  party  in- 
tended. I  don 't  believe,  and  I  think  I  express  the  sentiment 
of  the  majority  of  thinking  people  in  Pennsylvania  that 
are  concerned  in  this  matter,  I  do  not  believe  that  the  man 
who  lends  money  on  a  mortgage  is  paying  the  four  mills 
tax,  even  after  he  write  the  check.  I  have  said  to  people 
who  complain  of  this  personal  tax,  and  wanted  a  reason 
for  it,  I  gave  them  the  argument  that  Mr.  Brown  stated 
here  this  morning  that  everything  that  is  taxed  is  rated  so 
that  those  who  have  only  personal  property  should  bear 
the  burden  with  those  who  own  real  estate.  There  are  a 
great  many  men  who  have  money  loaned  on  mortgages  who 
do  not  pay  a  cent  towards  the  sustaining  of  the  burdens 
of  government.  I  believe  that  the  expression  and  the 
opinion  of  almost  every  man  who  knows  about  the  bor- 
rowing and  lending  of  money  will  sustain  that  opinion. 
We  know  how  many  mortgages  there  are  with  5.4  per  cent 
interest.  It  does  not  mean  that  the  rate  of  interest  is  5.4,  but 
it  means  that  the  rate  of  interest  is  5  per  cent.,  and  that 
that  four  mills  is  added  on  there  to  pay  the  taxes.  So  the 
borrower  pays  that  in  his  interest.  If  that  is  the  case,  what 
is  the  result  ?  The  man  that  borrows  the  money  is  not  only 
paying  the  taxes  on  the  property,  but  upon  the  very  mort- 
gage he  had  to  put  upon  it  in  order  to  allow  him  some  years 
to  pay  his  debt.  I  want  you  to  consider  it,  because  it  is 
a  very  grave  question  of  equality  between  man  and  man. 
I  met  a  man  from  New  York,  Lawson  Curdy,  President 
of  the  Board  of  New  York,  who  had  the  whole  state  of  Ne\a 
York  and  the  assessment  for  New  York  under  his  control. 
We  discussed  this  very  matter.  He  said  just  about  what 


677 

I  have  been  saying  to  you,  and  I  was  taking  the  opposite 
side,  because  I  expressed  the  opinion  you  expressed  this 
morning 

Mr.  Brown :  That  does  not  express  my  personal  opinion. 
I  just  tried  to  draw  an  opinion  from  the  speaker. 

Mr.  Smith :  I  expressed  that  opinion  so  frequently  that 
I  almost  believed  it  myself,  yet  I  believe  that  the  man  who 
borrows  money  is  paying  taxes  levied  upon  the  man  who 
lends  the  money,  and  this  is  a  double  taxation,  which  ought 
not  to  be. 

By  Mr.  Brown: 

Q.  Why  shouldn't  the  State  of  Pennsylvania  tax  the  un- 
encumbered as  well  as  the  encumbered  real  estate?  You 
say  that  the  encumbered  man  pays  double  taxes,  one  on  the 
land  and  a  tax  to  the  State.  "Why  shouldn't  the  man  who 
is  unencumbered  pay  taxes  on  his  land?  Why  shouldn't 
the  man  who  is  unencumbered  pay  a  tax  to  the  State  ? 

A.  I  don't  see  why  he  shouldn't. 

Q.  The  encumbered  man  does? 

A.  Yes,  sir. 

Q.  If  the  mortgagor  does  not  actually  pay  the  tax,  and 
is  paid  on  his  real  estate  and  on  the  other — first  assume 
that  he  is. 

A.  Yes,  sir,  we  will  assume  that  he  does  not  pay  the 
tax,  and  the  law  intends  that  the  tax  should  be  paid  by 
the  lender  and  not  the  borrower,  not  only  upon  the  prop- 
erty, but  upon  everything  else. 

By  Mr.  Cox : 

Q.  What  portion  goes  to  the  State  ? 

A.  One  mill.  Four  mills  go  to  the  State  and  three  mills 
are  returned.  The  amount  of  money  that  comes  to  Alle- 
gheny county  is  about  a  half  a  million  of  dollars,  about 
three-fourths  of  seven  hundred  and  twenty  thousand  dol- 
lars, and  it  relieves  the  taxes  of  Allegheny  county  to  that 
extent,  but  at  whose  expense  ?  So  that  the  people  who  are 


678 

paying  that  tax,  if  the  borrower  pays  it,  a  certain  portion 
is  paying  it  to  the  State  and  paying  it  to  the  county. 

Q.  How  does  the  three-fourths  compare  with  the 
amount  levied  on  real  estate  ?  What  is  the  amount  levied  ? 

A.  I  could  not  tell  you  that  exactly;  about  $4,000,000. 
We  get  about  a  half  a  million  from  the  tax  on  personal 
property. 

Q.  Half  a  million? 

A.  Yes,  sir,  half  a  million. 

Q.  So  you  get  about  one-eighth  of  the  tax  on  real  estate 
in  Allegheny  county  from  personal  taxes? 

A.  Yes,  sir.  If  what  has  been  stated  is  true,  that  tax 
is  paid  by  a  few — that  five  hundred  thousand  dollars — is 
paid  by  the  borrower  to  relieve  the  many,  those  who  do 
not  borrow. 

By  Mr.  Moyer : 

Q.  Isn't  it  a  fact  that  the  Act  states  that  all  money  at 
intrest  bearing  5  per  cent?  You  could  not  separate 
a  mortgage  from  a  certificate  of  deposit,  or  a  judgment  of 
record? 

A.  I  think  it  applies  to  all.  If  the  fact  is  so,  that  the 
borrower  pays  the  tax,  I  believe  he  does  it  in  all  cases. 
I  believe  he  pays  it  on  notes  and  every  loan,  because  the 
rate  of  interest  will  justify  that,  the  supply  and  demand 
of  money,  and  I  think  the  rate  now  is  the  normal  rate  plus 
four  mills. 

Q.  Provided  it  is  under  6  per  cent.  ? 
A.  Yes,  of  course. 

By  Mr.  Cox : 

Q.  Then  there  is  no  crime  committed  if  you  do  not 
collect  the  entire  amount  of  the  tax? 

A.  No,  no  crime,  because  the  taxation  Act  does  not  make 
it  a  crime. 

Q.  Do  you  mean  that  that  one-third  is  one-third  of  the 


679 

entire  personal  property  in  Allegheny  county,  or  that  you 
lose  one-third  of  what  is  returned? 

A.  I  mean  one-third  of  the  personal  property  we  don't 
assess. 

Q.  That  would  be  one-half  as  much  more  than  you 
really  have  returned? 

A.  That  would  depend  on  which  way  you  figured.  We 
probably  have  about  $250,000,000  of  personal  property  in 
this  county.  It  is  a  mere  conjecture,  but  a  large  amount 
escapes  taxation. 

Q.  You  lose  about  one-half? 

A.  No,  I  wouldn't  say  that.  I  say  we  ought  to  have 
about  one-third  more  than  we  have.  It  is  a  mere  matter 
ot  conjecture. 


680 


DR.  MOYER,  representing  the  Mercy    Hospital,    of 
Pittsburgh,  Pennsylvania,  spoke  as  follows : 

I  have  here  a  statement  relative  to  the  Mercy  Hospital, 
which  I  wish  to  file  with  your  Commission. 

By  Mr.  Brown: 

Q.  Do  you  get  State  aid? 

A.  Yes,  sir. 

Q.  How  much? 

A.  Ninety-  seven  thousand  dollars  the  last  time. 

By  Mr.  Moyer : 

Q  What  do  you  think  about  the  State  withholding  ap- 
propriations from  private  charities  not  controlled  by  the 
Commonwealth? 

A.  1  think  the  State  ought  to  have  control. 

Q  That  the  title  of  the  property  should  be  vested  in 
the  State? 

A.  I  think  they  ought  to  have  the  control  of  it. 

Q.  How  could  the  State  have  absolute  control  of  a  prop- 
erty in  which  it  had  no  title  or  interest?  How  could  it 
ever  acquire  that  property? 

A.  I  don't  know  that  the  control — I  have  not  given  that 
very  much  consideration.  There  ought  to  be  someone 
held  accountable  for  the  use  of  the -money,  the  way  it  is 
used. 

Q.  The  traveling  Auditor  General  calls  at  your  hos- 
pital? 

A.  Yes,  sir. 

Q.  And  audits  the  aeeounts? 

A.  Yes,  sir. 

Q.  Do  you  keep  a  list  of  all  the  distributions  of  State 
money  ? 

A.  Yes,  sir. 


681 

Q.  Is  the  management  obliged  to  borrow  money  until 
the  voucher  comes  from  the  State? 
A.  Usually;  not  always. 

Q.  How  do  you  manage  to  pay  your  bills?     Have  you  a 
sufficient  fund  to  do  that? 
A.  Yes,   sir. 

Q.  Have  you  an  endowment  fund? 

A.  No,  sir.  I  have  a  copy  of  the  report  to  the  Board 
of  Charities  here.  We  were  established  in  1848 ;  value  of 
the  real  estate  one  million  dollars ;  amount  of  indebted- 
ness, fixed,  $63,000,  current,  $24,465.66 ;  a  corporation ;  no 
endowment;  officers,  M.  N.  McMullian,  president;  J.  D. 
Gallery,  secretary ;  F.  H.  Skelding,  treasurer ;  services  all 
gratuitous ;  number  of  buildings  5  ;  number  of  beds  for  em- 
ployes, 250 ;  number  of  beds  for  patients,  350,  for  medical 
cases  not  limited,  for  maternity  cases  only  emergency 
cases  admitted ;  number  of  cases  treated  during  the  year : 
in  patients,  4,594 ;  dispensary  or  out  patients,  2,167 ;  num- 
ber treated  free,  1,621 ;  number  partly  free,  477 ;  number 
full  pay,  2,496;  number  of  days  hospital  treatment  (in 
patients  only),  123,005;  number  of  days  free  treatment, 
43,058 ;  per  cent,  of  free  treatment,  over  33  1-3  per  cent. ; 
average  number  of  beds  occupied  by  patients  during  the 
year,  339 ;  average  cost  of  patients  per  day,  $1.19.  Owing 
to  the  advanced  cost  of  living  the  average  cost  per  patient 
per  day  was  $1.71  during  the  last  quarter. 

By  Mr.  Cox : 

Q.  How  many  actual  free  beds  have  you  set  apart  in 
your  hospital? 

A.  None  set  apart  as  free  beds ;  the  estimate  here  is  that 
one-third  of  the  patients  treated  during  the  year  were 
free  patients.  There  are  no  separate  wards. 

Q.  No  preference  given  as  between  the  paid  and  the 
other  patients? 

A.  Not  in  the  wards.  Private  room  patients  are  ex- 
pected to  pay  for  their  additional  comforts. 


682 

Q.  Do  you  charge  anything  for  the  ward  patients? 
A.  Yes,  sir;  if  they  are  able  to  pay,  they  pay  a  dollar 
a  day. 

By  Mr.  Moyer : 

Q.  How  do  you  ascertain  whether  they  are  able  to  pay? 

A.  We  find  out  where  they  come  from,  and  their 
business. 

Q.  Do  you  have  many  patients  in  your  hospital  from 
adjoining  States? 

A.  Not  a  great  many;  some  from  West  Virginia  and 
Ohio. 

By  Mr.  Cox: 

Q.  Usually  surgery  cases? 
A.  Yes,  sir. 

By  Mr.  Woodward: 

Q.  Did  you  ever  refuse  any  case  brought  to  you? 

A.  Never  on  account  of  non-payment,  except  infectious 
diseases.  We  are  not  allowed  to  receive  them. 

Q.  You  would  not  refuse  a  case  on  account  of  their 
inability  to  pay? 

A.  No,  sir. 

By  Mr.  Brown: 

Q.  What  have  been  your  private  contributions  as  com- 
pared with  the  State  ? 

A.  I  don 't  know  how  much. 

Q.  Proportionately? 

A.  I  do  not  think  they  amount  to  very  much. 

Q.  You  mean  the  private  contribution  doesn't  amount 
to  very  much? 

A.  It  does  not  amount  to  anything  like  that  of  the  State. 

Q.  You  get  more  from  the  State? 

A.  Yes,  sir. 

Q.  Hasn't  the  State  appropriation  a  tendency  to  dimin- 
ish these  private  donations? 

A.  No,  sir. 


683 

Q.  Does  your  management  make  any  special  effort  to 
obtain  private  contributions? 

A.  They  endeavor  to  get  contributions  whenever  they 
can. 

Q.  How  much  did  they  get  the  last  year? 

A.  I  don't  know. 

Q.  You  are  getting  thirty  thousand  dollars  from  the 
State  for  two  years,  1909  and  1910? 

A.  Ninety-seven  thousand  dollars  was  the  last  amount 
we  had  appropriated. 

Q.  What  have  you  raised  during  that  time  by  private 
contributions  ? 

A.  I  don't  know,  but  I  don't  think  it  is  very  much.  I 
cannot  give  you  the  figures. 

Q.  In  other  hospitals  in  the  city  they  can  perform  the 
same  services? 

A.  I  think  our  daily  expense  is  lower  than  any  other  in 
the  city. 

Q.  Could  not  the  public  be  better  served  by  combining 
the  hospitals? 

A.  I  do  not  think  they  would.  I  don't  think  the  man- 
agement can  be  any  better. 

Q.  You  are  non-sectarian? 

A.  Yes,  sir. 

Q.  You  have  a  school  for  nurses? 

A.  Yes,  sir. 

Q.  How  many  do  you  graduate  in   a  year? 

A.  A  training  school  for  nurses,  and  the  number  ad- 
mitted is  71.  A  common  school  education  is  required ;  the 
term  is  three  years,  and  there  were  graduated  in  the  last 
year  eight. 

Q.  You  say  eight  in  the  last  year? 

A.  Yes,   sir. 

Q.  Is  that  better  than  the  average? 

A.  It  is  a  little  more  than  that  number,  about  eight  or 
ten  or  twelve. 


684 

Q.  And  this  money  appropriated  by  the  State  is  used 
in  the  manner  in  which  it  should  be  used? 

A.  Yes,  sir. 

Q.  And  the  officers  of  the  institution  are  not  paid  for 
their  services? 

A.  No,  sir. 

By  Mr.  Hunter: 

Q.  Don't  you  think  that  probably  owing  to  the  appro- 
priation received  from  the  State,  there  might  be  some 
laxity  in  getting  it  from  those  able  to  pay? 

A.  No,  we  are  careful  about  that;  we  are  careful  all 
the  time  to  get  money  to  pay  the  bills.  Very  few  get 
away  without  paying  that  are  able  to  pay. 


685 


OLIVER  McCLINTOCK,  ESQ.,  Pittsburgh,  Pa.,  spoke  as 

follows : 

I  did  not  intend  to  talk  when  I  came  here,  but  I  was 
interested  in  the  meeting.  All  that  I  have  to  say  is  as  to 
the  merchant.  Merchants  as  a  class,  retail  merchants,  are 
very  heavily  burdened  with  taxes  and  something  ought 
to  be  done  to  relieve  it.  We  seem  to  be  fair  game  for 
every  tax  that  comes  along. 

By  Mr.  Moyer: 

Q.  If  the  merchants  were  relieved  from  that  tax,  what 
would  you  say,  for  instance,  to  placing  a  tax  of  one  mill 
on  manufacturing  corporations? 

A.  I  would  not  be  able  to  say  positively  on  that,  because 
I  realize  it  is  a  complicated  problem.  The  thing  to  be 
striven  for  is  equality  of  taxation.  As  to  the  taxes  on 
mortgages  being  paid  by  the  man  in  debt  and  in  trouble, 
that  is  true. 

Q.  How  could  you  cure  that  unless  you  relieved  all 
forms  of  personal  property  from  taxation? 

A.  It  is  because  I  realize  how  complicated  it  is  that  I 
think  that  any  man  that  speaks  upon  the  question  should 
have  made  a  study  of  it.  I  didn't  come  here  for  that 
purpose,  and  would  not  like  to  give  an  opinion. 

By  Mr.  Brown: 

Q.  Have  you  any  associations  in  this  city — a  merchants ' 
association  ? 

A.  I  belong  to  the  Chamber  of  Commerce. 

Q.  Any  others? 

A.  Yes,  sir,  several.  I  understand  the  Pittsburgh 
Board  of  Trade  is  to  be  represented  here. 

Q.  If  there  is  any  association  of  that  kind  that  yon 
think  we  ought  to  hear,  we  would  like  to  hear  it. 

A.  I  think  probably  they  will  be  represented  here. 


686 


D.  J.  STEWART,  representing  the  Homeopathic  Hospital, 
of  Pittsburgh,  spoke  as  follows : 

I  see  a  couple  of  friendly  faces,  and  make  bold  to  come 
here.  They  have  seen  me  in  Harrisburg  hunting  for  ap- 
propriations. I  can  say  to  you  that  I  am  .intensely  inter- 
ested in  that  institution — worked  for  it  by  day  and 
dreamed  of  it  by  night.  I  do  not  come  here  to  make  any 
plea  for  cash  at  this  time,  but  we  had  an  invitation  to 
come  before  you,  and  as  our  dear  president  died  in  De- 
cember, this  duty  fell  to  me.  I  want  to  feel  that  I  have 
done  my  duty  towards  the  institution,  and  I  wanted  to 
meet  you  gentlemen,  for  perhaps  you  may  see  me  later 
in  Harrisburg  when  I  come  to  solicit  for  money.  I  think  I 
have,  been  successful  in  that  line  among  friends,  and 
reasonably  so  with  the  gentlemen  of  the  Appropriation 
Committee. 

By  Mr.   Moyer: 

Q.  Then  you  wouldn't  favor  withholding  appropria- 
tions from  private  institutions  not  under  State  control? 

A.  No,  I  would  not,  because  it  would  drive  some  of 
them  out  of  existence. 

Q.  Wouldn't  it  be  better  if  it  would? 

A.  I  would  not  be  unkind  enough  to  reflect  on  any 
other  charitable  institution. 

Q.  Taking  the  State  as  a  whole,  has  it  ever  oeen  brought 
to  your  notice  that  there  are  certain  institutions  posing 
as  charitable  institutions,  organized  simply  for  the  pur- 
pose of  getting  money  from  the  State? 

A.  Not  to  my  personal  knowledge. 

Q.  The  auditor  sent  out  by  the  State  examines  the  ac- 
counts of  all  hospitals,  and  we  propose  to  account  for 
every  cent  they  receive  from  the  State,  and  Mr.  Brown 


687 

has  asked  all  representatives  of  hospitals  whether  they 
received  much  assistance  from  outside  contributions. 

A.  I  have  nothing  to  conceal ;  we  do.  My  efforts  have 
been  so  consistent  that  my  friends  have  avoided  me.  I 
tell  them  my  years  are  getting  fewer,  and  that  I  want 
them  to  contribute  before  I  die. 

By  Mr.  Hunter : 

Q.  What  is  the  value  of  your  new  property? 

A.  We  paid  $135,000.  I  don't  know  exactly  what  we 
have  expended  on  that  building,  but  it  would  be  over 
$300,000  dollars. 

Q.  Is  it  paid  for? 

A.  So  far  as  we  have  gone.  We  had  an  old  institution 
in  the  city  here,  and  to  secure  funds  to  build  the  new 
one  we  mortgaged  the  old  one,  to  erect  this  new  building. 
We  didn't  get  the  appropriation  we  had  hoped  for,  and 
the  buildings  were  not  fully  carried  out.  The  front 
building — we  had  to  introduce  into  that  all  the  mechani- 
cal part  of  the  institution,  which  we  had  expected  to  put 
in  another  wing.  The  mechanical  department  of  that 
hospital,  the  heating  and  ice  plants,  and  other  machinery, 
is  costing  us  in  the  neighborhood  of  one  hundred  and  ten 
thousand  dollars.  Practically  all  the  money  that  build- 
ing represents  has  been  contributed.  Then  we  get  from 
the  State — I  don't  recall  just  how  much  we  get  from 
the  State.  We  did  at  one  time  get  seventy  thousand 
dollars,  and  at  another  ninety  or  a  hundred  thousand 
dollars. 

Q.  Then  you  raised  about  one-half  of  what  it  cost? 

A.  Yes,  sir,  and  we  are  getting  it  all  the  time.  We  are 
not  permitted  to  pay  any  back  bills  fo?  expenses  with 
the  money  we  get  from  the  State.  During  the  last  period 
of  two  years  previous  to  this  we  fell  behind  $23,000  and 
of  that  amount  we  got  in  debt  for  groceries  and  supplies 
during  the  panic.  We  have  succeeded  in  begging  enough* 
of  that  amount  so  that  today  we  are  in  debt  only  $6,000 


688 

of  that  amount.     We  raised  about  $16,000  or  $17,000,  and 
every  day  we  are  getting  rid  of  that. 

By  Mr.  Moyer : 

Q.  As  a  solution,  if  the  State  should  withhold  its  ap- 
propriations from  private  charities,  what  would  you  say 
as  to  this :  to  have  set  apart  moneys  based  upon  the  num- 
ber of  inhabitants  of  each  county,  and  divide  it  up,  say 
about  a  million  dollars  in  Allegheny  county,  and  let  all 
appropriations  be  fixed  by  an  Act  of  Assembly;  what  do 
you  think  about  that? 

A.  There  is,  among  a  certain  class  of  people,  a  great 
fascination  in  hospital  work.  Men  and  their  families  be- 
come interested  in  it.  They  secure  contributions  that  if 
they  were  not  interested  in  the  management  of  the  hos- 
pital actively  I  do  not  believe  would  be  tendered  to  the 
hospital.  We  have  people — there  is  a  certain  pride 
among  them  to  see  who  can  secure  the  largest  contribu- 
tions towards  the  institution.  We  would  lose  that  if  it 
were  entirely  a  State  institution. 

Q.  You  said  you  did  not  feel  like  making  any  unkind 
remarks  or  casting  any  reflections  upon  other  institutions. 
What  are  your  views  about  the  consolidation  of  the  hos- 
pitals— reducing  the  number? 

A.  There  are  a  great  many,  and  it  is  a  great  tax,  not 
only  on  the  State,  but  also  on  the  people;  but  they  are 
helping  on  all  sides,  and  I  think  our  citizens  here  are 
openhanded  enough  to  give  regardless  of  the  institution. 
If  the  hospitals  were  consolidated,  the  patients  that  were 
injured  on  the  South  Side  or  the  East  End  or  in  other 
places  would  have  to  be  taken  too  far  for  treatment,  but 
I  presume  that  you  mean  there  would  be  branch  institu- 
tions under  a  central  head. 

Q.  Yes. 

A.  I  am  afraid  the  public  at  large  would  lose  interest 
in  it  under  those  conditions. 


689 

By  Mr.  Woodward : 

Q.  Instead  of  a  number  of  the  board  of  managers  in- 
teresting their  families  and  friends,  there  would  be  a 
fewer  number  interested?  It  would  reduce  the  numbers 
that  were  intrested? 

A.  That  is  what  I  think. 

By  Mr.  Moyer: 

Q.  Are  the  board  and  president  in  your  institution 
paid  for  their  services? 

A.  The  president  in  our  institution  pays  money  out 
of  his  own  pocket. 

Q.  None  receives  a  salary? 

A.  Oh,  no.  I  have  been  connected  with  the  hospital 
for  twenty  years  and  I  have  never  got  a  cent  of  salary. 
It  has  cost  me  five  hundred  dollars  since  the  first  of 
January  and  there  are  others  that  have  done  the  same. 

Q.  My  line  of  examination  was  just  following  out  the 
idea  that  the  presidents  were  paid? 

A.  I  don't  know  of  any.  I  never  heard  of  one  in  any 
institution  that  was  paid.  We  pay  the  superintendent 
and  the  working  force  and  the  nurses.  I  presume  the 
nurses  get  the  same  in  other  institutions  as  in  ours.  They 
get  eight  dollars  the  first  year,  ten  the  second  and  twelve 
the  third. 

Mr.  Moyer :  We  are  not  sitting  as  a  Board  of  Charities 
or  Appropriations.  We  are  trying  to  remedy  some  of 
the  conditions. 

Mr.  Stewart :  I  am  interested  in  the  Children's  Hospital, 
too.  It  is  getting  along  finely.  They  have  a  small  en- 
dowment. The  Homoeopathic  Hospital  has  a  fair  endow- 
ment. If  I  could  live  long  enough  I  would  like  to  see 
the  day  that  hospital  would  be  supported  on  the  interest 
of  the  endowment.  This  may  sound  like  a  plea  for  cash, 
but  I  didn't  come  here  with  that  intention. 

Q.  You  are  familiar  with  a  number  of  the  other  hos- 
pitals in  this  city? 


690 

A.  Reasonably  so. 

Q.  In  your  judgment  are  they  wisely  and  economically 
managed  ? 
A.  Yes,  sir. 

Q.  And  that  no  unwise  expenditure  of  the  State  money 
is  being  made. 

A.  Not  that  I  know  of;  not  wilfully. 

By  Mr.  Hunter : 

Q.  You  have  a  pretty  vigorous  system  of  collection; 
do  you  vigorously  collect  the  money. 

A.  We  get  what  we  can  from  the  patients.  We  had 
yesterday  in  the  down-town  hospital  fifty-six  patients. 
We  are  moving  out  to  the  new  one,  and  we  are  trying 
to  make  this  one  an  emergency  hospital.  Of  the  fifty-six 
patients  forty  were  altogether  charity. 

Q.  Do  you  follow  closely  and  vigorously  and  work  hard 
to  make  collections  from  those  you  care  for  and  treat? 

A.  Yes,  sir. 


691 


G.  C.  UEQUHART,  Esq.,  representing  the  Pennsylvania 
Lines  West  of  Pittsburgh,  spoke  as  follows: 

The  General  Counsel  for  the  Pennsylvania  Lines  handed 
me  the  circular  the  Commission  sent  out,  and  in  response 
to  that  invitation  he  requested  that  I  come  before  the  Board 
and  give  them  the  benefit  of  any  ideas  that  I  might  have 
in  regard  to  the  revision  of  taxes  in  the  State.  I  have 
nothing  to  say  about  the  method  or  system,  but  rather 
prefer  to  leave  that  to  others.  But  there  is  one  thing  in 
regard  to  the  system  of  taxation  in  Pennsylvania  that  I 
have  not  heard  touched  on  in  any  of  the  discussions,  and 
that  is  the  manner  of  collection,  and  the  system  of  account- 
ing and  the  keeping  of  the  records  in  Pennsylvania.  You 
know  we  have  a  different  collector  in  nearly  every  borough 
and  township.  As  a  fair  example  of  that,  the  Pennsyl- 
vania Lines  West  of  Pittsburgh,  which  has  a  large  amount 
of  mileage  within  the  State,  in  seven  different  counties, 
is  obliged  every  year  to  pay  out  three  hundred  and  twenty- 
five  different  bills,  whereas  if  we  had  the  Ohio  and  Indiana 
system  in  Pennsylvania,  we  could  pay  the  money  direct  to 
the  county  to  the  County  Treasurer. 

By  Mr.  Moyer : 

Q.  Do  you  mean  on  the  depots  and  so  forth  ? 

A.  Property  and  rights  of  way. 

Q.  Any  realty  used  in  the  operation  of  the  railroad  is 
exempt  from  taxes? 

A.  Yes,  sir.  It  takes  three  hundred  and  twenty-five 
bills  to  pay  our  taxes  in  Pennsylvania,  whereas  in  the 
States  of  Ohio  and  Indiana  about  nine  vouchers  would  pay 
that. 

Q.  How  is  that  done? 

A.  In  the  States  of  Ohio  and  Indiana— I  think  it  would 
be  a  great  help  to  you  gentlemen  if  you  would  slip  out 


692 

there  and  have  a  little  talk  with  the  State  Auditor  in 
Ohio  and  Indiana — and  you  Would  get  some  valuable  in- 
formation. In  Ohio  all  the  taxes  are  collected  by  the 
County  Treasurer,  and  the  County  Auditor  keeps  the  books 
of  all  the  collections  and  all  levies,  and  the  funds  are 
carried  in  accounts  and  credited  to  the  different  officials. 

Q.  We  have  no  County  Auditor? 

A.  No,  but  I  thought  that  you  probably  might  want  to 
consider  some  question  of  that  sort. 

Q.  Your  proposition  would  be  to  create  the  office  of 
County  Auditor? 

A.  The  name  would  not  make  any  difference.  It  would 
be  very  convenient  for  a  large  corporation.  In  the  State 
of  Ohio  we  are  in  fifty-seven  of  the  fifty-eight  counties. 

By  Mr.  Woodward: 

Q.  How  are  the  bills  sent? 

A.  Very  seldom  sent;  we  have  to  go  after  them.  It 
seems  to  be  quite  a  habit  for  the  tax  collector  to  wait  until 
the  5  per  cent,  has  been  added. 

By  Mr.  Moyer: 

Q.  That  is  only  human  ? 

A.  Yes,  sir.  In  the  State  of  Ohio  they  have  a  very 
complete  system  of  preparing  tax  bills.  After  that  work  is 
done  in  the  office  of  the  Treasurer,  prior  to  the  time  of 
the  collecting  of  taxes,  and  the  amounts  are  sent  out  to 
the  owners,  and  the  property  owner  goes  to  the  office  and 
all  his  bills  are  handed  to  him,  and  he  pays  his  bills,  and 
the  coupons  are  torn  from  the  receipts  and  put  in  the 
drawer  and  used  for  the  purpose  of  checking.  In  Alle- 
gheny county,  when  you  go  to  the  window  and  want  to 
find  out  about  your  property,  if  it  is  in  one  ward  you  go 
to  one  window,  or  if  it  is  in  a  borough  you  go  to  another 
window,  and  so  on. 

By  Mr.  Woodward : 

Q.  If  there  is  a  line  you  have  to  wait  your  turn? 
A.  Yes,  sir. 


693 

By  Mr.  Moyer: 

Q.  What  is  this  taxable  property  ? 

A.  Real  estate  and  things  not  used  in  the  operation  of 
the  road. 

Q.  How  is  the  value  determined? 

A.  By  the  local  assessors,  the  same  as  any  other  prop- 
erty owner. 

Q.  Have  you  anything  to  do  with  the  filling  out  of  these 
blanks,  as  required  by  the  Anditor-General  ? 

A.  No,  sir. 

Q.  Have  you  heard  any  complaint,  or  any  expression  that 
it  would  be  more  handy  if  the  returns  were  made  at  the 
close  of  the  year  instead  of  the  first  Monday  of  November  ? 

A.  I  believe  I  have  heard  the  Accounting  Department 
speak  of  that,  to  have  to  concur  in  time  with  the  report 
of  June  30,  as  required  by  the  Interstate  Commission. 

Q.  June  30th  or  December  31st? 

A.  Yes,  sir. 

Q.  That  would  be  the  capital  stock  tax  year? 

A.  Yes,  sir. 

By  Mr.  Brown : 

Q.  How  would  it  do  for  the  different  tax  collecting  offi- 
cials to  certify  a  tax  to  the  County  Commissioners,  or 
to  the  Auditor-General,  and  have  the  Auditor-General  send 
you  a  bill  ? 

A.  That  is  practically  the  method  in  West  Virginia.  Rail- 
road property  is  assessed  by  a  Board  of  Public  Works.  The 
Board  of  Public  Works  receives  reports  from  the  different 
counties,  and  when  the  reports  are  all  in  the  taxes  are 
compiled  and  a  complete  bill  made  against  the  corpora- 
tion— railroads  I  am  referring  to — and  those  bills  paid 
direct  by  the  corporation  for  all  its  property  in  the  State 
to  the  State  Treasurer,  and  the  State  Treasurer  certifies 
certain  money  back  to  each  taxing  district  in  the  county. 

Q.  How  would  you  get  a  revision  in  case  you  wanted 
an  appeal.  You  would  have  to  go  back  to  the  original  tax 
levying  official? 


694 

A.  Yes,  sir.  So  far  as  corporations  are  concerned,  the 
matter  is  handled  by  a  State  Board.  For  instance,  in 
West  Virginia,  a  railroad  is  valued  on  its  tangible  prop- 
erty. The  very  instance  I  speak  of,  if  there  is  any  appeal 
as  to  the  valuation  it  has  to  be  done  then  and  there,  before 
they  certify  their  official  values. 

By  Mr.  Hunter : 

.  Q.  What  is  your  opinion  as  to  the  present  method  of 
assessing  valuations  ? 

A.  I  have  no  complaint  to  make  about  that. 

Q.  You  find  them  fair,  do  you? 

A.  Usually  so;  usually,  a  little  personal  talk  with  the 
local  official  and  resorting  to  maps  and  other  things  will 
shoAv  him  his  mistake. 

Q.  Where  do  you  find  that  trouble,  generally  ? 

A.  Mostly  in  the  assessor,  in  determining  to  his  satis- 
faction the  portion  of  the  ground  owned  by  the  company, 
used  for  railroad  purposes,  that  would  come  under  the 
general  corporation  tax.  We  have  no  complaint  on  that 
ground.  We  have  had  very  good  results. 

By  Mr.  Moyer; 

Q.  Are  you  obliged  to  pay  any  tax  other  than  the  cap- 
ital stock  tax  in  the  States  of  Ohio  and  Indiana? 

A.  In  the  State  of  Ohio  we  pay  a  tax  of  fifteen  thou- 
sand dollars  a  year,  which  is  fixed,  and  divided  among  the 
railroads  of  the  State,  in  proportion  to  their  property 
there. 

Q.  Fifteen  thousand  dollars  is  your  tax  f 

A.  No,  that  is  the  total.  We  pay  a  tax  in  the  State  of 
Ohio — a  direct  tax — a  tax  on  real  and  personal  property. 
Indiana  is  the  same  way,  only  two  taxes,  a  tax  on  real 
and  a  tax  on  personal  property. 

Q.  A  tax  on  real  and  a  tax  on  personal  property  ? 
A.  Yes,  sir.    We  have  no  capital  stock  tax  in  Ohio  and 
Indiana. 


695 

Q.  Instead,  they  assess  the  tangible  assets  ? 

A.  Yes.  sir.  In  the  States  of  Ohio  and  Indiana  all  stock 
is  subject  to  a  tax  for  State  purposes.  In  Pennsylvania 
we  don't  pay  a  State  levy. 

By  Mr.  Brown : 

Q.  As  I  understand  it,  the  railroads  in  Pennsylvania 
are  fairly  well  satisfied  with  the  present  tax  law  ? 

A.  I  believe  they  are. 

Q.  As  I  understand  it,  it  is  only  the  annoyance  in 
making  the  payments  ? 

A.  Yes,  sir. 

Q.  You  will  find  that  is  going  to  be  a  very  difficult 
thing  to  correct.  The  local  authorities  are  very  jealous  of 
their  prerogatives. 

A.  I  realize  it  would  be  a  hard  matter  to  correct.  I 
felt  that  I  would  like  to  call  the  attention  of  the  Commission 
to  it,  and  I  have  never  seen  or  heard  it  discussed. 

Here  the  Commission  adjourned  to  meet  Friday,  March 
25,  1910,  at  10  o'clock  A.  M. 


696 


Public  meeting,  Pittsburgh,  Pa.,  morning  March  25, 
1910. 

And  now,  Friday,  March  25,  1910,  the  hour  of  10  o'clock 
A.  M.  having  arrived,  the  Commission  met,  pursuant  to 
adjournment. 

JAMBS  A.  BEAVER,  ESQ.,  representing  the  Pennsylvania 
State  College,  spoke  as  follows: 

If  your  solicitor  will  indicate  what  you  would  like  to 
hear  I  will  give  you  any  information  in  my  power.  So 
far  as  I  know,  I  appear  here  by  the  direction  of  the  Presi- 
dent of  the  Pennsylvania  State  College,  the  college  having 
been  summoned,  or  an  intimation  made,  that  the  Com- 
mittee would  be  glad  to  hear  from  its  representatives  as 
to  the  relation  which  it  bears  to  the  State.  If  you  wish 
information  on  that  subject,  I  will  be  glad  to  give  you 
what  I  know.  It  is  peculiar,  absolutely  unique.  It  has 
a  relation  to  the  State  that  no  other  institution  in  the 
United  States  has,  educational,  charitable,  or  any  other 
sort.  I  do  not  think  that  this  has  ever  been  quite  under- 
stood by  our  legislative  authorities.  In  the  constractual 
relations,  and  those  of  the  State  to  the  United  States,  and 
the  State  and  the  college,  it  is  absolutely  unique.  Then 
I  might  have  a  suggestion  or  two  to  make  as  to  its  main- 
tenance, growing  out  of  the  contract  which  the  State  made 
with  the  United  States  and  with  the  college.  If  Mr.  Brown 
will  interrogate  me  and  guide  me  in  what  you  want  to  hear, 
I  will  be  glad  to  give  you  any  information  that  I  have. 

By  Mr.  Brown : 

Q.  I  assume  from  what  you  say  that  it  is  proper  for  the 
State  to  appropriate  money  for  the  support  of  such  insti- 
tutions ? 


697 

A.  It  is  not  only  proper,  but  an  absolute  contract  that 
it  will  do  it. 

Q.  Where  is  the  State  benefited  by  the  maintenance  of 
such  an  institution  ? 

A.  From  the  same  point  of  view  that  the  State  is  bene- 
fited by  the  maintenance  of  a  system  of  education.  The 
Constitution,  you  know,  provides  for  the  maintenance  of 
a  thorough  system  of  education,  under  the  Act  of  1854,  re- 
lating to  what  we  call  high  schools.  The  question  has  been 
raised  as  to  whether  there  was  a  high  school  until  1885, 
until  the  law  of  that  year  was  passed.  Under  the  law  of 
1854,  which  authorized  the  establishing  of  schools  in  the 
different  counties,  we  have  had  high  schools  in  Pennsyl- 
vania, but  it  was  the  United  States  Government  that  really 
started  the  idea  of  the  education  of  the  industrial  classes 
for  the  pursuits  and  professions  of  life. 

In  1853  Governor  Bigham  called  the  attention  of  the 
Legislature  to  the  condition  of  our  agriculture,  and  sug- 
gested that  we  have  a  State  Chemist  appointed  to  make 
some  analysis  of  the  agricultural  conditions,  and  an  an- 
alysis of  the  soils.  Judge  Watts  and  Robert  A.  Walker, 
and  men  of  that  class,  took  that  idea  up,  and  in  1853  had 
a  charter  granted  by  the  Legislature  for  the  Farmers'  High 
School  of  Pennsylvania.  Inside  of  a  year,  in  1855,  a  new 
charter  was  granted,  under  which  the  Farmers'  High  School 
of  Pennsylvania  was  organized.  General  Irwin,  of  Center 
county,  gave  two  hundred  acres  of  land  to  the  college,  and 
the  people  of  Center  county  gave  twenty-five  thousand 
dollars,  on  the  condition  that  the  institution  would  be  lo- 
cated in  Center  county.  Probably  a  dozen  other  people 
made  offers  of  farms,  and  the  people  of  Blair  county 
and  other  counties  made  offers  of  ground  on  condition  that 
it  would  be  located  in  their  several  counties.  Governor 
Pollock,  then  Governor  of  Pennsylvania,  and  several  of  the 
trustees  of  the  Farmers'  High  School  were  appointed  a 
Commission  to  go  over  the  State  and  determine  where  the 
institution  should  be  located.  After  visiting  the  State, 


698 

thirteen  different  locations  were  considered,  but  they  fi- 
nally determined  on  Center  county,  and  they  finally  de- 
cided to  accept  the  two  hundred  acres  of  land  donated  by 
General  Irwin  and  the  twenty-five  thousand  dollars  given 
by  the  citizens  of  Center  county  to  be  used  towards  the 
erection  of  the  buildings.  In  the  original  act  of  incor- 
poration, the  Commonwealth  authorized  the  Agricultural 
Society  of  Pennsylvania  to  donate  as  much  as  ten  thousand 
dollars  to  this  institution,  which  it  did.  Elliott  Cresson, 
of  Philadelphia,  was  the  first  private  contributor  outside 
of  Center  county,  and  he  gave  five  thousand  dollars.  Sub- 
sequently, the  Legislature  appropriated  fifty  thousand  dol- 
lars towards  the  erection  of  the  buildings.  The  State  gave 
in  the  neighborhood  of  one  hundred  thousand  dollars  for 
the  erection  of  the  buildings,  and  the  people  throughout 
the  State  gave  about  a  like  sum.  That  ushered  in  the 
Farmers'  High  School  of  Pennsylvania. 

In  1862,  under  the  leadership  of  Governor  Morrell,  then 
in  the  lower  house  of  Congress,  and  with  the  co-operation 
of  James  T.  Hale,  a  member  of  Congress  and  also  a  trus- 
tee of  the  Farmers'  High  School,  what  was  called  the 
Morrel  Land  Grant  Act  was  passed,  and  it  was  signed  by 
Lincoln  on  the  second  day  of  July,  1862.  The  object  of 
the  institutions  organized  under  that  Act  is  fully  set  out  in 
the  Act  itself.  That  Act  appropriated  and  set  apart  thirty 
thousand  acres  of  land  for  each  Member  of  Congress  and 
Senator  in  Congress.  Pennsylvania,  by  that  Act,  secured 
seven  hundred  and  eighty  thousand  acres  of  land.  And 
the  Legislature  of  Pennsylvania,  which  was  in  session  in 
April,  1863,  had  before  it  that  Land  Grant  Act,  and  an 
offer  of  the  United  States  of  seven  hundred  and  eighty 
thousand  acres  of  land  on  condition  that  it  would  erect 
and  maintain  at  least  one  institution  whose  principal  ob- 
ject should  be,  without  excluding  the  other  studies,  to 
teach  such  branches  as  related  to  agriculture  and  the  me- 
chanical arts,  in  such  a  way  as  to  provide  the  industrial 
classes  with  the  pursuits  and  professions  of  life.  If  you 


699 

have  ever  seen  a  better  scheme  of  education,  I  would  like 
to  see  it.     The  industrial  classes,  mark  you — not  a  high 
school  education — but  an  education  that  would  fit  the  in- 
dustrial classes  for  the  various  pursuits  and  professions 
of  life.     A  profession  in  that  day  was  understood  to  be 
either   theology,  law  or  medicine.     That   was  about   the 
run  of  professional  education.     Now,  instead  of  dealing 
with  the  professions  that  deal  with  the  degenerative  side 
of  humanity,  our  professions  are  looking  to  the  construc- 
tive side  of  humanity,  and  the  engineer  is  the  great  man 
of  to-day.     We  don't  deal  with  the  degenerative  man,  but 
the  engineer  deals  with  the  building  up  of  things,   and 
it  is  under  this  act  of  Morrell's,  and  the  educational  side 
of  our  whole  make  up  that  has  been  established  under 
that  Act,  that  the  engineer  has  become  the  great  man  of 
to-day,  and  has  made  our  industrial  life  and  our  ordinary 
life  what  it  is.     Take  that  light,  for  instance,  that  comes 
from  this  bill,  and  comes  from  the  education  of  the  indus- 
trial classes — that  arises  out  of  this  Land  Grant  Act.    Now, 
the  United  States  said  to  the  State  of  Pennsylvania,  we 
will  give  you  seven  hundred  and  eighty  thousand  acres 
of  land  on  condition  that  you  erect,  maintain  and  support 
an  institution  of  this  kind,  and  the  Legislature,  on  the 
first  of  April,  1863,  in  an  Act  of  Assembly,  which  I  will 
read   here,    says:    "We    will    do   that."      Seven   hundred 
and  eighty  thousand  acres  of  land  would  be  worth  at  least 
nine   hundred   and   seventy-five   thousand   dollars.     Here 
was  practically  a  million  dollars  thrown  into  the  lap  of 
Pennsylvania  on  condition  that  it  should  maintain  an  in- 
stitution.    Then  the  Legislature  turned  around  and  said 
to  the   Trustees  of  the  Farmers'   High   School  that  this 
college  was  along  the  very  lines  of  what  Morrell  said  in 
this  Act  that  they  were  to  do,  this  Act  that  was  passed 
on  the  second  day  of  July,  1862.     It  said  to  them,  "You 
are    already    teaching    agriculture,    you    simply    have    to 
enlarge  along  the  mechanical  arts  side,  and  this  college, 
for  which  the  State  of  Pennsylvania  contributed  a  him 


700 

dred  thousand  dollars  and  the  people  of  the  State  a  like 
amount,  why  not  just  take  that  institution  and  meet  the 
requirements  of  this  Land  Grant  Act?"  and  the  Trustees 
said,  "Certainly,  you  take  it,  and  give  us  the  benefit  of 
the  grant. ' '  In  1863  the  Legislature  passed  this  act : 

' '  Whereas,  By  an  act  of  Congress,  passed  the  second 
day  of  July,  one  thousand  eight  hundred  and  sixty, 
two,  a  grant  of  land  was  made  to  the  several  States 
and  Territories  which  may  provide  colleges  for  the 
benefit  of  agriculture  and  the  mechanical  arts,  equal 
to  thirty  thousand  acres  for  each  Senator  and  Rep- 
resentative in  Congress  to  which  the  States  are  respect- 
ively entitled  by  the  apportionment  under  the  census 
of  1860,  which  Act  of  Congress  requires  that  the  sev- 
eral States,  in  order  to  entitle  them  to  the  benefit 
of  the  said  grant,  should,  within  two  years  from  the 
date  of  said  act,  express  their  acceptance  of  the  same ; 
and 

"Whereas,  the  Legislature  of  Pennsylvania  has  al- 
ready shown  its  high  regard  for  the  agricultural  in- 
terests of  the  State  by  the  establishment  of  the  Agri- 
cultural College  of  Pennsylvania,  by  making  liberal 
appropriations  thereto;  therefore, 

"Be  it  enacted  by  the  Senate  and  House  of  Eepre- 
sentatives  of  the  Commonwealth  of  Pennsylvania  in 
joint  assembly  met,  and  it  is  hereby  enacted  by  the 
authority  of  the  same.  That  the  Act  of  Congress  of 
the  United  States,  passed  the  second  day  of  July,  one 
thousand  eight  hundred  and  sixty-two,  entitled  "An 
Act  donating  lands  to  the  several  States  and  Territories 
which  may  provide  colleges  for  the  benefit  of  agricul- 
ture and  the  mechanical  arts, '  be  and  the  same  is  hereby 
accepted  by  the  State  of  Pennsylvania  with  all  its 
provisions  and  conditions,  and  the  faith  of  the  State 
is  hereby  pledged  to  carry  the  same  into  effect." 
Accepts  the  Act  of  Congress  with  all  its  conditions  and 
provisions,  and  pledges  the  faith  of  the  State  to  carry  it 


701 

into  effect.    If  you  can  find  any  other  such  enactment  by 
v,he  State  of  Pennsylvania  in  regard  to  any  other  institu- 
ion  in  the  State  of  Pennsylvania,  I  have  never  seen  it. 
ind  I  would  be  willing  to  leave  it  to  any  lawyer  if  that 
was  not  a  contract  between  the  State  of  Pennsylvania  and 
the  United  States  Government.    And  the  Legislature  in  this 
Act  said  further:    ''We  can  meet  the  requirements  of  this 
Act  by  taking  this  college  •   and  by  the   addition   of  the 
instruction  in  the  mechanical  arts,  we  can  meet  the  re- 
quirements of  this  Act,  and  we  will  pledge  the  faith  of  the 
State  to  carry  out  all  of  its  conditions  and  provisions." 
Now  the  Act  of  Congress  requires  that  no  part  of  the  income 
o.v  this  land  grant  shall  ever  be  used  directly  or  indirectly, 
in  any  manner  whatever,  in  the  erection,  maintenance  or 
repair  of  any  building  or  buildings.    What  then?    Why, 
of  course,  the  State  having  pledged  its  faith  to  carry  out 
the  provisions  of  the  Act  of  Congress,  is  bound  to  maintain 
the  buildings.    Now  what  follows?    I  said  we  had  seven 
hundred  and  eighty  thousand  acres  of  land,  sixty  thousand 
less  than  New  York.     New  York  had  two  more  repre- 
sentatives than  we  had.     We  have  twenty-four  Represen- 
atives  and  two  Senators  and  they  had  twenty-six  Repre- 
sentatives  and   two    Senators.      Under   the   provisions   of 
the  Land  Grant  Act  no  State  was  allowed  to  locate  this  land 
outside  of  itself.    Of  course,  Pennsylvania  having  no  land 
within  its  borders,  it  could  not  locate  anywhere,     So  it 
was  with  all  the  States  outside  of  the  Southern   States, 
which  were  in  rebellion.     Thirty  thousand  acres  of  land 
was  granted  to  each   °tate  ior  each  Representative  and 
Senator  in  Congress.     This  act  also  provided  for  a  Commis- 
sion to  consist  of  the  Governor,  Surveyor  General  and  the 
Auditor  General,  who  should  attend  to  the  disposition  of 
this  land  grant.     Our  Commission  consisted  of  Governor 
Curtin,  Campbell,  and  I  have  forgotten  the  name  of  the 
Auditor  General.     They  put  the  land  on  the  market  and 
sold  it  for  an  average  of  fifty-three  cents  an  acre,  less  than 
one-half  of  what  the  United  States  was  getting  for  their 


702 

land  which  they  were  selling  in  quarter  sections.  It  really 
should  have  amounted  to  about  nine  hundred  and  seventy- 
five  thousand  dollars,  and  it  actually  yielded  about  three 
hundred  and  ninety  thousand  and  some  hundred  dollar?. 
Campbell  made  a  report  after  the  thing  was  closed  up.  I 
knew  him  very  intimately.  He  was  humiliated  at  the  way 
things  turned  out.  He  made  a  report  to  the  Legislature. 
He  said  that  this  thing  was  a  sacrifice.  He  said  we  have  in 
the  neighborhood  of  three  hundred  and  ninety  thousand 
dollars,  and  he  suggested  that  we  put  it  into  United  States 
bonds.  He  also  suggested  that  the  Legislature  authorize 
the  Commission  to  sell  the  bonds,  and  turn  the  money  over 
to  the  Treasurer  of  the  State  of  Pennsylvania,  and  that 
the  State  should  give  to  the  Agricultural  College  of  Penn- 
sylvania its  bond  for  five  hundred  thousand  dollars,  and  in 
that  the  Land  Grant  Act  requires  each  State  to  maintain 
the  fund  which  it  receives  from  the  Land  Grant  Act  at  at 
least  5  per  cent,  interest,  I  suggest  that  the  State  makes  its 
bond  bearing  6  per  cent,  interest  for  fifty  years,  the  in- 
terest in  the  meantime  to  be  paid  to  the  Agricultural  Col- 
lege of  Pennsylvania.  There  is  the  foundation  of  the 
endowment  of  the  Pennsylvania  State  College,  to  which 
the  United  States  contributed  in  the  neighborhood  of  four 
hundred  and  six  thousand  dollars,  and  the  remaining  nine- 
ty-three thousand  and  some  hundred  dollars  was  simply 
a  gratuity  on  the  part  of  the  State  of  Pennsylvania  in 
keeping  their  contract  made  with  the  United  States.  In- 
stead of  giving  their  bond  for  the  amount  received  from 
the  Land  Grant  Act,  and  at  5  per  cent.,  the  State  gave  its 
bond  for  five  hundred  thousand  dollars  at  6  per  cent., 
and  the  State  College  receives  every  year  from  that  thirty 
thousand  dollars,  fifteen  thousand  dollars  semi-annually 
on  that  bond  for  its  maintenance.  From  1887  the  State 
gave  irregularly  to  the  college  at  different  times.  One 
time,  shortly  after  it  took  the  college,  it  provided  for  the 
payment  of  a  mortgage  of  eighty  thousand  dollars,  which 
was  necessitated  by  the  erection  of  the  old  main  hall.  Two 


703 

sets  of  contractors  broke  up  in  the  construction  of  that 
building.     One   end  of  the    building    was    erected,  and 
students  were  received  in  1859.     War    came    along,  and 
building  material  advanced,  and  the  building,  instead  of 
costing  ninety  thousand  dollars,  cost  nearly  two  hundred 
thousand  dollars.    It  required  a  mortgage  of  eighty  thou- 
sand dollars,  bearing  7  per  cent,    interest,    and    it    cost 
fifty-six  hundred  dollars  every  year  to  keep  that  mortgage 
alive.    Finally  it  was  paid  by  the  State.    Since  that  time 
there  have  been  a  half  a  dozen  acts  passed  by  Congress, 
one  called  the  Hatch  Act,  which  gave  fifteen    thousand 
dollars  a  year  for  the  purpose  of  making  experiments  in 
agriculture,  and  in  order  to  meet  the  requirements  of  this 
bill,  the  trustees  of  the  college  conveyed  to  themselves, 
and  to  the  institution  one  hundred  acres  of  land,  to  be 
set  apart  under  this  trust,  that  it  should  be  held  inviola- 
bly sacred,  for  all  times,  for  the  purpose  of  the   Hatch 
Act,  under  which  the  State,  and  through  the  State   the 
college  was  to  receive  fifteen  thousand  dollars  a  year  for 
experiments,  and  that  makes  the  experiment  station  of 
Pennsylvania,  and  the  State  College  holds  that  one  hun- 
dred acres  in  trust,  inviolably  in  trust,  for  meeting  the 
requirements  of  the  Hatch  Act,  and  it  has  so  held  it,  and  is 
bound  to  for  all  time.     They  could  not  sell  it,  it  is  held 
in  trust  for  that  purpose,  and  as  a  result  of  that  the  Legis- 
lature said  that  the  income  of  this  Act  was  to  go  to  the 
Agricultural  College  of  Pennsylvania.    In  the  meantime 
the  section  in  the  Morrell  Land  Grant  Act,  which  com- 
pelled the  land  grant  colleges  to  give  instruction  in  the 
mechanical  arts  and  agriculture,  compelled  the  college  to 
enlarge  its  sphere,  and  instead  of  being  the  Agricultural 
College  of  Pennsylvania,  confining  its  time  and  attention 
to   agriculture,   it    took   up   mechanical   arts,   and    has 
grown  into  one  of  the  greatest  schools  in  the    United 
States.    It  is  third  in  its  number  of  students  in  the  United 
State,  and  there  are  more  State    College  men  within  ;i 
radius  of  a  hundred  miles  of  Pittsburgh,  giving  their  time 


704 

and  attention  to  the  mechanical  arts,,  and  building  up 
your  industries,  than  from  any  other  institution  in  the 
United  States.  I  can  summon  two  hundred  by  telephone 
that  are  located  in  this  vicinity,  New  Castle,  Youngstown, 
Cleveland,  etc.,  and  some  of  the  best  engineers  you  have 
in  the  various  departments  of  your  industrials  come  from 
State  College.  We  had  a  man  a  few  years  ago  who  had  a 
great  reputation  at  the  college  for  flunking.  He  came  to 
be  known  as  ' l  Flunky  so-and-so. ' '  He  could  not  get  along 
in  his  studies,  and  he  finally  hit  on  metallurgy.  He  found 
his  notch.  He  could  control  the  college  students  and  get 
anything  from  them  he  wanted.  He  was  not  much  of  a 
success  there  at  school  until  he  took  up  metallurgy.  When 
he  graduated,  and  he  did  graduate  in  that  branch  without 
any  trouble,  he  came  here  and  became  assistant  superin- 
tendent of  one  of  your  largest  furnaces.  He  worked  as 
assistant  superintendent  for  a  number  of  years.  The 
superintendent  there  died,  and  the  thing  ran  along  under 
"Blank's"  management.  He  could  control  the  men,  a?id 
he  was  a  master  in  connection  with  the  workings  of  the 
furnace,  and  he  made  a  record  on  that  furnace  that  broke 
the  record  of  the  world.  He  was  wearing  himself  down, 
and  had  all  the  responsibility,  and  he  asked  the  concern 
to  appoint  a  superintendent,  and  they  appointed  him,  and 
he  has  been  there  ever  since,  and  making  good.  I  could 
tell  you  of  others,  and  could  name  them.  It  is  just  such 
work  as  that  that  resulted  from  the  extensions  of  the 
colleges  as  required  by  the  Land  Grant  Act,  because  it  re- 
quired that  all  these  colleges  not  only  should  give  in- 
structions in  agriculture,  but  also  in  the  mechanical  arts. 
The  Morrell  Acts  says  that  they  shall  fit  the  industrial 
classes  for  the  various  pursuits  and  professions  of  life. 
You  must  keep  that  in  mind  all  the  time.  Now,  the  Legis- 
lature of  Pennsylvania,  of  course,  in  order  to  meet  the 
requirements  of  the  Act  of  Congress,  had  to  have  a  col- 
lege, because  that  is  the  fundamental  question  in  the 
Morrell  Act,  and  they  said  to  the  trustees  of  the  Agricul- 


705 

tural  College  of  Pennsylvania,  "Here  is  this  college  we 
have  helped  you  to  build,  let  us  take  it/'  and  the  trustees 
said,  "Certainly,"  and  in  the  Act  of  1863,  they  said,  "We 
pledge  the  faith  of  the  State  to  maintain  this  college  under 
the  Act  of  1862.  That  meant  exactly  what  was  in  the 
minds  of  the  trustees  of  the  college,  and  they  said,  "When 
we  have  the  State  of  Pennsylvania  pledging  its  faith  to 
maintain  this  institution,  it  has  got  to  be  maintained  if 
there  is  anything  in  the  faith  of  the  State.  That  constituted 
the  contract  between  the  United  States  and  the  State  of 
Pennsylvania,  and  the  State  of  Pennsylvania  and  the  col- 
lege. Now,  it  is  true  that  this  was  never  considered  as  a 
contract  in  the  ordinary  sense.  It  was  not  considered  a 
contract  under  which  the  college  could  sue  the  State,  but 
the  Legislature,  in  carrying  out  the  pledge  of  faith  of  the 
State  of  Pennsylvania,  must  determine  just  how  far  it 
is  to  be  carried  out.  The  trustees  of  the  college  come 
regularly  before  the  Legislature  with  the  budget,  some- 
times running  as  high  as  three  million  of  dollars,  sometimes 
less,  and  they  generally  get  about  one-tenth  of  what  they 
ask  for.  We  have  a  great  number  of  students  there  now, 
and  the  board  is  considering  the  question  of  limiting  the 
freshman  class  of  the  coming  year  to  five  hundred.  Last 
year  it  was  four  hundred  and  thirty-five. 

Mr.  Brown:  The  Legislature  of  Pennsylvania  in  the 
session  of  1909  appropriated  a  certain  amount  for  two 
years  for  the  maintenance  of  the  Department  of  Engineer- 
ing, and  also  an  amount  to  make  good  certain  payments. 
The  Governor  cut  both  these  appropriations,  and  gave  cis 
his  reason  the  insufficiency  of  State  revenue,  the  lack  of 
sufficient  funds  being  caused  by  appropriations  to  institu- 
tions not  under  State  control.  In  your  opinion,  should  that 
college,  the  State  College,  be  taken  care  of  before  any 
money  was  appropriated  to  institutions  not  under  State 
control  ? 

A.  Yes,  sir,  I  think  it  should  because  of  the  contract. 

Q.  Entirely  independent  of  the  contract,  do  you  think 
it  should? 
37 


706 

A.  Yes,  sir. 

Q.  Entirely  independent  of  the  legal  obligation — take 
the  moral  obligation? 

A.  Yes,  sir.  I  got  a  notice  the  other  day  from  a  little 
fellow  named  A.  Solomon  Silverstein,  informing  me  that  I 
was  elected  an  honorary  member  of  the  Cosmopolitan  Club 
of  the  State  College,  composed  of  men  from  nearly  every 
country,  graduates  from  State  College.  Here  were  boys 
from  Cuba,  Porto  Rico,  and  from  all  over  the  world,  and 
they  got  up  a  little  club.  It  was  signed  by  A.  Solomon 
Silverstein,  secretary.  A  few  years  ago,  before  Dr.  Sparks 
came  to  the  college,  having  been  president  of  the  Board  of 
Trustees,  I  was  asked  to  occupy  the  president's  chair.  I 
spent  most  of  my  time  there  during  my  vacation.  Miss 
Smitsky,  the  president's  secretary,  told  me  of  a  young  fel- 
low from  Philadelphia,  who  prepared  at  the  Brown  Train- 
ing School,  who  was  there  with  only  three  dollars  in  his 
pocket  to  get  an  education.  I  sent  for  the  boy  and  looked 
him  over,  and  made  up  my  mind  he  was  going  to  make 
good.  I  said  to  her,  "You  tell  this  boy  to  go  to  McAllister 
Hall  and  board  three  weeks  at  my  expense."  She  told 
him  the  next  day,  and  he  would  not  go.  He  said,  "I  have 
a  job  now."  He  never  took  the  three  weeks'  boarding. 
He  had  a  job  in  the  dairy  building,  giving  so  many  hours 
a  day  there.  He  is  now  in  his  third  year — a  bright  young 
fellow.  He  worked  in  the  day  and  is  studying  at  night, 
and  he  is  going  to  be  one  of  the  educated  men  of  this  State. 
I  was  sitting  in  the  office  one  day  when  a  fellow  came  in. 
He  said,  "I  have  a  suit  of  clothes  and  twenty  dollars,  and 
of  course  that  isn't  going  to  pay  for  my  books,  boarding 
and  so  forth.  "What  am  I  going  to  do?"  I  said,  "Over 
there  at  McAllister  Hall  the  people  will  give  you  a  table  to 
serve  if  you  can  bring  twelve  people  there,  and  you  will  get 
your  board."  He  said,  "I  am  a  stranger,  I  don't  know  a 
soul  here."  Dr.  Welsh  became  interested  in  the  case,  and 
said  he  would  see  what  he  could  do.  He  sat  back  and 
said,  "Will  you  pare  potatoes?"  The  boy  said,  "I  will  do 


707 

anything  that  is  decent  and  honorable  to  get  an  education. ' ' 
Dr.  Welsh  said,  "You  pare  potatoes  two  hours  a  day  and 
you  will  get  your  board. ' '  And  he  did  that,  and  now  he  is 
away  up  in  his  class.  I  know  three  fellows  that  have  two 
rooms  together,  and  every  evening  at  eight  o'clock  they 
shut  up  shop  and  press  trousers  at  ten  cents  apiece,  and 
are  going  through  college  in  that  way. 

By  Mr.  Brown: 

Q.  I  assume  that  it  is  your  opinion,  if  there  is  not  suffi- 
cient revenue,  that  this  institution  should  be  favored? 

A.  Yes,  sir. 

Q.  All  of  its  immediate  needs  should  be  satisfied? 
A.  Yes,  sir,  and  as  a  matter  of  fact  the  contract  comes 
first. 

Q.  Assuming  the  revenue  was  not  sufficient,  do  you  think 
the  State  would  be  justified  in  increasing  her  list  of  tax- 
ables  ? 

A.  Yes,  sir. 

Q.  You  think  a  State  should  increase  the  taxables  in 
order  to  take  care  of  these  institutions? 

A.  I  have  had  that  in  mind  for  a  number  of  years,  and 
a  great  many  of  the  States  are  setting  the  example.  In 
one  State  they  laid  a  tax  of  one  mill  for  the  support  of 
their  land  grant  college.  Probably  ten  or  twelve  States 
have  levied  a  tax  of  one-tenth  of  a  mill  for  the  support  of 
the  land  grant  colleges,  in  accordance  with  the  contract 
which  they  had  made  with  the  United  States  to  support  at 
least  one  college,  whose  principal  object  shall  be  to  give 
instruction  in  the  sciences  that  relate  to  agriculture  and  the 
mechanical  arts. 

Q.  Your  idea  is  that  in  such  institutions  those  who  take 
a  course  in  those  branches  should  be  cared  for,  and  the 
State  should  provide  sufficient  money  ? 

A.  No,  I  don't  think  that  the  State  should  say,  ''You  go 
there  and  we  will  board  you."  The  college  endeavors  to 


708 

provide  for  them.  I  know  of  two  hundred  fellows  that  are 
going  through  college  on  two  hundred  dollars  a  year. 

Q.  Where  is  the  State  limited  in  its  obligation  under  the 
contract  of  the  grant? 

A.  It  is  not  limited. 

Q.  It  should  take  care  of  this  institution? 

A.  Yes,  sir. 

Q.  And  that  should  be  done  even  to  the  withholding  of 
their  support  for  institutions  not  under  State  control? 

A.  Yes,  sir.  I  never  went  that  far  in  my  personal  re- 
lation to  this  thing.  When  I  was  in  the  executive  office  I 
had  the  same  trouble.  I  was  confronted  with  so  many 
millions  of  appropriations  and  so  many  millions  less  of 
revenue,  and  it  had  to  go  around.  I  worked  it  out  this  way, 
that  no  charitable  institution  should  lack  funds  to  carry 
out  its  work.  There  is  a  hospital  here,  the  West  Penn  Hos- 
pital. They  had  so  much  to  pay  a  mortgage,  so  much  for 
maintenance  and  so  much  for  improvements.  I  told  James 
B.  Scott,  who  came  to  see  me  with  reference  to  this  appro- 
priation, that  they  were  not  to  turn  a  patient  away  from 
the  institution.  I  told  him  how  much  they  would  be 
allowed,  and  when  we  had  talked  it  over  he  said  it  was 
reasonable,  and  they  would  have  to  be  satisfied.  We  have 
built  a  stone-like  structure  out  of  concrete,  and  we  have 
one  of  the  best  chemistry  lecture  rooms  in  the  United 
States.  A  few  years  ago  our  mining  department  became 
so  pushed  for  room  that  something  had  to  be  done.  We 
could  not  wait  until  the  Legislature  met.  We  solicited 
funds.  We  came  to  Pittsburgh  and  a  half  a  dozen  people 
gave  a  thousand  dollars.  One  man  gave  twenty-five  hun- 
dred dollars.  We  put  up  a  hemlock  building,  and  whilst  it 
is  a  miserable  affair,  yet  it  serves  the  purpose,  and  will  until 
we  can  get  something  better. 

By  Mr.  Brown : 

Q.  Do  these  men  stay  mostly  in  the  State  of  Pennsyl- 
vania ? 


709 

A.  They  go  wherever  the  inducement  is  greatest.  A 
man  interested  in  mining  will  go  to  Nevada  or  Colorado, 
or  sometimes  to  Mexico.  There  is  a  great  demand  for  in- 
structors in  this  branch,  and  we  are  every  year  sending 
men  all  over  the  country  to  fill  these  places.  One  man  is 
at  the  head  of  the  experimental  station  in  Oklahoma,  and 
a  man  by  the  name  of  Fields  has  been  connected  with  the 
Agricultural  Department  for  some  time.  As  I  said  before, 
I  could  summon  two  hundred  men  by  telephone  within  fifty 
miles  of  Pittsburgh,  and  that  will  give  you  some  idea  of  the 
influence  that  the  men  of  this  institution  are  exerting  upon 
the  industries  and  institutions  of  this  Commonwealth. 

By  Mr.  Moyer : 

Q.  I  understood  you  to  say  that  you  have  students  from 
almost  every  section  of  the  world? 

A.  A  few. 

Q.  Do  they  pay  the  State  College  a  tuition  fee? 

A.  Not  now.  "We  used  to  charge  one  hundred  dollars  for 
people  outside  of  Pennsylvania,  but  that  led  to  a  good  many 
complications,  and  we  stopped  that. 

Q.  Based  upon  the  fact  that  the  State  of  Pennsylvania 
maintains  this  institution,  don't  you  think  that  the  students 
there  should  be  confined  to  citizens  of  the  Commonwealth? 

A.  The  college  has  never  encouraged  students  from  out- 
side of  the  State  to  become  enrolled  there.  The  college  is 
so  well  known,  and  particularly  in  agriculture  the  standing 
of  the  college  is  such  that  it  draws  students  from  every 
State.  To  have  such  a  rule  would  result  in  people  coming 
into  the  State  and  locating  somewhere,  and  making  their 
declaration  of  citizenship,  and  say  I  am  a  citizen  of  such 
and  such  a  place,  or  town  or  borough,  and  then  become  a 
student  at  the  college.  He  would  have  a  right  to  become 
a  citizen,  and  then  would  have  the  right  to  become  a 
student.  I  have  a  list  here  of  the  students  from  the  several 
counties  in  Pennsylvania.  Allegheny  leads  with  95,  Phil- 
adelphia next  with  87,  and  Center  county  next  with  70. 


710 

And  so  it  is  all  down  the  list,  and  every  county  is  repre- 
sented but  Pike  county.  That  will  give  you  some  idea  of 
the  representation  throughout  the  State. 

By  Mr.  Hunter : 

Q.  Assuming  that  the  State  would  appropriate  all  the 
funds  that  you  would  ask  for,  would  the  number  of  students 
at  your  college  increase  with  greater  rapidity  than  it  has 
in  the  past? 

A.  I  don't  know  that  it  would.  I  don't  think  we  could 
keep  up  with  the  increase.  The  town  is  endeavoring  to  take 
care  of  the  students  so  far  as  lodging  is  concerned.  We 
don 't  have  college  dormitory  buildings.  If  we  did  we  would 
get  fifty  dollars  for  every  room,  and  that  would  be  an  in- 
come. That  would  be  one  way  to  provide  for  this  institu- 
tion, and  one  of  the  best  ways.  If  we  had  dormitory  build- 
ings to  accommodate  a  thousand  men  we  would  derive  a 
nice  income  from  them,  and  the  State  could  not  put  the 
money  anywhere  to  better  advantage. 

By  Mr.  Moyer: 

Q.  I  am  not  quite  clear  as  to  what  your  test  of  citizen- 
ship is.  You  said  that  if  a  boy  declares  himself  a  citizen  of 
the  State  of  Pennsylvania,  he  can  be  enrolled  as  a  student 
at  State  College.  Is  that  test  a  mere  declaration  ? 

A.  Citizenship  depends  upon  the  intention.  If  a  man 
declares  his  intention  to  become  a  citizen,  he  becomes  a 
voter,  because  it  requires  citizenship  to  become  a  voter,  and 
so  in  a  certain  time  he  becomes  a  charge  upon  the  district 
into  which  he  comes,  and  that  district  is  bound  to  support 
him,  and  so  it  is  all  the  way  through  in  regard  to  the  rec- 
ognition of  citizenship. 

Q.  You  would  think  it  would  be  all  right  then,  inasmuch 
as  the  State  appropriates  money  for  the  maintenance  of 
this  institution,  and  this  established  contract  entered  into 
with  the  United  States  Government,  that  the  student  body 
should  be  confined  to  the  State. 

A.  If  you  look  at  it  from  that  point  of  view  I  think  it 


711 

would  be  all  right.    At  other  institutions,  such  as  Cornell, 
students  from  Pennsylvania  pay  a  fee  to  go  there. 

Q.  They  pay  a  tuition  fee? 
A.  Yes,  sir. 

Q.  You  refer  not  to  the  Cornell  University,  but  to  the 
agricultural  school. 

A.  It  is  a  part  of  the  Cornell  University,  and  also  a 
State  institution.  I  wish  we  had  had  a  Cornell  in  Penn- 
sylvania. We  would  have  had  a  million  dollars  out  of  the 
land  grant.  Cornell  bought  the  land  from  the  State,  and 
located  it  himself,  because  the  State  couldn't  locate  it.  He 
held  the  land  and  sold  it  at  a  good  price.  He  never  sold  an 
acre  for  less  than  ten  dollars,  and  some  of  it  as  high  as 
twenty-five.  The  college  was  to  pay  Cornell  for  what  he 
had  put  into  it,  with  interest  at  6  per  cent.,  and  the  pro- 
ceeds of  the  sale  of  the  land  were  to  go  to  the  Agricultural 
College  and  Cornell  University.  If  we  had  had  someone 
here  to  take  this  seven  hundred  and  eighty  thousand  acres 
of  land  and  locate  it  in  the  timber  lands  of  Wisconsin  and 
some  of  the  other  States,  and  held  it  for  us  to  be  disposed 
of  in  the  same  way,  we  would  have  gotten  enough  out  of  it 
so  that  we  wouldn't  have  to  bother  the  State. 

Q.  It  seems  to  me,  inasmuch  as  you  made  this  state- 
ment here  that  the  board  of  trustees  was  thinking  of  limit- 
ing the  freshman  class  to  five  hundred  on  account  of  there 
being  so  many  enrolled,  that  there  should  be  no  difficulty  in 
coming  to  the  conclusion  that  State  College  should  confine 
its  students  to  those  who  are  citizens  of  the  Commonwealth. 

A.  We  would  have  to  go  further.  Say  we  limit  the 
number  of  students  coming  to  our  college  to  five  hundred 
per  year.  We  would  have  to  go  further  and  say  they  will 
be  admitted  from  the  counties  of  Pennsylvania  in  propor- 
tion to  their  population,  if  they  claim  the  right  to  them. 
That  would  be  necessary,  and  indeed  originally  that  was  the 
case.  If  Center  county  would  say  we  want  more  than  our 
proportion,  the  trustees  would  say,  "No,  you  can  only  have 


712 

your  proportion,  according  to  the  population,  of  the  num- 
ber enrolled. 

Q.  What  in  your  judgment  should  the  State  do  with 
charitable  institutions  over  which  it  has  no  control,  and  the 
title  to  his  property  is  not  vested  in  the  State  in  its  rela- 
tions to  these  institutions?  Should  it  continue  appropri- 
ating to  such  institutions  ? 

A.  That  is  a  very  broad  question.  Of  course,  Pennsyl- 
vania does  more  of  that  than  any  other  State.  At  least 
it  did  when  I  made  a  study  of  it,  and  I  never  could  quite 
make  up  my  mind  that  the  State  of  Pennsylvania  could 
shut  up  its  bowels  of  compassion. 

Q.  At  the  time  you  were  Governor  did  it  ever  strike  you 
that  there  were  too  many  hospitals  ? 

A.  Yes,  sir. 

Q.  What  would  you  say  as  to  a  consolidation  of  hospitals  ? 

A.  I  suppose  I  made  as  many  enemies  as  anyone  pos- 
sibly could  by  vetoing  bills  for  hospitals.  I  have  gone 
through  hospitals  that  had  a  hundred  vacant  rooms,  and 
again  into  others  that  had  not  only  every  bed  occupied,  but 
the  operating  tables.  They  had  a  patient  sleeping  on  the 
operating  table  because  there  was  no  bed.  The  hospitals 
for  the  insane  and  our  miners'  hospitals  are  such  institu- 
tions. The  State  has  paid  for  them  and  has  the  title  to 
them,  and  is  under  obligation  to  maintain  them.  A  great 
many  of  these  private  hospitals  are  coming  in  and  saying, 
' '  We  will  build  a  hospital  and  help  maintain  it,  but  we  want 
help  from  the  State."  Why  shouldn't  we  give  the  help  to 
the  hospital  rather  than  build  it  and  own  it?  It  can't  be 
used  for  any  other  purpose.  The  State  rather  gains  by  it 
rather  than  loses.  I  remember  during  my  term  in  the 
executive  office  that  the  Legislature  appropriated  a  certain 
amount  for  three  miners'  hospitals.  I  appointed  three  of 
the  keenest  men  I  knew  of  in  Pennsylvania  to  build  them. 
After  they  reported  to  me  what  they  could  do  with  the  ap- 
propriation, and  had  located  the  three  places  for  the 
buildings,  I  said  it  wouldn't  do,  that  there  would  have  to 


713 

be  four,  and  they  would  have  to  build  them  out  of  this  ap- 
propriation. I  told  them  if  they  could  not  do  that  they 
would  have  to  go  to  the  several  communities  in  which  they 
are  located  and  say  that  they  must  help  finish  them.  They 
had  assurances  from  the  different  communities  that  such 
would  be  the  case,  and  they  did  build  the  four  hospitals, 
one  at  Mercer,  one  in  Philadelphia,  one  in  Center  county 

and  one  in  -    ,  four  regions  in  which  hospitals 

were  needed.  We  cannot  hustle  these  men  injured  in  mines 
all  over  the  State.  There  must  be  some  place  near  where 
the  injured  can  be  taken,  and  you  know  that  question  of 
taking  care  of  the  diseased  and  injured  is  just  as  important 
as  the  question  of  education.  Where  you  can  get  a  com- 
munity to  help  build  an  institution  and  help  the  State  pay 
for  it,  it  looks  like  a  good  proposition. 

Q.  And  the  title  is  vested  in  the  State? 

A.  Yes,  sir. 

Q.  And  the  State  should  take  care  of  its  own? 

A.  Yes,  sir. 

Q.  Did  you  ever  come  across  a  concrete  example  where 
money  appropriated  for  maintaining  a  hospital  was  ever 
misused?  Was  that  ever  brought  to  your  attention? 

A.  Oh,  yes,  all  sorts  of  questions  of  that  sort.  I  never 
found  a  well  authenticated  case  in  which  the  accusation 
was  made  absolute.  I  think  in  the  main  our  hospitals  are 
thoroughly  well  managed,  but,  of  course,  I  haven't  very 
much  knowledge  on  that  subject. 

By  Mr.  Brown : 

Q.  Assuming  there  is  a  great  necessity  for  insane 
asylums,  do  you  think  it  is  proper  for  the  State  and  wise, 
to  delay  in  the  erection  of  those  institutions,  because  she 
has  not  money  to  do  it  and  appropriate  to  institutions  not 
under  State  control ?  Shouldn't  she  build  her  own  institu- 
tions first  ? 

A.  I  was  on  the  commission  for  building  the  hospital  for 
the  insane  at  Warren.  There  were  only  three  of  us,  and 


714 

you  can  get  along  with  a  commission  of  three.  I  said, 
"Gentlemen,  we  are  building  for  a  thousand  years.  A 
State  does  the  most  economical  thing  when  it  builds  the 
most  reliable  buildings,  buildings  of  stone,  iron  and  con- 
crete, and  we  will  put  the  best  that  can  be  put  into  this 
building."  I  believe  we  did  it.  "We  ran  along  for  about 
ten  years  building  it,  but  when  it  was  built  it  was  there 
for  all  time.  "We  had  the  best  builders  we  could  get  in 
Pennsylvania. 

Q.  Was  it  not  possible  to  erect  it  in  less  time? 

A.  It  could  not  have  been  erected  properly  in  less  than 
five. 

Q.  So  that  for  five  of  those  ten  years  that  institution 
could  have  been  used? 

A.  Yes,  sir. 

Q.  Before  you  finished  the  institution  you  were  paying 
for  repairs  and  up-keep? 

A.  No,  I  don't  think  so. 

Q.  Did  you  have  that  brought  to  your  attention  as  to 
other  buildings  ? 

A.  Yes,  sir.  The  one  at  Norristown  was  built  about  the 
same  time,  and  before  they  had  finished  it,  they  had  to 
go  over  it.  If  you  visit  the  two  institutions  you  will  see 
the  difference.  I  do  not  believe  there  is  any  economy  hi 
building  for  the  State  in  a  cheap  way. 

Q.  "We  have  had  several  letters  complaining  that  the 
State  institutions  should  be  finished  first. 

A.  If  you  put  it  on  the  ordinary  business  proposition 
that  a  man  should  take  care  of  his  own  first,  then  I  think 
it  would  be  the  thing  to  do.  But  humanity  demands  some- 
times that  we  sacrifice  self  and  help  the  other  man. 

Q.  Do  you  think  that  would  apply  to  the  case  where  the 
insane  are  concerned  ?  Why  should  the  insane  be  allowed 
to  roam  at  large  for  want  of  proper  quarters,  while  these 
moneys  are  being  distributed  to  these  institutions? 

A.  That  is  true,  and  where  the  insane  patient  can  be 


715 

taken  care  of  in  the  first  instance  and  probably  restored, 
you  cannot  spend  too  much. 

Q.  Would  the  same  apply  to  the  feeble  minded? 

A.  Not  so  much  in   that   case   when   their   ailment   is 
permanent,  but  when  a  man  can  be  restored  it  is  the  only 
proper  thing  to  do.     We  have  erred  in  the  direction  of 
spending  more  money   on  our  so-called   insane   patients ; 
not  strictly  so  in  the  ordinary  sense,  they  have  got  beyond 
that.     They  have  got  to  the  point  where  nothing  can  be 
done  for  them,  and  they  cannot  be  restored.     But  the 
others,  and  the  chances  are  that  seven  in  ten  can  be  re- 
stored, should  be  taken  care  of.    I  became  interested  hi 
the  question  of  the  larger  counties  maintaining  their  own 
hospitals  for  the  insane,  and  a  great  many  of  them  are 
doing  it  and  doing  it  well,  some  of  them  perhaps  not  so 
well.     Just  before  I  give  way  to  Dr.  Sparks,  who  can 
tell  you  of  the  relations  of  Pennsylvania  to  the  other  States, 
there  are  two  ways  that  the  State  College  can  be  main- 
tained without  trespassing  upon  any  other  educational 
institution.     I  believe  in  the  largest  possible  appropria- 
tions to  our  educational  institutions.     I  do  not  believe 
that  Pennsylvania  can  expend  too  much  in  that  direction. 
I  would  rather  spend  money  in  developing  minds  that 
will  have  a  tendency  towards  benefiting  the  Common- 
wealth, than  upon  minds  that  can  never  do  anything. 
Q.  But  each  man,  of  course,  must  be  taken  care  of? 
A.  Yes,  sir,  just  the  same  as  you  provide    for    your 
paupers  and  your  children  that  go  to  school.    When  you 
look  to  the  welfare  of  the  State,  the  thing  is  to  take  care 
of  the  coming  man,  not  the  man  gone,  although  you  must 
take  care  of  him,  because  the  dictates  of  humanity  compel 
it.     Dr.  Atherton  was  a  wonderfully  far-sighted  man  in 
his  day.     He  had  a  bill  introduced  to  lay  a  special  tax 
of  one-tenth  of  a  mill,  or  one-half  or  one-fourth,  or  what- 
ever it  may  be,  to  be  set  aside  for  meeting  this  distinct 
engagement  with  the  United  States  of  America  and  the 
Pennsylvania  State  College,  that  is  to  meet  the  pledged 


716 

faith  of  the  State  of  Pennsylvania,  which  has  never  been 
given  to  any  other  institution,  and  which  has  been  given 
in  pursuance  of  the  contract  which  the  State  made  with 
the  United  States.  It  said,  "Here  we  have  a  college.  We 
pledge  you  that,  and  pledge  to  maintain  it  in  order  to  meet 
the  requirements  of  the  Morrell  Act. ' '  That  is  one  of  the 
most  remarkable  things  in  the  history  of  this  country. 
Abraham  Lincoln  when  McClellan  was  on  the  banks  of 
the  James,  when  there  never  was  a  darker  day  in  the  his- 
tory of  the  United  States,  signed  this  Land  Grant  Act,  and 
I  believe  that  in  time  to  come  that  Act  will  be  as  much 
spoken  of  to  the  credit  of  Lincoln  as  the  Emancipation  Pro- 
clamation. The  Emancipation  Proclamation  only  released 
a  race  of  slaves,  while  this  bill  paved  the  way  for  the  de- 
velopment of  the  industrial  classes  in  the  United  States,  on 
whom  the  welfare  and  the  perpetuity  of  the  United  States 
depends.  I  don't  know  whether  it  is  within  the  province  of 
this  Committee,  but  there  are  one  or  two  ways  through 
which  this  institution  can  be  provided  for.  About  twenty 
other  States  have  provided  a  special  tax.  Probably  one- 
tenth  of  a  mill  would  be  sufficient.  It  takes  about  a  half 
a  million  dollars.  It  takes  about  four  hundred  and  seven- 
ty-five thousand  or  five  hundred  thousand  dollars  a 
year  to  meet  the  requirements.  Nearly  a  hundred  thou- 
sand comes  from  the  United  States,  thirty  thousand  we 
get  from  the  Land  Grant  Act,  and  fifteen  thousand  from 
the  Hatch  Act.  And  Morrell,  after  this  Land  Grant  Act 
went  into  effect,  and  after  the  Southern  States  that  had 
been  in  rebellion  came  back  into  the  Union,  because  they 
were  shut  out  by  the  Act  of  1862,  and  yet  needed  it  as  badly 
as  we  did,  had  a  second  Act  passed  to  cover  their  cases,  by 
which  the  United  States  gave  twenty-five  thousand.  It  be- 
gan with  ten  thousand,  and  afterwards  went  to  twenty-five 
thousand,  to  all  of  the  States  for  the  education  of  the 
industrial  classes  along  this  line,  and  the  State  of  Penn- 
sylvania directed  that  should  go  to  State  College.  Now 
we  need  upwards  of  four  or  five  hundred  thousand  dol- 


717 

lars  for  maintenance,  without  any  question  of  building. 
The  Governor  of  Pennsylvania  was  at  Pennsylvania  Day, 
and  when  he  had  made  a  little  address,  I  had  an  arrange- 
ment with   him,   by  which  we   would   slip   out,    and   I 
got  a  carriage  and  drove  him  around  the  school.    We  went 
through  the  agricultural  building  and  the  dairy  building, 
and  when  he  came  out,  he  stood  on  the  steps  of  the  agri- 
cultural building,  looking  towards  the  Nittany  Mountains, 
and  said,  "I  will  tell  you  what  you  need  here.    You  need 
twenty  million  dollars,  and  I  am  afraid  you  will  get  it." 
I  said  we  didn't  want  it  this  year  but  would  before  we 
got  through  with  this  institution  if  it  is  to  compete  with 
other  institutions,  and  so  we  will.    "We  have  an  offer  of  a 
million  to  go  into  an  engineering  building.     The  gentle- 
man has  stated  that  he  wants  to  do  that  more  than  I  want 
it,  but  he  has  got  to  make  his  million  first.    These  great 
industries  that  are  building  up  in  Pennsylvania,  and  build- 
ing up  Pennsylvania,  must  be  provided  for.    Here  is  this 
question  of  mining,  and  providing  for  the  safety  of  the 
men.    It  is  being  shown  now  to  the  people  how  mining  can 
be  done  in  safety,  and  how  safety  is  to  be  brought  about, 
and  the  loss  of  life  reduced,  and  it  is  so  in  the  other  de- 
partments.   We  have  a  class  in  agriculture  in  Greenville 
in  which  the  farmers  of  that  locality  are  being  instructed 
as  to  farming.    In  Altoona  the  Pennsylvania  Railroad  is 
building  a  building  for  the  instruction  of  the  employes, 
and  we  send  a  professor  there  every  week.    We  have  a 
class  in  Williamsport  and  one  in  Altoona  in  which  in- 
struction in  the  mechanical  arts  is  being  given,  and  if  we 
had  the  amount  necessary,  we  could  cover  the  State  with 
institutions  of  this  kind,  where  we  could  be  training  the 
men  for  the  work  they  have  to  do. 

In  addition  to  this  fraction  of  a  mill  tax,  there  is  an- 
other way.  This  institution  is  really  the  head  of  the 
school  system.  We  are  endeavoring  to  have  the  super- 
intendents of  instruction  bring  their  high  schools  to  the 
point  where  their  graduates  can  be  admitted  to  the  State 


718 

College.  Suppose  you  appropriate  seventeen  millions  of 
dollars  to  common  schools.  A  simple  way  would  be  to 
provide  that  one-tenth  should  go  to  the  maintenance  of 
the  State  College,  and  that  would  remedy  the  whole  diffi- 
culty, and  would  not  make  a  particle  of  difference,  except 
on  paper,  to  the  State  of  Pennsylvania.  The  schools  of 
Pennsylvania  would  not  know  the  difference  when  their 
warrants  came  to  be  paid  to  them,  if  one-half  of  a  million 
were  put  into  this  out  of  their  appropriation.  Of  course, 
I  know  what  that  means  to  the  Legislature.  The  average 
Legislature  gets  its  orders,  but  just  a  little  provision  of 
that  kind  would  not  make  a  particle  of  difference  so  far 
as  the  people  are  concerned.  To  my  mind  that  is  the 
simplest  and  easiest  way,  and  in  the  next  two  years,  when 
you  come  to  appropriate  twenty  millions  of  dollars  to 
common  schools,  just  say  that  one-twentieth  of  that  shall 
be  for  the  maintenance  of  this  institution.  I  believe  that 
tither  one  of  these  two  things  will  make  it  easy  to  pro- 
vide for  this  institution,  if  we  are  to  do  what  every  other 
State  is  doing  for  their  land  grant  colleges. 


719 


DR.  SPARKS,  representing  State  College,  spoke  as 
follows : 

Governor  Beaver  has  been  connected  with  the  college  for 
over  twenty  years,  and  he  has  covered  the  ground  very 
fully.  There  is  something  connected  with  the  administra- 
tion of  the  college  which  he  has  covered,  especially  the 
point  which  I  hoped  he  would,  that  the  taxes  as  collected 
from  the  people  of  the  State  should  be  invested  in  the 
college,  and  the  returns  go  to  the  State  at  large  in  the 
way  of  these  experiment  training  classes.  We  are  starting 
weekly  schools  in  Greenville,  in  which  seven  or  eight 
counties  are  represented.  Our  mining  work  is  especially 
extensive,  and  all  that  work  we  think  belongs  to  a  tax- 
supported  institution.  The  great  difficulty  we  have  ex- 
perienced is  in  getting  the  results  of  our  experiments  to 
the  people.  We  tried  the  pamphlet  form  with  the  farmers, 
but  you  and  I  know  that  the  farmer  is  a  busy  man,  and 
you  cannot  picture  him  in  the  evening  reading  a  pamphlet 
— he  wants  to  go  to  bed.  In  the  winter  he  is  engaged,  and 
all  during  the  summer  the  farmer  has  no  time  to  read  them. 
It  is  the  same  way  in  the  shops.  This  summer  we  intend 
having  a  session  for  teachers,  of  six  weeks'  duration.  It  is 
to  be  supported  out  of  the  general  funds,  and  we  intend 
giving  instruction  in  agriculture,  horticulture,  and  the 
domestic  sciences — such  work  as  has  not  been  done  in  any 
other  institution,  and  in  that  way  give  the  country  dis- 
tricts the  same  training  as  in  the  cities.  The  trouble  here- 
tofore has  been  that  the  teachers  were  not  fully  capable 
of  teaching  the  practical  side.  We  propose  first  to  instruct 
the  teachers  in  this  practical  education.  For  five  years  w? 
are  not  expecting  any  results.  Then  at  the  end  of  that 
time  you  will  be  able  to  see  what  we  have  done. 

By  Mr.  Hunter : 

Q.  There  seems  to  be  some  doubt  in  the  minds  of  many 
people  as  to  State  College  being  a  State  institution. 


720 

A.  I  see  that  State  College  is  classified  among  private 
institutions  receiving  State  help.  I  cannot  understand 
now  that  L,  D'*t  that  has  been  the  classification.  As  to 
whether  or  not  it  is  a  State  institution  would  depend  upon 
the  title  in  which  the  property  is  vested,  and  also  the 
method  in  appointing  trustees.  There  is  a  wide  difference 
in  the  appointing  of  the  trustees  and  the  holding  of  the 
title.  It  is  vested  in  the  Board  of  Trustees  in  this  Stat'1 
In  some  of  the  Western  States  it  is  vested  in  the  State. 
The  Auditor  General  of  the  State  is  made  the  holder  of 
the  title.  Our  trustees  are  appointed  partly  by  the  college 
and  partly  by  the  sessions  of  the  college.  That  same  thing 
holds  good  in  many  States.  In  the  "Western  States  the 
Board  of  Trustees  is  appointed  by  the  Governor.  In  some 
States,  New  York  and  Maryland,  I  think,  the  board  itself 
appoints  its  members.  In  this  State  we  are  as  nearly  ideal 
in  that  respect  as  in  any  other  State.  We  have  a  certain 
number  appointed  by  the  Governor.  It  is  a  question 
whether  he  appoints  a  sufficient  number. 

By  Mr.  Moyer : 

Q.  What  proportion  does  he  appoint? 

A.  Eight  out  of  thirty-one. 

Q.  If  he  were  to  appoint  seventeen  out  of  that  thirty-one 
wouldn't  that  settle  the  question? 

A.  That  would  give  the  political  parties  control  of  the 
board.  That  is  just  what  happened  in  Oklahoma.  The 
Democratic  party,  when  it  gained  control,  removed  the 
Board  of  Trustees  and  the  whole  faculty.  That  might  be 
a  drawback,  but  I  cannot  see  that  it  would  make  any  dif- 
ference in  the  efficiency  of  the  board. 

Q.  Could  not  these  appointments  be  permanent  ? 

A.  There  should  be  some  course  like  that.  Oklahoma 
is  practically  an  experiment  station  for  the  United  States 
at  the  present  time. 

By  Mr.  Hunter : 

Q.  What  are  your  methods  of  purchasing  supplies? 


721 

A.  We  prepare  a  schedule  the  same  as  the  State  of 
Pennsylvania.  Bids  are  taken  on  that  the  same  as  is  done 
in  the  State.  The  schedule  will  be  ready  very  soon  for 
supplies  from  the  first  of  July,  for  one  school  year.  Bids 
shall  be  asked  for,  and  the  contract  for  furnishing  them 
let  to  the  lowest  bidder.  That  is  for  the  common  supplies. 
We  have  to  buy  large  quantities  of  chemicals,  and  supplies 
of  that  nature,  and  on  them  we  cannot  take  bids  until  we 
come  to  the  specific  purchase.  We  have  a  book  that  shows 
at  the  end  of  each  month  the  supplies  used.  That  system 
has  been  used  for  a  number  of  years. 

Q.  You  still  use  that  system? 

A.  Yes,  sir. 


722 


W.   S.   MILLER,   representing  the  Pittsburgh  Board  of 
Trade,  spoke  as  follows : 

I  will  only  take  a  few  minutes  of  your  time.  Mr.  Chal- 
fant,  our  legal  representative,  is  here  and  he  will  take  up 
the  subject  of  the  mercantile  tax.  If  you  will  permit, 
I  will  tell  you  about  the  Pittsburgh  Board  of  Trade.  It 
is  an  organization  in  the  East  End,  has  its  own  location, 
and  has  over  twelve  hundred  members.  It  has  done  a 
great  deal  of  good  work.  It  has  improved  and  widened 
some  of  the  streets  in  the  East  End,  and  it  was  through 
its  work  that  the  Pennsylvania  Railroad  Company  got 
rid  of  the  old  station  and  built  a  new  one  at  East  Liberty, 
and  the  organization  is  working  hard  to  get  a  new  freight 
station.  The  influence  of  the  Board  of  Trade  is  extend- 
ing all  over  the  city  and  even  through  the  State.  It 
is  located  in  the  center  of  the  dwelling  population  of  the 
City  of  Pittsburgh.  It  is  not  a  limited  body,  as  you  see. 
It  is  a  business  concern,  but  has  a  legislative  committee. 
We  have  followed  its  suggestions  as  to  the  means  of  having 
a  foreign  corporation  make  a  report  to  the  Anditor-Geii- 
eral  as  to  the  stock  which  it  claims  to  have  paid  up,  and 
if  it  was  paid  in  good  faith,  as  well  as  the  bonds, 
whether  or  not  they  are  fictitious.  We  want  you  to  have 
an  Act  passed  that  will  put  these  foreign  corporations  on 
a  plane  with  the  home  corporations.  We  have  found  here 
in  Pittsburgh  agents  selling  stock  to  our  people.  They 
go  around  to  our  dwellings  and  get  the  women  to  sub- 
scribe for  stock  in  fake  concerns,  in  which  they  claim 
the  stock  has  been  paid  for.  We  have  tried  to  break  this 
up  and  check  it  all  we  can.  One  man  reported  that 

Mrs.  was  going  into  the  oil  business.     An  agent 

had  sold  her  some  stock.  We  made  an  investigation  of  the 
corporation,  and  found  that  the  three  millions  of  capi- 
tal stock  claimed  to  have  been  paid  in  was  issued  under 
the  Arizona  Corporation  Act,  and  the  paid  in  stock  was 


723 

simply  that.  They  had  contracts  for  oil  and  gas,  and  the 
consideration  which  they  agreed  to  pay  was  to  come  out 
of  the  proceeds  of  the  oil  when  it  was  obtained.  The  fact 
of  the  matter  is,  that  the  paid  up  capital  stock  was  simply 
nothing,  merely  a  fake  concern,  and  the  investigation  of 
our  board  in  the  Tast  End,  of  course,  showed  that  up.  I 
found  business  men  in  the  City  of  Pittsburgh,  who  had 
taken  stock  in  that  company,  and  they  thought  they  had 
a  wonderful  company  on  account  of  the  capital  stock  paid 
up.  Now,  we  have  another  suggestion,  which  I  think  is 
proper  and  ought  to  be  attended  to.  I  am  going  to 
leave  this  paper  with  you.  I  will  read  it  to  you : 

"That  a  failure  to  record  the  articles  and  certi- 
ficate of  incorporation  in  the  county  in  which  its 
business  is  carried  on  shall  not  forfeit  the  rights  of 
said  corporations  to  maintain  suit  or  suits,  but  that 
suitable  penalties  shall  be  provided  for  such  failures, 
with  a  further  provision  that  a  suit  cannot  be  main- 
tained until  the  corporation  has  recorded  its  articles 
and  certificate  of  incorporation  in  the  county  in  which 
its  principal  place  of  business  is  located. ' ' 

Just  an  illustrationof  that.  After  you  take  out  your 
charter,  and  pay  the  bonus,  and  have  everything  all  right, 
but  you  fail  to  record  your  charter  in  this  county,  if  the 
place  of  business  is  in  Allegheny  county,  you  forfeit  all  the 
right  of  your  company  to  maintain  a  suit.  A  short  time 
ago  an  action  was  brought  here  in  Pittsburgh  for  over 
three  hundred  thousand  dollars  by  a  contracting  company. 
When  the  case  came  to  trial  they  were  unable  to  say  that 
the  charter  had  ever  been  recorded.  They  had  neglected 
that.  They  had  influence  enough  to  go  to  Harrisburg 
last  winter  and  have  a  bill  passed  validating  all  acts  done 
under  that  charter.  But,  then,  a  company  of  men,  or  a 
small  company  that  is  not  able  to  secure  such  an  Act  would 
lose  this  money.  We  think  it  is  too  great  a  penalty.  We 
suggest  a  penalty  sufficient  to  cover  the  circumstances — 
whatever  the  Legislature  may  think  right. 


724 

By  Mr.  Brown: 

Q.  What  do  you  think  right? 

A.  I  think  a  fine  of  one  thousand  dollars  would  be  about 
right. 

Q.  What  are  to  become  of  the  people  who  do  not  know 
that  they  are  not  incorporated  until  they  have  recorded 
the  charter? 

A.  They  must  present  that  to  the  Secretary  of  the 
Commonwealth ;  and  another  act  is  that  it  irfust  be  recorded 
in  the  county  where  its  place  of  business  is,  so  that  the 
people  may  have  knowledge  of  who  the  corporation  is. 
They  know  it  is  a  corporation,  but  do  not  know  where  or 
under  what  laws  it  was  incorporated.  We  make  this  sug- 
gestion to  you,  and  there  should  be  some  kind  of  a  penalty 
for  a  corporation  that  makes  this  mistake.  We  allow  for- 
eign corporations  to  come  in  and  do  as  they  please.  They 
should  have  to  do  the  same  thing  as  domestic  corporations. 

Q.  You  would  allow  the  foreign  corporation  to  own  real 
estate  in  Pennsylvania? 

A.  Yes,  sir.  We  ought  to  allow  them  to  do  that  after 
the  corporation  has  honestly  shown  it  is  an  honest  cor- 
poration, that  the  stock  is  paid  up,  and  what  property  it 
has.  They  should  be  permitted  to  hold  real  estate.  In 
fact,  nearly  all  of  these  manufacturing  concerns  that  have 
come  in  from  other  States  have  tried  to  have  acts  passed 
permitting  them  to  hold  real  estate.  While  Governor 
Penny  packer  was  in  the  chair,  one  company  succeded  in 
having  ,an  Act  passed  permitting  it  to  hold  real  estate 
but  the  Governor  vetoed  the  bill,  and  they  have  to  hold 
that  property  in  the  name  of  an  individual.  It  ought  to 
be  held  in  the  name  of  the  foreign  corporation.  Then 
you  could  reach  it.  You  could  tax  it,  and  you  could  get 
service.  As  it  is  now  I  don 't  see  how  you  could  do  it.  The 
Board  of  Trade  is  more  interested  in  the  question  of  the 
mercantile  tax  than  in  the  question  tc  which  I  have  re- 
ferred, and  passed  this  resolution : 


725 

"Whereas,  The  direct  State  tax  now  levied  on  the 
business  of  wholesale  and  retail  merchants^  commonly 
known  as  the  Mercantile  License  Tax,  has  been  found 
to  be  unjust  and  inequitable,  and  the  cost  of  adver- 
tising and  maintenance  of  the  office  necessary  to  en- 
force the  collection  thereof  is  excessive  and  burden- 
some to  the  people ;  be  it 

"Resolved,  That  we  recommend  the  repeal  of  all 
Acts  of  Assembly  relating  to  said  mercantile  license 
tax  in  so  far  as  the  same  apply  to  wholesale  and  retail 
vendors  of,  and  dealers  in,  ordinary  goods,  wares  and 
merchandise. ' ' 

By  Mr.  Moyer : 

Q.  Of  course,  you  understand  this  mercantile  tax  ques- 
tion. I  want  to  ask  you  a  question  relative  to  it.  You 
are  at  the  head  of  this  Board  of  Trade,  and  act  for  it, 
and  a  man  of  experience.  If  you  abolish  the  mercantile 
license  tax,  what  would  you  say  as  to  taxing  manufacturing 
corporations  ? 

A.  This  tax  question  I  don't  know  anything  about.  Mr. 
Chalfant  has  had  occasion  to  study  it. 

Q.  You  certainly  have  an  opinion.  What  would  you 
say  as  to  taxing  manufacturing  corporations?  Don't  you 
think  they  ought? 

A.  I  think  they  ought  to  be  taxed. 

Q.  You  think  they  are  better  able  to  pay  a  tax? 

A.  Yes,  sir. 

By  Mr.  Brown : 

Q.  I  wish  to  ask  you  why  shouldn't  they  pay  something 
towards  the  State  expenses? 

A.  I  see  no  reason.  There  is  another  matter,  and  that 
is  the  taxing  of  churches.  I  do  not  see  why  churches  should 
not  be  taxed.  Why  shouldn't  a  church  in  the  South  Side 
and  in  the  East  End  pay  taxes  when  they  own  valuable 
property,  and  when  only  probably  one-tenth  or  one-twen- 
tieth of  the  people  go  to  church? 


726 

Q.  You  think  the  people  that  don 't  go  to  church  ought  to 
be  taxed? 

A.  You  do  tax  the  people  that  don't  go  to  church.  Why 
should  we  protect  a  special  lot  of  rich  people,  who  have 
more  than  one  or  two  million  dollars  in  church  property 
in  the  East  End,  and  tax  the  poor  people  ? 

Q.  The  theory  is  we  are  all  expected  to  go  to  church, 
and  the  burden  is  equal  upon  all  of  us. 

A.  I  do  not  think  that  more  than  one-tenth  of  the  popu- 
lation, or  one-twentieth  of  them  are  church  members. 

Q.  That  undoubtedly  applies  to  Pittsburgh.  It  does  not 
apply  to  Philadelphia. 


727 


ATTORNEY   CHALFANT,   representing   the   Pittsburgh 
Board  of  Trade,  spoke  as  follows: 

I  do  not  intend  to  make  a  speech  nor  to  enter  into  a 
lengthy  discussion  of  this  subject.    I  presume  we  will  have 
to  do  away  with  the  subject  of  levying  taxes  on  church 
property  for  some  time.    There  is  only  one  question  which 
I  desire  to  present.     You  have  heard  the  resolutions.     It 
is  a  very  simple  matter  to  have  a  resolution  passed  that 
way.     You  have  probably  found  out  in  this  investigation 
that  you  have  been  making,  that  the  only  popular  tax  is 
the  tax  the  other  fellow  has  to  pay.    "While  I  do  not  say 
that  is   true   throughout   the   State,   it   certainly   is   true 
here.     I  have  not  been  able  to  find  a  single  business  man 
in   favor  of  the  mercantile   license  tax.     There  may  be 
some,  but  I  have  not  found  a  single  man  in  favor  of  it. 
There  are  several  reasons.     The  cost  of  the  collections  is 
excessive,  and  the  maintenance  of  this  office  force,  known 
as  the   Mercantile   Appraiser's   Office.     I   think  you   are 
all  familiar  with  this  species  of  taxation.     There  are  dif- 
ferent Acts  that  apply  to  different  parts  of  the  Common- 
wealth.    I  can  only  speak  for  Allegheny  county.     I  will 
simply  present  the  views  as  presented  to  me.     We  have 
here  our  Mercantile  Appraiser's  Office,  whose  duty  it  is 
to  levy  and  collect  the  taxes.    The  costs  of  that,  as  I  under- 
stand the  Audit  or- General's  report,  is  about  11  or  12  per 
cent,  of  the  gross  collections,  the  cost  of  collection.     I  got 
those  figures  from  his  report.     But  when  we  go  back  of 
that  we  find  this,  that  the  figures  do  not  tell  the  truth. 
I  do  not  mean  that  the  Auditor-General's  report  is  not 
correct.     If  we  go  back  of  that  report  we  find  very  often 
that    the    wholesale    or    retail    merchant    has    paid    fifty 
cents  for  having  his  business  assessed.    So  he  is  paying  that 
and  the  expense  of  maintaining  that  business,  and  the  ex- 
pense of  collection.     We  have  a  system  in  this  county  of 


728 

advertising.  What  I  am  saying  will  not  meet  with  the  ap- 
proval of  the  press.  We  advertise  in  this  City.  Do  you 
advertise  in  Philadelphia? 

Mr.  Brown :  Yes,  we  do. 

Mr.  Chalfant:  The  appraiser  goes  to  every  store  and 
makes  a  personal  investigation  of  just  what  his  business 
is  and  everything  connected  with  the  store.  After  all  this 
is  done,  and  the  merchant  knows  his  assessment  and  tax, 
we  take  all  the  moneys  collected  and  pay  for  advertising 
in  five  or  six  different  papers  in  several  publications  of 
the  papers,  and  we  have  to  pay  for  the  privilege  of  tell- 
ing man  what  he  already  knows,  and  for  the  rest  of  us 
not  concerned  in  it,  we  buy  the  papers,  and  when  we  are 
going  home  in  the  cars  we  take  out  the  news  section  of 
the  paper  and  throw  the  rest  away.  It  adds  to  the  worry 
of  the  street  car  conductors  and  the  street  cleaners.  It 
might  be  right  to  do  this  advertising,  but  I  believe  that 
it  is  just  so  much  of  the  people's  money  thrown  away. 
Then  there  is  the  expense  of  the  legal  department,  to 
which  the  State  appropriates  five  thousand  dollars,  to  be 
applied  for  counsel.  It  would  hardly  be  right  to  say  any- 
thing about  that  office.  It  may  be  that  five  thousand  dol- 
lars is  not  too  much  to  apply  for  the  furnishing  of  legal 
advice  for  that  office.  That  is  one  of  the  points  sug- 
gested by  the  business  men.  Another  point  is  the  manner 
of  taxing.  Why  should  we  find  this  circumstance,  and  it 
is  the  point  suggested  by  the  chairman  of  the  Pittsburgh 
Board  of  Trade,  that  the  taxes  are  not  equitably  assessed. 
We  find  a  man  selling  a  certain  class  of  goods.  He  is 
taxed  a  mercantile  license.  Next  door  to  him  is  a  manufac- 
turer, manufacturing  the  same  class  of  goods  and  selling 
them,  without  paying  any  mercantile  license.  I  see  no 
reason  why  the  manufacturer  should  not  be  taxed.  If  we 
are  going  to  levy  a  tax  on  the  wholesale  or  retail  vendor 
of  merchandise,  it  seems  to  me  that  the  manufacturer 
should  be  taxed  likewise.  As  it  stands  now,  this  tax  is 
unjust  to  the  merchants.  After  such  taxing  as  the  State  does. 


729 

they  are  turned  over  to  the  tender  mercies  of  the  Mercan- 
tile Appraiser  to  exact  from  them,  together  with  the  tax 
already  paid,  an  additional  tax.  That  is  the  experience 
here.  After  they  have  paid  a  tax,  they  pay  another  tax 
for  the  privilege  of  doing  something  for  which  they  have 
already  paid.  I  believe,  however,  that  a  species  of  taxa- 
tion, a  level  tax,  will  meet  with  the  approval  of  the  people 
of  Pennsylvania.  As  it  stands  now,  I  do  not  think  it  is 
either  equitable  or  just. 


730 


H.  S.  KEIL,  representing  Jones  &  Laughlin,  spoke  as  fol- 
lows: 

I  want  to  express  my  appreciation  of  the  manner  in 
which  this  Committee  has  listened  to  the  addresses  that 
have  been  made.  I  just  want  -a  minute  of  your  time.  Mr. 
Oliver  is  present  with  us  this  morning,  and  I  have  the 
report  of  the  Jones  &  Laughlin  Steel  Company,  which  I 
represent.  This  report  suggests  a  continuance  of  the  ex- 
cluding of  firms  engaged  strictly  in  manufacturing  from 
taxation.  Mr.  Oliver's  brother,  I  understand,  was  instru- 
mental, in  1885,  in  having  manufacturing  corporations  ex- 
cluded from  taxation  for  State  purposes.  We  have  had 
a  number  of  prominent  manufacturers  in  Pennsylvania, 
that  you  all  know,  but  I  do  not  think  that  any  one  of 
them  has  done  what  H.  W.  Oliver  has  done,  in  this  one 
act  of  having  the  manufacturing  corporations  exempted 
from  taxation  for  State  purposes,  for  that  helped  to  make 
them  what  they  are  to-day.  I  do  not  think  that  any  little 
amount  of  taxes  that  the  State  of  Pennsylvania  could 
get  would  make  up  for  the  loss  of  pre-eminence  of  Penn- 
sylvania in  a  manufacturing  way.  The  Jones  &  Laughlin 
Steel  Company  is  willing  to  pay  a  large  amount  of  freight 
to  bring  its  ore  twelve  hundred  miles  to  manufacture  here 
in  Pennsylvania.  I  think  it  would  be  a  mistake  to  put  a 
tax  on  the  stock  of  manufacturing  corporations,  in  view 
of  the  history  of  the  advantage  it  has  been  to  the  State. 
I  dislike  exceedingly  to  pit  one  concern  against  another. 
We  have  paid  a  mercantile  tax  for  a  good  many  years.  A 
merchant  takes  his  money  and  invests  it  in  a  stock  of 
goods,  and  puts  it  in  a  store,  and  you  put  no  local  tax 
on  that  stock.  Mr.  Oliver  takes  his  money  and  puts  it 
into  a  manufacturing  concern,  and  his  machinery  is  taxed 
for  local  purposes  and  the  other  is  not.  We  do  pay  on 
what  is  not  employed  strictly  for  manufacturing  purposes. 
We  have  a  large  number  of  other  companies  in  which 


731 

we  have  stock.  We  pay  a  tax  on  that  for  local  pur- 
poses, so  that  the  State  tax  is  not  the  end  of  it  by  a  good 
deal,  and  hardly  the  beginning.  A  railroad  company  pays 
taxes  on  its  capital  stock,  and  claims  exemption  from  local 
taxes  on  its  right-of-way  and  all  of  its  property  used  for 
railroad  purposes.  When  we  pay  our  State  tax,  it  is  not 
a  beginning  of  what  we  have  to  pay  to  the  State,  county, 
townships  and  other  municipalities.  There  is  another  point 
that  I  wish  to  speak  about,  and  that  is  double  taxation. 
Sometime  ago  we  were  compelled  to  incorporate  a  coal 
company,  owning  about  twenty-five  thousand  acres  of  coal. 
We  could  not  locate  in  Pennsylvania  because  we  could 
not  hold  real  estate.  We  were  compelled  to  pay  a  tax  in 
Maryland  and  in  Pennsylvania  because  we  built  a  road  to 
carry  the  coal  mined  in  New  York  on  the  north  and  Mary- 
land on  the  south,  and  it  would  be  in  Pennsylvania.  Man- 
ufacturers could  locate  here,  and  could  just  as  easy  locate 
elsewhere,  but  they  prefer  to  locate  here  on  account  of  the 
liberal  terms  offered.  We  are  compelled  to  pay  a  tax  on 
that  because  the  capital  of  the  Jones  &  Laughlin  Company 
invested  in  that  is  not  employed  in  manufacturing.  The 
Pennsylvania  corporation  pays  the  capital  stock  tax.  It 
is  not  capital  employed  in  manufacturing,  and  we  are  liable 
to  the  State  of  Pennsylvania  because  it  is  a  foreign  cor- 
poration : 

By  Mr.  Brown: 

Q.  You  assume  that  the  State  of  Pennsylvania  holds  the 
pre-eminent  position  of  manufacturing  because  of  the  ex- 
emption from  taxation? 

A.  Yes,  sir.  We  not  only  extend  this  establishment  here, 
but  other  corporations  come  in  and  locate  within  the  boun- 
daries of  our  State. 

Q.  My  understanding  is  that  nearly  every  other  State 
except  Pennsylvania  taxes  corporations? 

A.  Yes,  sir.  Taxes  are  a  burden,  as  stated  in  my  written 
report,  and  boroughs  and  other  municipalities  have  offered 


732 

to  let  corporations  locate  within  their  borders  and  be  ex- 
empt from  taxes  for  a  number  of  years. 

By  Mr.  Hunter: 

Q.  The  question  of  natural  resources  does  not  apply  to 
Pennsylvania  as  it  used  to  ? 

A.  No,  sir;  and  a  manufacturing  corporation  could  lo- 
cate outside  of  Pennsylvania  if  it  wanted  to.  In  years 
gone  by  it  wes  generally  understood  that  Pennsylvania  had 
all  the  natural  resources  necessary  for  manufacturing 
purposes.  Now,  the  developments  in  later  years  have  prac- 
tically deprived  them  of  that — the  developments  in  other 
States. 

Q.  The  other  States  are  in  as  good  condition  as  Penn- 
sylvania for  manufacturing  purposes  ? 

A.  Yes,  sir.  But  we  would  rather  haul  our  ore  here  and 
manufacture  than  haul  our  coal  to  some  other  State. 

Q.  Isn't  it  true  that  some  of  the  large  mill  interests  are 
building  closer  to  the  ore? 

A.  I  don't  know  whether  their  locating  in  other  States 
is  on  account  of  the  ore  interests.  But,  of  course,  that 
would  have  something  to  do  with  it.  The  State  of  Penn- 
sylvania could  well  afford  to  pay  the  taxes  to  get  them  to 
locate  in  the  State  of  Pennsylvania. 

Q.  Assume  that  the  State  of  Pennsylvania  required  more 
revenue  for  the  support  of  her  institutions  for  the  insane 
and  other  legitimate  outlays.  Assuming  that  the  other 
taxablees  were  earring  the  whole  burden,  don't  you  think 
these  manufacturing  interests  should  help? 

A.  No,  I  think  not.  Manufacturers  then  will  be  driven 
to  the  inconvenience  of  moving  their  plants  to  States  where 
they  won't  be  taxed.  We  do  help.  My  impression  is  that 
we  have  reached  about  the  limit. 

Q.  That  the  manufacturer  is  paying  as  much  as  he  ought 
to  pay  to  have  his  business  continue  in  its  present  healthy 
condition  ? 

A.  Yes,  sir. 


733 


JOHN  J.  JACKSON,  representing  the  Westinghouse  in- 
terests, Pittsburgh,  Pa.,  spoke  as  follows : 

On  account  of  it  being  near  the  time  for  adjournment. 
I  will  read  my  report  here  to  save  time. 

(Report  read  and  filed.) 

By  Mr.  Moyer: 

Q.  Isn't  it  a  fact  that  a  charter  from  the  State  of  Penn- 
sylvania or  New  York  is  accounted  as  worth  as  much  as 
ten  charters  from  other  States? 

A.  I  don't  know. 

Q.  Would  you,  as  a  manufacturer,  incorporate  under  the 
laws  of  Arizona,  or  Nevada,  or  Delaware,  or  North  or 
South  Dakota,  or  any  of  these  States? 

A.  Perhaps  not. 

Q.  Don't  you  think  that  a  charter  from  the  State  of 
Pennsylvania,  with  its  safe  and  sane  policy,  that  that  is 
recognized  by  a  manufacturer  to  be  of  considerable  value? 

A.  Yes,  sir.  But  I  would  not  like  to  make  the  state- 
ment that  a  charter,  in  my  mind,  would  be  worth  as  much 
as  ten  or  twelve  from  other  States. 

Q.  Don't  you  think  that  the  fact  of  the  charter  being  so 
valuable  to  the  manufacturing  concerns  they  should  help 
bear  the  burden  of  the  State  expense? 

A.  T  think  that  any  other  policy  than  that  in  use  at 
present  might,  perhaps,  drive  us  into  such  States  as  New 
York  and  West  Virgania. 

By  Mr.  Brown : 

Q.  Do  you  think  that  your  views  fairly  represent  the 
views  of  the  manufacturing  interests  of  this  City? 

A.  Yes,  sir. 

Q.  Assuming  that  the  burdens  of  the  present  taxables 
are  sufficient,  and  there  is  a  need  of  more  revenue,  is  it 


734 

your  view  that  manufacturing  corporations  should  not  be 
taxed? 

A.  I  think  the  manufacturers  in  Pennsylvania  are  un- 
der all  the  taxation  they  can  bear.  If  you  put  another 
tax  on  them,  I  think  it  will  react,  and  will  come  back 
upon  the  very  good  people  of  Pennsylvania  and  other 
citizens,  and  it  is  a  matter  that  should  not  be  allowed  to 
be  done,  to  put  another  tax  on  manufacturers. 

Q.  We  have  received  many  letters  from  all  manner  of 
interests  in  Pennsylvania,  asking  why  manufacturers  are 
not  taxed.  That  is  the  reason  I  am  directing  the  attention 
of  manufacturers  to  that  point.  Mr.  Wilson  H.  Brown, 
of  Philadelphia,  said  that  they  had  come  to  the  conclusion 
that  no  such  tax  of  one  mill  would  have  to  be  levied  on 
manufacturing  interests,  and  that  they  thought  it  might 
be  an  entering  wedge  that  might  be  used  for  the  purpose 
of  making  the  tax  larger ;  but  if  they  thought  it  would  be 
stopped  at  one  mill,  it  would  be  satisfactory. 

A.  If  we  were  to  pay  more  taxes  in  Pennsylvania  you 
are  going  to  put  us  in  a  position  where  we  cannot  com- 
pete with  the  competitors  in  any  other  (State. 

Q.  I  said  that  I  thought  that  should  be  considered  by 
the  Legislature,  that  the  case  should  be  presented  in  such 
a  way  that  they  could  take  whatever  action  they  thought 
best. 

A.  I  think  we  are  paying  as  much  if  not  more  taxes 
than  we  should. 

Mr.  Moyer:  As  Mr.  Brown  said,  this  matter  has  been 
widely  discussed,  and,  of  course,  the  function  of  this 
Committee  is  merely  a  matter  of  hearing  what  the  views 
of  this  Commonwealth  are,  and  boiling  that  down  to  a 
fine  point. 


735 


H.  F.  HECKERT,  representing  the  St.  Francis  Hospital, 
made  the  following  statement: 

A  legislation  should  be  enacted  regulating  a  charge  for 
all  employes  of  corporations.  Governor  should  accept 
appropriation  bills  as  passed,  or  make  personal  investi- 
gation by  hearing  or  visit  before  modifying  same.  Theory 
of  appropriation  through  Charity  Board  approved. 

Here  the  Commission  took  a  recess  until  2  o'clock. 


736 


Public  Meeting,  Pittsburgh,  Pa.,  afternoon  March  25, 
1910. 

SAMUEL  W.  BLACK,  representing  Real  Estate  Dealers, 
Pittsburgh,  Pa. : 

In  order  to  save  your  time  and  mine,  I  have  prepared 
a  paper,  and  I  would  like  to  suggest  or  ask  your  Secretary 
to  read  it.  (Paper  read  as  follows) : 

The  assessment  made  for  the  county  is  used  also  for 
the  boroughs  and  townships  in  levying  their  local  taxes. 
The  City  has  assessors  of  its  own,  appointed  by  the  Mayor. 

I  ask  that  the  law  regarding  the  Board  of  the  Assess- 
ment and  Revision  of  Taxes  for  State  and  county  pur- 
poses for  counties  of  300,000  to  1,000,000  population,  which 
is  now  in  force  only  in  Allegheny  county,  be  changed, 
giving  the  County  Commissioners,  Controller  and  Treas- 
urer the  appointing  power,  and  thus  taking  away  from 
the  Judges  of  the  Common  Pleas  Court. 

This  law  was  created  four  or  five  years  ago,  taking 
away  from  the  County  Commissioners  the  work  of  re- 
vising and  adjusting  the  tax  assessments,  because  the 
County  Commissioners  were  burdened  with  too  much 
work. 

Having  a  Board  of  Assessment  and  Revision  of  Taxes 
with  the  power  that  they  now  have  of  selecting  and  ap- 
pointing assessors  all  over  the  county,  is  a  good  one,  for 
there  is  no  reason  why  an  equitable  assessment  should  not 
made  if  the  Board  of  Assessment,  etc.,  is  careful  and  uses 
good  judgment  in  selecting  the  assessors  to  do  the  work, 
and  as  the  Board  can  revise  the  tax  assessments  any  and 
every  year  at  their  discretion,  they  have  ample  time  to 
travel  all  over  the  county  and  see  for  themselves  any 
properties  that  may  be  wrongly  assessed;  also  they  have 
ample  time  to  go  into  the  different  districts  and  consult 


737 

with  the  citizens  regarding  the  capability  of  the  assessors 
they  may  have  in  that  district. 

I  think  $4.00  or  $5.00  per  day  for  the  assessors  would 
be  better  than  their  present  compensation,  $3.00  per  day. 

In  taking  away  the  power  of  appointing  this  Board 
from  the  Judges  of  the  Common  Pleas  Court,  I  would  give 
as  a  very  good  reason  the  judgment  that  has  been 
shown  by  them  in  having  on  the  present  Board  one  mem- 
ber who  is  over  80  years  old,  another  member  who  is  75 
years  old.  This,  in  my  humble  opinion,  is  ridiculous  on 
the  face  of  it.  It  is  hardly  to  be  expected  that  men  of 
that  age  can  travel  around  and  over  this  large  county 
and  see  for  themselves  why  their  assessors  are  making 
this  or  that  assessment,  and  qualify  themselves  to  give 
better  judgment  when  appeals  are  made  by  property 
owners,  and  see  for  themselves  whether  the  assessors  are 
making  assessments  too  low,  for  it  is  my  experience  in  32 
years  of  active  real  estate  work  in  this  City  and  county, 
Mi  at  there  are  more  errors  and  greater  ones  in  the  as- 
sessments being  too  low  than  being  too  high.  I  agree 
heartily  with  the  President  of  the  Board  of  Assessment 
and  Revision  of  Taxes,  Mr.  E.  Z.  Smith,  that  it  is  the 
unequal  assessment  that  property  owners  object  to,  that  is 
to  say;  they  do  not  relish  paying  on  a  high  valuation  of 
their  property  when  their  neighbor  across  the  street  may 
be  assessed  a  low  valuation. 

The  County  Commissioners  always  have  at  least  one 
of  their  three  members  representing  the  minority  party 
on  their  Board,  and  as  the  County  Controller  and  Treas- 
urer, as  well  as  the  Commissioners,  are  elected  by  the 
people  every  three  years,  it  behooves  them  to  be  careful 
in  appointing  the  tax  revision  board,  which,  to  my  mind, 
is  the  most  important  to  the  people  of  the  county. 

The  Judges  are  elected  for  a  ten  year  term,  and  in  this 
county  are  too  numerous  to  form  an  effective  appointing 
power,  there  being  12  of  them. 

I  had  the  pleasure  and  honor  of  originating  and  pre- 
paring this  law,  creating  the  Board  of  Assessment,  etc. 
38 


738 

By  Mr.  Brown : 

Q.  Mr.  Black,  does  that  express  the  sentiment  of  the 
real  estate  brokers  and  agents  of  this  city? 

A.  1  think  so. 

Q  You  think  it  would.  Have  you  talked  around 
among  them  to  ascertain  the  consensus  of  opinion  upon 
this  subject,  or  is  it  your  own  individual  opinion,  based 
upon  personal  experience? 

A.  No,  it  is  common  talk  all  over  this  county  that 
the  Judges  have  made  a  very  poor  selection  in  appointing 
these  two  old  men.  I  have  great  respect  for  old  age,  but 
I  don't  want  it  in  public  offices  so  important  to  the  people 
as  that  office  is. 

Q.  Have  you  a  real  estate  brokers'  or  agents'  associa- 
tion in  this  city? 

A.  No,  I  am  sorry  we  have  not. 

Q.  Has  there  been  any  concerted  effort  on  the  part  of 
the  brokers  and  agents  to  reform  this  present  Board? 

A.  No,  there  is  not. 

Q.  As  I  understand  you,  your  only  objection  is  that 
there  happen  to  be  on  this  Board  two  men  you  think 
have  gone  beyond  the  years  of  successful  effort? 

A.  Yes,  and  the  fact  that  the  Judges  appointed  them 
when  the  law  was  created,  and  then  reappointed  them 
after  three  years'  experience  with  them. 

Q.  You  don't  mean  that  you  object  because  they  reap- 
pointed them  because  they  have  had  experience? 

A.  I  object  to  them  appointing  them  after  three  years 
added  to  that  great  age. 
Mr.  Brown:  Are  there  any  other  questions? 

Mr.  Hunter:  Mr.  Black,  don't  you  think  it  would  be 
impossible  for  these  three  or  four  men  to  adjust  all  these 
troubles,  and  investigate  the  properties  in  question  all 
over  the  county? 

A.  No,  as  I  have  stated  in  that  paper,  the  Board  has 
three  years  to  make  the  assessment,  and  make  changes 


739 

any  time  during  that  three  years,  and  they  have  ample 
time  to  go  around  all  over  the  county  and  see  for  them- 
selves not  only  the  properties  in  question,  but  the 
assessors  who  have  gone  before  them,  and  they  must  see 
that  some  of  them  are  incompetent. 

Q.  Don't  you  think  that  incompetency  arises  from  the 
fact  that  their  services  are  of  a  temporary  character 
rather  than  continued? 

A.  I  put  the  blame  on  the  Board  in  having  incompe- 
tent men — the  Board  has  absolute  power  to  select  a  man 
in  any  district.  They  are  not  elected  by  the  people,  these 
assessors,  these  district  assessors.  They  are  appointed  by 
this  Board. 

Q.  Their  wages  and  length  of  service  are  fixed  by  law? 

A.  There  are  always  men  willing  to  serve. 

Q.  Their  wages  are  fixed  by  law? 

A.  Yes,  sir. 

Q.  And  their  length  of  service  is  fixed  by  law? 

A.  I  think,  as  I  stated  in  that  paper,  that  $4.00  or  $5.00 
a  day  would  be  better  than  $3.00  a  day,  and  when  I  pre- 
pared this  law  I  took  that  into  consideration,  and  added 
50  per  cent,  to  what  they  were  getting,  the  old  assessors. 

Q.  In  other  words  you  think  the  work  is  of  such  char- 
acter and  importance  that  it  would  require  $5.00  men 
rather  than  $3.00  men? 

A.  Yes,   sir. 

Vice  Chairman  Moyer :  I  understand  that  Mayor  Magee 
is  here,  and  desires  to  be  heard  with  reference  to  certain 
legislation  or  Acts  of  Assembly  with  reference  to  the  State 
Railroad  Commission. 

Mayor  William  A.  Magee :  Mr.  Brown,  one  of  the  City 
Solicitors,  is  here,  and  he  will  address  you  upon  that  sub- 
ject. He  will  speak  for  the  city  administration.  There 
are  one  or  two  things  that  I  would  like  to  bring  before 
the  Commission  in  relation  to  local  taxation.  I  wish 
to  recommend  that  all  classification  of  real  estate  be 


740 

avoided.  That  is  to  say,  I  favor  but  one  kind  of  assess- 
ment, to  assess  every  piece  of  real  estate  in  full  without 
regard  to  its  character  or  its  location.  We  find  in  mak- 
ing tri-annual  assessment  in  the  City  of  Pittsburgh  this 
year  that  there  was  great  difficulty  in  doing  justice  to 
people  in  all  parts  of  the  city.  In  this  City  we  find  a 
very  great  inequality  in  classifications.  The  Act  of  As- 
sembly in  relation  to  second  class  cities  provides  and 
designates  three  classes :  One  is  called  built-up,  one  rural, 
and  one  agricultural.  I  suppose  the  reasons  for  these 
classifications  on  certain  kinds  of  property  receive  more 
or  less  of  the  municipal  expenditures  in  the  neighborhoods 
in  which  they  are  located,  and,  therefore,  there  should  be 
an  unequal  contribution  from  the  various  pieces  of  prop- 
erty to  the  city  expenditures.  Now,  I  believe  economically, 
every  piece  of  property  will  find  its  own  level,  that  is 
to  say,  a  piece  of  property  on  Herron  Hill  should  pay 
on  its  full  value,  just  the  same  as  a  piece  of  property  on 
Fifth  avenue  or  Smithfield  street,  because  that  value  is 
fixed  not  only  because  it  is  an  inconvenient  place  to  get 
to,  or  it  is  an  undesirable  place  to  live,  and  the  purposes 
which  it  would  be  used  for,  but  by  reason  of  these  very 
facts  there  must  necessarily  be  less  money  expended  on 
it  than  on  other  places  more  highly  favored,  and  there- 
fore, I  think  the  subject  will  adjust  itself.  Then  I  believe 
that  if  it  can  be  done  lawfully  and  constitutionally,  that 
there  ought  to  be  but  one  Board  of  Assessors  in  a  large 
city  and  county.  We  have  in  this  county  a  great  num- 
ber of  assessors.  We  have  in  this  county  the  Board  of 
Revision  of  Taxes,  composed  of  three  Commissioners  who 
are  appointed  by  the  Courts.  They  in  turn  select  local 
assessors  who  are  appointed  for  a  few  months  in  the  year 
to  make  assessments.  Now,  the  City  of  Pittsburgh  has 
its  own  Board  of  Assessors,  composed  of  nine  persons. 
We  ought  to  have,  in  my  opinion,  one  Board  of  Assessors 
first  for  the  county,  and  then  for  the  city,  boroughs, 
townships  and  all  various  governmental  jurisdictions, 


741 

that  would,  no  doubt,  produce  a  just  assessment  upon  all 
properties.  The  Board  of  Assessors  in  Pittsburgh  and  the 
Board  of  Revision  of  Taxes  in  the  county  do  not  operate 
in  the  same  way.  In  the  county  the  assessors  are  ap- 
pointed by  the  Board  of  Revision  making  original  assess- 
ments, and  the  Board  of  Revision  is  just  what  its  name  im- 
plies, it  is  a  supervisory  and  an  appellate  body ;  they  only 
sit  upon  the  work  passed  upon  by  the  general  assessors; 
whereas,  in  the  City  of  Pittsburgh,  nine  assessors  make 
original  assessments,  so  that  they  are  both  original  assess- 
ors and  revisionary  or  appellate  body.  Now  that  system 
works  all  right  in  Pittsburgh,  I  mean  the  plan  of  it;  but 
I  believe  the  other  system  is  the  better  one,  and  the  other 
system,  I  believe,  is  generally  followed  in  most  communi- 
ties in  the  United  States.  Now,  the  county  system,  which 
is  a  general  one,  I  say  is  open  to  this  objection :  that  the 
assessors  appointed  by  the  Board  of  Revision,  I  believe, 
in  many  cases  are  not  competent  to  do  this  work.  I  be- 
lieve there  are  men  who  look  upon  this  employment  as 
merely  for  the  emolument  that  is  in  it,  and  I  believe  they 
are  men  of  considerable  age,  men  who  are  not  engaged 
generally  in  regular  occupation,  and  perhaps  have  no  other 
experience  in  this  matter  than  what  they  have  obtained 
in  this  work. 

The  ideal  system,  to  my  mind,  would  be,  if  possible, 
to  have  men  who  would  know  something  about  real  es- 
tate. That  is,  men  who  have  been  angeged  for  some  time 
in  real  estate  business.  That  may  not  be  possible  in  all 
cases.  I  want  to  say  too,  for  the  benefit  of  these  local 
assessors,  many  of  these  assessors  in  the  course  of  time 
will  acquire  such  a  knowledge  of  property  in  their  local- 
ity that  they  do  make  very  good  assessors  and  assessments. 
I  believe  the  proper  way  to  make  assessments  is  to  have 
the  original  assessments  made,  and  then  allow  the  Board 
of  Revision  to  come  in  and  consider  the  subjects  on  ap- 
peal. 

Now,  another  matter  in  relation  to  local  taxation:  I 


742 

have  found  since  I  have  been  in  office — I  am  of  the 
opinion  that  public  utility  corporations  of  all  kinds,  taxa- 
tion to  that  extent,  calls  for  a  remedy.  I  believe  that 
they  ought  to  pay  their  fair  share  of  the  burden  of  taxa- 
tion. In  the  City  of  Pittsburgh,  that  is  to  say  the  old 
City  of  Pittsburgh,  which  consists  of  about  three-fourths 
of  the  Greater  City,  by  reason,  I  think,  of  special  Act  of 
Assembly,  the  city  can  assess  the  property  of  railroad  cor- 
porations and  all  public  utility  corporations,  except  the 
right-of-way  of  railroad  companies,  street  railway  com- 
panies, and  on  the  wire,  conduits,  etc.,  pipes,  mains,  of 
other  kinds  of  public  utilities. 

Now,  over  on  the  North  Side,  which  was  the  old  City 
of  Allegheny,  we  are  not  authorized  to  assess  any 
property  belonging  to  and  used  by  corporations  unless 
it  may  be  property  that  is  not  actually  used  in  the  conduct 
of  the  business  of  the  corporation.  A  piece  of  vacant 
ground  for  instance,  or  a  piece  temporarily  unused,  I  think 
we  can  assess  that,  but  the  stations  and  depots  and  shops 
and  rolling  stock  of  the  railroad  company,  and  street  rail- 
way companies  on  the  North  Side,  we  cannot  assess  them, 
the  Supreme  Court  has  told  us  that;  as  to  rights-of-way 
on  the  North  Side  and  in  the  old  City  of  Pittsburgh,  we 
can  assess  them.  I  think  there  is  ten  millions  worth  of 
property  probably,  of  corporations,  in  the  City  of  Pitts- 
burgh that  is  unassessable,  upon  the  theory  that  these 
corporations  today  pay  tax  to  the  State.  The  theory 
upon  which  they  pay  taxes  to  the  State — I  am  speaking 
of  transportation  companies — is  that  we  cannot  assess 
any  of  their  business,  except  business  that  is  entirely  car- 
ried on  in  the  State  of  Pennsylvania.  Interstate  com- 
merce cannot  be  taxed.  The  result  of  it  is  that  the  State 
of  Pennsylvania  gets  a  very  small  tax  comparatively  upon 
business  corporations  of  that  kind.  The  City  of  Alle- 
gheny gets  nothing;  the  City  of  Pittsburgh  only  gets  a 
part,  probably  about  only  half,  in  my  opinion,  of  what 
it  ought  to  be,  so  that  in  trying  to  distribute  the  burden 


743 

of  taxation  of  these  corporations  to  the  State  and  to  the 
counties  and  to  the  cities,  it  seems  to  me  that  by  reason 
of  legislative  construction,  a  corporation  of  this  kind 
ought  to  pay  what  I  claim  is  its  fair  share  of  taxation. 

I  am  sorry  to  say,  gentlemen,  I  intended  to  get  some 
data  on  this  subject;  I  would  have  liked  to  submit  some 
figures  to  you,  and  to  have  quoted  some  Acts  of  Assem- 
bly on  the  points  I  desire  to  make. 

By  Mr.  Brown: 

Q.  Mr.  Mayor,  isn't  it  a  fact  that  all  the  railroad  prop- 
erties are  taxable  except  the  rights-of-way? 

A.  I  make  the  distinction  on  the  North  Side  nothing 
is  taxable ;  in  the  City  of  Pittsburgh  all  property  is  tax- 
able except  the  rights-of-way. 

Q.  You  think  the  property  on  that  side  should  be  put 
on  the  same  footing  as  Pittsburgh? 

A.  And  I  think  all  property  and  rights-of-way  should 
pay  a  local  tax. 

Q.  All  utility  corporations? 

A.  Yes,  sir. 

Q.  You  have  no  heat  and  power  companies? 

A.  We  have  some  heat  and  power  companies. 

Q.  Telephone  and  telegraph  and  everything? 

A.  Yes,  gas  companies  and  water  companies. 

Q.  In  Philadelphia  our  real  estate  assessments  are  paid 
by  the  year.  Do  you  think  that  system  here  would  be  a 
benefit? 

A.  I  am  not  acquainted  thoroughly  with  it.  I  think  that 
would  be  the  one  I  would  recommend.  I  think  there  is 
in  fact  more  need  of  that  in  Allegheny  county  than  in 
Philadelphia  county.  The  Board  of  Assessors  in  the  City 
of  Pittsburgh  do  their  work  very  satisfactorily.  Mr. 
Purdy,  the  head  of  the  Tax  Commission  in  New  York,  who 
is  one  of  the  leading  authorities  upon  the  tax  subject, 
said  that  we  had  the  cheapest  form  of  assessment  and 
one  of  the  most  efficient  in  the  United  States,  in  Pittsburgh, 


744 

so  I  would  not  ask  that  the  Board  of  Tax  Assessors  of 
Pittsburgh  should  be  revised  alone ;  I  only  say  they  ought 
to  get  a  more  comprehensive  plan  to  assess  all  kinds  of  real 
estate  for  governmental  purposes.  If  I  would  discuss  the 
City  of  Pittsburgh,  I  would  say,  leave  it  as  it  is,  but  the 
system  of  Philadelphia  seems  to  me  to  be  the  logical  one, 
but  not  necessarily  the  best  one,  maybe  our  system  in  this 
city  is  just  as  good  as  the  Philadelphia  system.  I  believe 
there  ought  to  be  a  clear  distinction  drawn  between  the 
boroughs  and  townships  of  the  county  and  the  City  of 
Pittsburgh,  but  I  prefer  a  comprehensive  assessment 
whereby  everybody  in  the  county,  every  piece  of  property 
in  the  county,  will  be  passed  upon  by  the  same  board. 

Q.  That  would  apply  to  the    assessment    of   personal 
property  as  well  as  realty  ? 
A.  Yes,  sir. 

Q.  Mayor,  you  have  evidently  been  giving  some  thought 
to  this  subject,  upon  the  idea  of  getting  all  that  the  Com- 
monwealth and  city  is  entitled  to  in  the  way  of  taxation. 
What  is  the  sentiment  of  this  city,  as  far  as  you  have 
been  able  to  learn  it,  as  to  the  increasing  of  the  list  of 
taxable  subjects.  Is  it  the  thought  here  that  everything 
here  that  is  being  taxed  ought  to  be  taxed? 

A.  My  own  opinion  is  that  automobiles  should  pay  a 
tax.  The  license  tax  is  practically  nothing,  and  the  method 
of  collection  of  that  tax,  I  think,  is  a  gross  injustice  to 
the  man  who  is  honest  enough  to  pay  it.  We  have  an 
Act  of  Assembly  that  prohibits  municipalities  from  levying 
any  tax  on  automobiles.  The  State  is  paid  a  license  fee 
of  from  six  to  ten  dollars,  or  eight  dollars — something 
like  that,  according  to  the  size  of  the  machine — upon 
automobiles,  but  it  does  not  provide  any  method  for  the 
collection  of  it.  Now,  of  course,  that  tax  is  levied  not  for 
revenue  purposes,  it  is  merely  a  registration  tax  for 
identification,  and  it  is  totally  inadequate  to  begin  with, 
but  the  machinery  provided  for  the  collection  of  it  is 
practically  nothing,  and  therefore,  I  say,  it  cannot  be 


745 

enforced,  in  my  opinion.  "We  have  an  Act  of  Assembly 
covering  cities  of  the  second  class — that  has  been  re- 
pealed by  this  Act  of  Assembly.  "We  have  an  ordinance 
that  has  been  repealed  that  allowed  us  to  collect  this  tax. 
The  amount  was  only  $13,000  a  year — that  much  last  year 
— a  comparatively  small  part,  I  believe,  of  what  property 
of  that  kind  ought  to  pay,  I  think  we  collected  from 
automobiles  last  year.  Our  police  held  up  automobiles 
that  did  not  have  licenses  on,  and  ran  down  cases  in 
which  licenses  were  not  attached,  and  we  compelled  the 
payment  of  that  tax.  This  year  we  got  nothing.  The 
State  Highway  Commissioner  tells  me  that  we  at  least 
ought  to  collect  that  tax  for  the  State ;  no  doubt,  theoret- 
ically speaking,  he  may  be  absolutely  correct.  There  would 
be  comparatively  little  interest  in  the  office  on  this  subject, 
because  the  revenue  does  not  come  to  the  City  of  Pitts- 
burgh, his  employer,  but  would  go  to  the  State.  And 
officers  of  the  law  are  men  like  anyone  else,  they  are  going 
to  work  for  their  employer,  and  I  am  of  the  opinion  that 
there  is  being  comparatively  little  of  that  tax  paid  under 
compulsion.  The  force  is  not  behind  the  power  to  do  the 
work. 

Q.  Is  it  the  thought  of  the  people  of  this  city  that 
moneys  at  interest  should  be  taxed? 

A.  I  have  not  heard  much  discussion  of  that,  Mr.  Brown, 
but  my  opinion  is  that  most  money  at  interest  pays  tax  on 
it. 

Q.  You  speak  about  taxing  these  public  utility  corpora- 
tions. Have  you  in  mind  to  what  extent  the  taxes  should 
be? 

A.  I  think  rights-of-way  should  be  appraised  and  as- 
sessed the  same  as  any  real  estate.  I  believe  rolling  stock 
of  railways  should  be  taxed  the  same  as  real  estate,  and 
everything  else.  I  believe  that  they  receive  the  benefit 
of  the  expenditure  of  public  moneys. 

Q.  Would  you  have  that  done  locally,  or  take  a  railroad 
like  the  Pennsylvania  Bailroad — would  that  be  done 
locally? 


746 

A.  Each  county  should  be  paid  it. 

Q.  I  suppose  it  would  be  certified  by  the  County  Com- 
missioners to  Harrisburg,  and  collected  for  the  whole 
county? 

A.  No,  no,  sir — the  County  Treasurer — I  think  that 
might  be  done.  Let  it  be  distributed  to  the  various  muni- 
cipalities. 

Q.  The  thought  was  expressed  by  railroad  officials  here 
that  there  were  too  many  to  account  to,  that  it  involved 
a  separate  department  for  paying  taxes. 

A.  I  believe  it  would  work  to  their  benefit.  I  forgot 
to  mention  that  I  found  out  that  the  burden  of  school 
taxes  in  certain  localities  is  much  more  than  those 
localities  can  bear,  especially  in  Allegheny  county.  We 
have  about  five  or  six  boroughs  in  the  City  of  Pittsburgh 
that  have  been  annexed,  after  becoming  insolvent.  The 
Borough  of  Sheridan  last  year  had  a  tax  assessment  of 
thirty-nine  mills,  which  was  3  9.10  per  cent,  of  the  value 
of  the  property.  A  very  small  part  of  that  went  10 
pay  expenses  of  the  City  of  Pittsburgh.  About  thirteen 
mills  went  to  pay  interest  on  the  sinking  fund  and 
obligations  of  the  old  borough  indebtedness,  while  thir- 
teen mills  of  that  went  to  pay  school  tax,  and  eight  mills 
went  to  the  expenses  of  the  City  of  Pittsburgh.  This  is 
about — I  am  not  sure  exactly  of  my  figures,  but  I  know 
the  total  was  thirty-nine  mills.  Now,  Esplen,  Montooth, 
Elliott,  West  Liberty — those  four  boroughs  all  came  in 
in  about  the  same  shape  as  Sheridan.  The  difficulty  in 
these  places  is  that  the  taxable  property  and  real  estate 
runs  from  about  $600,000  in  the  lowest  case,  to  $3,000,000 
in  the  highest  case.  Now  the  school  tax  upon  these  places 
is  so  enormous  by  reason  of  extravagant  or  improper  man- 
agement of  their  affairs,  that  they  are  so  burdened  now 
that  the  growth  of  these  communities  is  absolutely  stopped, 
and  I  think  will  be  until  these  old  debts  of  the  old 
boroughs  are  wiped  out;  Mr.  Morrow  and  I  devised  a 
plan  to  reduce  the  old  floating  indebtedness,  and  we  made 


747 

a  material  reduction  in  their  taxation.  None  of  the 
boroughs  will  pay  as  much  as  thirty  mills,  we  have  reduced 
them  from  20  to  30  per  cent,  each  by  cutting  down  the 
old  borough  obligations;  the  tax  levy  has  been  cut  down 
for  these  purposes  one-half  to  two-thirds,  making  a  reduc- 
tion of  20,  25  or  30  per  cent,  in  all  these  cases.  I  say 
there  ought  to  be  a  general  school  tax  for  all  these  pur- 
poses. Property  down  town  here  pays  one-fourth,  one-half 
and  three-quarters  of  a  mill,  that  is  to  say,  five  cents  on 
a  hundred  dollars.  There  are  comparatively  few  children 
in  these  localities,  and  the  burdens  of  school  tax  do  not 
fall  upon  that  class  of  property.  The  burdens  of  educa- 
tion in  the  State  should  be  put  upon  all  property  generally. 

Q.  That  is  in  one  county,  for  instance? 
A.  I  would  say  in  certain  jurisdictions — yes,  a  whole 
county  or  a  whole  community.    There  is  another  thing 

Q.  Mayor,  that  is  what  the  school  code  in  the  last 
Legislature  attempted  to  accomplish. 

A.  Now,  Pennsylvania  is  strictly  a  manufacturing  State. 
The  City  of  Pittsburgh  is  peculiarly  situated.  With  all 
our  natural  resources  here,  we  do  not  have  the  amount  of 
manufactures  that  we  really  ought  to  have  and  should 
have.  It  is  partly  due  because,  manufacturers  tell  me, 
certain  class  of  workmen  do  not  want  to  live  in  the 
locality  of  Pittsburgh.  There  are  some  other  reasons  too, 
but  the  objection  I  hear  more  than  anything  else  is  our 
taxes.  Competitive  communities  which  are  near  Pitts- 
burgh, such  as  West  Virginia,  Ohio,  and  Indiana,  appeal 
more  strongly  to  new  manufacturing  enterprises,  because 
of  their  methods  of  taxation.  Out  in  Indiana  about  twenty 
years  ago  owners  of  land  out  there  started  a  policy  of 
giving  free  taxation  of  land,  free  fuel  in  some  cases,  to 
induce  manufacturers  to  locate  there.  We  haven't  any- 
thing of  that  kind  here.  It  would  have  some  effect  upon 
manufacturing  enterprises.  Down  in  Ohio  there  is  a  large 
number  of  thriving  cities  which  were  no  size  at  all 
a  few  years  ago,  that  have  been  getting  all  the  small 


748 

new  manufacturing  plants.  There  is  very  little  develop- 
ment for  a  number  of  reasons,  one  reason  is  that  of  our 
taxes.  I  have  no  recommendations  to  make  upon  the 
subject,  but  there  ought  to  be  no  classification  at  all.  I 
believe -the  State  ought  to  favor  manufacturing  corpora- 
tions. I  will  make  that  one  exception  to  what  I  said  be- 
fore. I  think  there  is  one  kind  of  property  that  ought  to 
be  given  encouragement  not  only  to  locate  here  but  remain 
here.  It  is  a  very  serious  problem  to  Pittsburgh  how  it 
can  maintain  its  supremacy  in  manufacturing. 

Q.  Then  you  would  do  that  not  as  against  but  in  com- 
parison with  public  utility  corporations,  which  you  have 
spoken  of? 

A.  I  don't  believe  they  need  encouragement. 

Vice  Chairman  Moyer :  I  would  suggest  that  the  Mayor 
file  a  brief,  because  that  would  be  of  valuable  service. 

By  Mr.  Brown : 

Q.  Do  you  think  other  classes  of  real  estate  represented 
in  the  City  of  Pittsburgh  would  be  willing  to  have  this 
preference,  which  you  say  should  be  shown? 

A.  I  believe  the  enlightened  people  would  strongly 
support  that. 

Q.  In  Philadelphia  we  are  compelled  to  tax  all  real 
estate  and  property,  except  that  which  is  exempt  from 
real  estate  taxation. 

A.  At  least  during  the  past  year,  we  have  strictly  fol- 
lowed the  duties  of  assessors  as  laid  down  in  the  Act  so 
plain,  and  we  undoubtedly  have  made  mistakes  about 
things.  We  have  not  attempted  to  do  this  here,  which  we 
think  ought  to  be  done  by  law. 

Q.  We  have  received  numerous  letters  from  all  over  the 
Commonwealth,  suggesting  that  manufacturing  corpora- 
tions ought  to  pay  additional  tax — in  other  words,  that  the 
Act  of  1885  should  be  removed? 

A.  That  would  ruin  us. 

Q.  I  was  asking  some  manufacturers  about  that    this 


749 

morning.  I  think  the  manufacturers  of  this  city,  this  city 
being  distinctly  a  manufacturing  city,  that  the  manufac- 
turers here  ought  to  bestir  themselves  and  present  their 
views  to  this  Commission,  so  that  the  matter  may  be  thor- 
oughly exhausted. 

A.  I  think  it  ought  to  be  done  in  the  interest  of  the 
people  and  in  the  interest  of  the  manufacturing  corpora- 
tions. 

Samuel  W.  Black :  After  hearing  the  Mayor  I  heartily 
agree  with  him,  but  I  think  a  Board  of  Assessors  would 
be  better  for  the  city  and  county — one  board — and  I 
would  like  to  make  just  one  suggestion,  that  instead  of 
the  Treasurer  of  the  county  being  on  that  board,  to 
appoint  the  Board  of  Assessors,  that  the  Mayor  be  sub- 
stituted in  place  of  the  Treasurer — the  Mayor  of  the  city 
be  substituted  in  place  of  the  County  Treasurer. 

By  Mr.  Brown : 

Q.  Who  appoints  your  local  Board  of  City  Assessors? 

Mr.  Hunter:  The  Mayor  appoints  the  City  Board,  the 
Court  appoints  the  County  Board. 

Mr.  Black:  Now,  there  is  no  reason,  in  my  mind,  why 
one  Board  of  Assessors  should  not  make  the  assessment  for 
the  city  as  well  as  the  county. 

Mr.  Moyer :  That  is  the  way  we  do  in  Philadelphia.  We 
have  one  board  there. 

Mr.  Black:  I  would  like  to  add  that  to  my  paper. 

Mr.  Moyer:  That  will  be  made  part  of  the  record. 


750 


DR.  MAITLAND  ALEXANDER,  representing  the 
Allegheny  General  Hospital: 

Mr.  Chairman,  I  do  not  know  that  I  have  anything  very 
definite  to  suggest.  I  was  asked  by  the  Board  to  appear 
and  present  the  Board's  views  concerning  the  present 
system  that  State  money  is  turned  over  to  semi-charitable 
institutions,  like  the  Allegheny  General,  and  I  think  we 
find  from  our  experience  that  there  ought  to  be  only  three 
questions  which  would  be  involved  in  the  granting  of 
that  money  by  the  State :  first,  the  amount  of  work,  char- 
itable work  done;  and  secondly,  the  way  in  which  the 
fund  is  administered  to  get  the  greatest  amount  of  effici- 
ency from  it;  and  thirdly,  the  locality  in  which  the 
hospital  stands,  in  relation  to  the  cost  of  its  maintenance. 
I  think  that  would  sum  it  up.  I  think  this  lies  at  the  very 
basis  of  the  whole  thing. 

By  Mr.  Brown : 

Q.  Doctor,  you  have  ten  or  twelve  hospitals  in  the  City 
of  Pittsburgh? 
A.  Yes,  sir. 

Q.  Do  you  think  that  the  public  welfare  would  be  as 
well  served  by  the  consolidation  of  some  of  these  hospitals  ? 

A.  I  think,  Mr.  Brown,  that  hospitals  ought  to  be  placed 
according  to  geographical  need. 

Q.  Well,  in  these  days  of  automobile  ambulances  and 
such  facilities  for  the  quick  movement  of  patients,  don't 
you  think  there  could  be  a  less  number  and  still  the  effi- 
ciency not  be  seriously  crippled? 

A.  Are  you  talking  about  this  city? 

Q.  Yes. 

A.  No,  sir,  I  don't  think  so  in  this  city. 


761 

Q.  How  many  vacant  beds  have  you  in  the  hospitals  of 
this  city? 

A.  I  don't  know. 

Q.  Suppose  I  would  tell  you  that  there  were  five  thou- 
sand vacant  beds  in  the  hospitals  of  this  State,  would  that 
lead  you  to  believe  that  there  might  be  some  consolida- 
tion? 

A.  Yes,  sir,  I  believe  so. 

Q.  All  of  you  operate  practically  on  the  same  plan — non- 
sectarian — those  that  receive  State  money? 

A.  I  don't  know  all  that,  Mr.  Brown,  whether  they  are 
or  not.  I  cannot  say. 

Q.  Do  you  think  money  ought  to  be  appropriated  by 
the  State  constructive  work? 

A.  I  would  say  it  depended  very  largely  upon  the 
situation  of  the  hospital  and  the  resources  behind  it. 

Q.  Take  a  city  like  Pittsburgh? 

A.  In  some  cases,  yes,  I  do. 

Q.  Do  you  think  the  public  welfare  cannot  be  as  well 
served  ? 

A.  You  are  talking  about  new  hospitals  now? 

Q.  Yes,  constructive  work,  now  hospitals? 

A.  If  you  are  speaking  about  new  hospitals,  I  would 
say  yes,  I  think  we  have  enough ;  if  you  are  speaking  about 
improvements,  I  would  say  we  ought  to  have  some  State  aid 
for  it. 

By  Vice- Chairman  Moyer : 

Q.  Do  you  believe,  doctor — do  you  believe  that  the 
present  system  of  appropriating  our  State  money  is  an 
efficient  one? 

A.  About  as  efficient  as  can  be  gotten. 

By  Mr.  Brown : 

Q.  What  proportion  of  money  have  you  collected  from 
private  sources  as  compared  with  money  received  from  the 
State  in  the  last  five  years— say  the  last  two  years? 


752 

A.  In  the  fiscal  year  just  closed  we  received  $82,236 ;  we 
raised  for  our  maintenance  the  same  amount  within  just  a 
very  few  dollars,  and  raised  outside  that  something  like 
$36,000  for  new  work? 

Q.  Suppose  you  had  not  recived  this  $82,000,  what 
would  have  been  the  result  ? 

A.  Shut  down  on  the  charity  patients. 

Q.  Do  you  make  any  distinction  between  charity  and 
paid  patients? 

A.  No,  sir. 

Q.  What  is  your  endowment  fund,  doctor? 

A.  Twenty  thousand  dollars. 

Colonel  Albert  J.  Logan,  representing  the  West  Penn 
Hospital :  Mr.  Brown,  what  is  it  you  want  from  me  ? 

Mr.  Brown :  Colonel  Logan,  you  heard  the  questions 
asked  of  Dr.  Alexander. 

Col.  Logan :    I  would  like  you  to  repeat  them. 

By  Mr.  Brown: 

Q.  Of  course,  you  have  no  doubt  the  State  of  Pennsylva- 
nia should  appropriate  money  to  institutions  under  her 
control ? 

A.  I  believe  that  the  State  should  appropriate  money  to 
such  institutions  as  the  West  Penn  and  other  hospitals, 
which  assists  in  taking  care  of  the  unfortunate  wards  of  the 
State.  I  believe  the  State  could  get  very  good  results  by 
doing  so.  I  believe  the  best  system — in  my  opinion,  the 
best  results — could  be  obtained  by  the  maintenance  of  an 
appropriation  based  on  the  number  of  charity  patients  that 
has  been  taken  by  the  hospitals  during  a  period — per 
capita  basis. 

Q.  Has  the  receipt  of  State  money  tended  to  diminish 
your  private  contributions? 

A.  No,  sir,  I  don't  think  so — I  don't  think  it  has  in  our 
hospital.  The  West  Penn  Hospital  has  been  receiving  about 
$5,000  a  month  or  $60,000  a  year  for  the  past  three,  or 


753 

four,  of  five  years,  and  I  believe  our  expenses  run  along 
about  $12,000.  The  difference  is  made  up  by  the  receipt 
from  our  endowment,  or  from  the  paid  patients  and  con- 
tributions. 

Q.  How  many  vacant  beds  does  your  hospital  average 
during  the  year? 

A.  Well,  I  can't  tell  you  on  an  average.  We  probably 
now  have  very  few,  probably  in  the  neighborhood  of  twenty 
a  day. 

Q.  Does  that  condition  exist  so  far  as  you  know  in  other 
hospitals  in  this  city  ? 

A.  I  cannot  answer  that.  The  use  of  beds'  in  the  hospital 
varies  much  according  to  the  condition  of  health  in  the 
community.  A  few  years  ago  when  the  typhoid  fever  was 
so  bad  here  we  were  overcrowded.  Sometimes  running 
down,  probably  not  over  60  per  ecnt.  of  the  beds  being  oc- 
cupied— 65  per  cent,  along  in  there — and  then,  of  course, 
it  changes  in  course  of  time.  You  made  some  reference,  I 
believe,  to  Dr.  Alexander  about  the  consolidation  of  hos- 
pitals. 

Q.  That  is  the  sentiment  of  Philadelphia.  A  good  many 
hospitals  are  there,  and  it  was  thought  some  could  be  con- 
solidated without  detracting  from  the  public  welfare. 

A.  I  believe  my  opinion  is — to  a  limited  extent — that 
might  be  done. 

By  Mr.  Woodward: 

Q.  Would  not  joint  administration  lessen  the  cost  of 
maintaining  these  patients  in  these  institutions? 

A.  It  depends  upon  the  size  of  the  hospital.  I  think  you 
can  get  a  hospital  too  big  for  management,  and  it  cannot 
be  properly  taken  care  of.  After  you  reach  a  certain  size  it 
goes  beyond  the  power  of  a  man,  and  after  awhile  it  comes 
down  to  where  a  man  who  is  on  the  ground  all  the  time 
cannot  take  care  of  these  institutions,  and  it  goes  beyond 
his  reach  if  it  is  too  large.  I  believe  there  is  a  large  num- 
ber of  small  hospitals  throughout  the  State,  that  it  costs  too 


764 

much  to  maintain  the  number  of  patients  they  have.  I  be- 
lieve the  doctor's  suggestion  that  the  cost  of  maintenance 
can  be  reduced  in  that  way,  and  I  believe  a  fair-sized  hos- 
pital is  most  economical  to  run.  We  have  the  West  Penn 
'Hospital,  and  our  cost  of  maintenance  is  about  $1.80  per 
day  per  head,  although  this  present  month  we  have  struck 
our  lowest  mark,  $1.57,  the  lowest  we  have  had  since  my 
connection  with  the  hospital.  I  wish  to  say,  Mr.  Brown, 
that  if  the  system  can  be  established  by  which  a  proper 
check  can  be  made  by  putting  on  all  these  institutions  a 
check  on  the  patients  they  are  taking  care  of,  that  the  fair 
way  for  all  is  to  pay  on  a  per  capita  basis.  I  am  not  much 
in  favor  of  the  State  furnishing  the  buildings  and  fur- 
nishing the  maintenance  and  having  private  individuals 
run  it,  so  when  we  get  away  from  that  basis,  and  that  plan 
will  work  out,  I  believe  we  would  get  better  results  of 
either  one — have  either  one  or  the  other  furnish  the  build- 
ing, and  in  my  plan  the  State  would  pay  the  board  of  the 
patients  that  are  sent  in  there  that  needs  to  be  paid  for, 
and  it  would  remove  the  much-talked-of — and  I  don't  be- 
lieve much  in  the  idea  that  so  many  are  turned  away  from 
the  hospitals  in  the  city — worthy  cases — but  it  would  cer- 
tainly— this  would  be  an  incentive  to  take  that  case — it 
would  have  an  assurance  that  it  would  be  more  likely  to 
take  care  of  the  case. 

By  Vice- Chairman  Moyer : 

Q.  Do  you  believe  the  State  should  appropriate  money 
to  private  institutions  for  permanent  improvements  and 
buildings  ? 

A.  No,  sir.  I  think  that  that  system  has  been  in  vogue 
and  has  done  some  good,  but  it  seems  to  me  that  the  State 
should  have  an  equity  for  whatever  the  State  puts  up  money 
for.  Now,  whether  that  equity  can  be  brought  together  in 
a  satisfactory  way  to  the  State  is  a  question  in  my  mind. 
That  is  why  I  suggest  the  idea  that  private  institutions 
furnish  their  own  equipment  and  buildings,  there  would 
be  better  results  arrived  at. 


755 

Q.  Then  your  views  are  that  the  State  should  not  ap- 
propriate money  to  private  institutions  over  which  it  has 
no  control  for  permanent  improvements? 

A.  Yes,  sir. 

Q.  But  the  State  should  appropriate  such  money  for 
maintenance  only  and  on  a  per  capita  basis? 

A.  Yes.  I  want  to  say,  however,  that  since  the  State  has 
established  this  system  of  building  up  hospitals  and  ap- 
propriating money  for  equipment,  that  it  would  be  very 
unjust  and  injurious  to  the  institutions  now  in  existence 
if  the  State  would  suddenly  chop  off  that  system.  If  my 
plan  is  adopted  it  ought  to  be  arrived  at  at  some  gradual 
basis,  and  not  have  the  result  of  closing  up  some  of  the 
well-established  institutions. 

By  Mr.  Brown: 

Q.  Suppose  that  the  State  cannot  appropriate  to  the  City 
of  Pittsburgh  all  the  money  needed  by  your  several  insti- 
tutions, don't  you  suppose  you  could  get  together  and 
decide  to  drop  out  some  of  them  without  detracting  from 
the  public  welfare.  There  are  12  hospitals  in  the  City  of 
Pittsburgh,  each  receiving  State  aid.  Now,  assuming  it  is 
impracticable  for  the  State  to  appropriate  moneys  which 
you  all  have  asked,  and  which  it  is  presumed  you  need,  but 
is  able  to  contribute  toward  six  or  seven,  being  a  less  sum 
in  the  aggregate  than  that  demanded  by  10  or  12,  do  you 
think  it  is  possible  for  your  hospitals  to  get  together  and 
lessen  your  number,  say  to  six? 

A.  I  don't  believe  it  is.  I  don't  see  how  you  could  do 
that  very  well.  The  hospitals  are  located  throughout  the 
city,  and  I  think  wisely  so,  to  have  them  located  geograph- 
ically in  Pittsburgh.  Now  we  have  certain  hospitals  in  the 
lower  part  of  the  North  Side,  the  Allegheny  General  in  the 
center,  and  then  out  this  district  the  West  Penn,  in  the 
Penn  avenue  district  the  St.  Francis,  and  on  out  further 
the  Pittsburgh  Hospital,  on  the  other  side  the  Mercy,  and 
on  the  other  side  of  the  river  the  South  Side  Hospital.  It 


766 

is  hard  to  get  about  here,  so  that  I  believe  that  that  would 
hardly  apply  in  Pittsburgh.  Furthermore,  I  don't  think 
that  so  far  as  hospitals  are  actually  concerned  that  we  are 
very  much  overbuilt  in  regard  to  numbers  in  the  City  of 
Pittsburgh.  The  capacity  in  our  hospital — 1  think  we  have 
quite  a  sufficiency  for  the  time,  but  there  are  no  new  hos- 
pitals that  I  know  of  projected  now  to  begin,  and  with  our 
growing  community  I  do  not  think  there  will  be  much  op- 
portunity to  consolidate  the  places  in  Pittsburgh.  Now, 
if  the  per  capita  basis  were  used  it  would  enable  you  to  know 
about  the  time  each  hospital  would  get  its  share  of  what 
the  State  would  appropriate,  and  then,  of  course,  it  would 
be  time  to  take  care  of  the  deficiency  on  that  account. 


767 


MR.  GEORGE  B.  LOGAN,  representing  the  Presbyterian 
Hospital,  North  Side,  Pittsburgh. 

By  Mr.  Brown : 

Q.  You  think,  of  course,  that  the  State  should  appro- 
priate money  to  such  hospitals  as  yours  ? 

A.  Yes,  sir,  for  both  building  purposes  and  maintenance. 
The  State  has  given  us  money  to  finish  about  one-third, 
possibly  more  than  that,  but  we  shall  need  more  money  than 
can  be  raised  among  the  citizens  here. 

Q.  Why  is  it  that  these  moneys  cannot  be  raised  in  a 
community  like  this.  These  hospitals  that  take  care  of  the 
helpless  sick,  why  is  it  in  a  city  like  this  more  money  can- 
not be  raised  from  the  people? 

A.  The  people  of  Pittsburgh  are  called  on  for  all  kinds 
oi  charity,  and  people  seem  to  flock  to  Pittsburgh  when- 
ever they  want  any  money,  and  I  think  they  find  the  people 
here  as  liberal  as  anywhere. 

Q.  You  say  you  can't — what  effort  is  made? 

A.  Go  among  the  people  and  solicit  it. 

Q.  What  answer  do  they  give? 

A.  That  they  give  to  this,  and  give  to  that,  and  haven't 
anything  left. 

Q.  Do  you  think  equally  good  results  could  be  obtained 
by  consolidation? 

A.  No,  I  do  not. 

Q.  What  is  the  nearest  hospital  to  yours? 

A.  The  Allegheny  General  is  about  a  quarter  of  a  mile. 

Q.  About  three  squares  here? 

A.  Four. 

Q.  Is  there  any  reason  why  your  hospital  or  the  other 
could  not  fulfill  all  needs  in  that  locality  ? 

A.  It  could  if  made  large  enough. 


758 

Q.  A  larger  hospital  would  be  better  able  to  take  care 
of  the  sick? 

A.  Yes,  sir. 

Q.  Do  any  of  your  hospitals  here  have  tubercular  wards  1 

A.  No,  sir. 

Q.  Why  not? 

A.  I  don't  know. 

Q.  They  have  made  no  effort  to  take  care  of  tubercu- 
losis ? 

A.  I  can't  answer  for  all  the  hospitals. 

Q.  Is  there  any  reason  so  far  as  you  know? 

A.  There  is  a  special  hospital  here.  I  listened  yesterday 
to  one  of  the  men  here — you  have  got  to  pay  money  out 
before  you  get  money  from  the  State  to  pay  your  debts. 
It  is  a  great  inconvenience  to  the  trustees  who  have  to  go 
into  a  bank  and  give  their  own  personal  endorsement  before 
they  can  get  money  to  pay  their  bills. 

By  Mr.  Woodward: 

Q.  It  is  an  expensive  proposition,  too? 

A.  Yes,  and  I  don't  see  why  the  Auditor  could  not  pay 
some  of  it. 

By  Mr.  Brown : 

Q.  Mr.  Logan,  from  communications  we  have  received, 
there  seems  to  be  a  general  sentiment  that  there  is  too  much 
money  given  by  the  State  to  these  institutions. 

A.  I  agree  with  what  Colonel  Logan  said  about  the  per 
capita  basis. 

Q.  Have  you  ever  considered  the  amount  of  money  that 
should  be  appropriated  to  treat  tubercular  patients? 

A.  We  have  no  facilities  for  such,  we  have  no  room  in 
our  institution. 

By  Mr.  Hunter : 

Q.  Very  few  of  them  have. 

A.  Very  few.  In  Pittsburgh  there  is  an  institution  espe- 
cially for  it. 


759 

By  Mr.  Brown : 

Q.  Dr.  Flick  testified  that  there  was  no  reason  why  all 
hospitals  should  not  have  special  wards  to  treat  tubercular 
patients,  or  did  not  see  any  reason  for  it. 

By  Mr.  Moyer : 

Q.  Mr.  Logan,  you  spoke  a  moment  ago  about  having 
some  unfinished  buildings.  Do  you  believe  it  is  the  State's 
duty  to  give  you  some  money  to  finish  them,  or  do  you 
think  it  is  the  State's  first  duty  to  take  care  of  its  own 
unfinished  insane  asylums  and  other  buildings,  for  the  care 
of  the  wards,  generally  called  the  unfortunate  wards  of 
the  Commonwealth.  Don't  you  think  it  is  the  first  duty 
of  the  Commonwealth  to  take  care  of  its  own  ? 

A.  Do  you  mean  a  purely  State  institution? 

Q.  Yes,  one  under  State  control  exclusively. 

A.  I  think  in  regard  to  our  institution,  the  State  having 
begun  to  help  us,  and  having  only  half  of  the  institution 
finished,  it  would  be  bad  faith  if  they  did  not  help  us 
finish  it. 

Q.  What  obligation  rests  upon  the  State,  only  good  will? 

A.  Just  the  fact  that  they  have  led  us  to  believe  that  we 
could  get  State  aid.  For  instance,  last  year  the  Legislature 
appropriated  for  building  purposes  $60,000,  and  the  Gov- 
ernor had  to  cut  down  all  appropriations,  and  he  cut  it  in 
half,  and  we  only  got  $30,000  instead  of  $60,000. 

By  Mr.  Hunter: 

Q.  Mr.  Logan,  I  believe  you  are  a  trustee  of  the  Associ- 
ated Charities  here  ? 

A.  Yes,  sir. 

Q.  I  am  of  the  opinion  that  we  should  hear  a  few  words 
on  that  subject,  and  tell  us  the  plan  of  your  work  and  the 
purpose  of  it. 

A.  The  Associated  Charities  is  a  sort  of  clearing  house 
through  which  the  charities  come  together  and  try  to  do 
their  work  to  the  best  advantage. 


760 

By  Mr.  Woodward : 

Q.  The  object  is  to  see  that  these  places  are  not  abusing 
their  privileges? 

A.  Each  institution  and  each  association  work  in  connec- 
tion with  each  other,  and  their  work  lies  in  one  direction, 
rather  than  cross  purposes.  I  think  it  is  an  excellent  thing 
when  we  get  it  going  here. 


761 


MR.  FRANCIS  J.  TORRENCE,  representing  the  State 
Board  of  Charities : 

I  came  here  to  listen  rather  than  to  make  any  speech 
on  the  subject.  But  to  begin  with,  on  the  ques- 
tion of  State  appropriations  for  maintenance,  we  have 
very  pronounced  views,  as  set  forth  in  our  report  to  the 
Legislature.  I  will  read  an  extract  from  that  report,  as 
follows : 

"Under  the  item  'Homes'  our  recommendations  show 
a  decrease  from  that  of  the  previous  session  of  the  Legis- 
lature. While  the  appropriation  of  public  funds  to  private 
and  semi-private  charities  is  an  interesting  question,  it 
should  be  borne  in  mind  that  these  institutions  relieve 
suffering  humanity  and  that  they  represent  the  true  spirit 
of  charity,  and  further,  that  they  directly  or  indirectly 
relieve  the  State's  institutions.  The  questions  of  the 
State's  contributions  to  homes  and  hospitals  (other  than 
State  institutions)  for  the  treatment  of  patients  or  in- 
mates is  an  important  one,  and  one  to  which  this  Board 
has  given  earnest  consideration.  We  have  endeavored 
to  formulate  some  plan  by  which  such  cases  might  be 
treated  in  private  institutions  on  a  per  capita  basis  for 
free  patients  or  inmates  cared  for,  or  for  a  free  bed 
capacity,  but,  so  far,  we  have  been  unable  to  find  any 
arbitrary  or  fixed  rule  that  would  work  fairly  and  equit- 
ably in  all  cases.  The  ideal  condition,  or  plan,  would  be 
something  similar  to  that  by  which  the  insane,  deaf  and 
dumb,  or  the  blind  are  now  being  considered,  but,  as  the 
circumstances  and  conditions  of  each  institution  are  so 
different,  we  have  taken  up  each  one  separately,  and 
made  the  recommendations  accordingly,  taking  into  con- 
sideration all  the  conditions  entering  into  a  proper  ex- 
amination of  each  institution." 

Now,  that  is  my  view  as  expressed  and  approved  by  the 


762 

Board  of  Public  Charities  in  their  message  sent  to  the 
Legislature  two  years  ago,  and  on  which,  as  far  as  we 
know,  we  have  not  changed  our  views.  The  grave  question 
of  that  is  the  abuse  of  State  moneys  in  these  institutions  as 
well  as  in  other  institutions,  and  the  tendency  to  abu^e 
the  use  of  State  moneys.  On  the  question  of  State  ap- 
propriations to  these  institutions,  Mr.  Brown,  that  is  a 
grave  proposition.  It  has  become  a  custom  because  it  was 
begun  in  that  way,  particularly  in  late  years  we  have 
recommended  in  making  our  recommendations  to  the 
Legislature  that  the  State's  appropriation  would  be  safe- 
guarded in  that  a  reversionary  provision  should  be  made 
to  care  for  money  given  out  of  the  State  Treasury  for  these 
private  institutions,  in  which  title  is  vested  in  a  Board  of 
Trustees. 

Now  as  to  a  question  which  you  asked  this  morning,  in 
which  I  was  very  much  interested,  Mr.  Brown,  we  have 
very  pronounced  views  as  to  taking  care  of  the  insane 
patients,  as  parents  should  take  care  of  children;  and  we 
have  set  that  forth  in  our  annual  message  to  each  session 
of  the  Legislature,  requesting  or  rather  suggesting  as  fol- 
lows: "Institutions  owned  and  controlled  by  the  State, 
and  Dixmont  Hospital."  We  make  this  provision  for  Dix- 
mont  in  that  the  property  there  is  not  vested  in  the  State, 
but  is  regarded  as  a  State  boarding  house,  used  by  us  in 
taking  care  of  insane  wards.  Our  second  consideration  is 
for  "institutions  for  dependent  and  delinquent  classes,  rec- 
ognized as  wards  of  the  State,  but  owned  and  conducted 
by  private  corporations."  Third,  "private  charities  of  all 
other  kinds." 

Now,  my  views  on  the  subject  generally  are  those  that  I 
have  expressed  in  my  messages  and  letters  to  the  Legis- 
lature and  to  the  Governor.  I  would  be  very  glad  to 
answer  any  questions. 

By  Vice-Chairman  Moyer: 

Q.  Mr.  Torrance,  what  do  you  think  of  appropriating 


763 

money    to    private    institutions    for   permanent    improve- 
ments ? 

A.  Where  it  can  be  safeguarded  or  reversionary — that 
would  be  in  the  shape  of  a  benefit. 

By  Mr.  Woodward: 

Q.  There  is  such  a  provision  in  all  of  the  Acts  passed  at 
the  1909  session  ? 

A.  Yes,  sir. 

By  Mr.  Brown : 

Q.  Mr.  Torrance,  what  supervision  does  your  Board  make 
as  to  the  use  of  the  moneys  the  State  appropriates?  How 
do  you  know  whether  they  are  expended  properly  or  not? 

A.  Well,  in  such  Acts  as  provide  for  supervision,  such  as 
special  Acts  which  provide  for  supervision  by  the  Board 
of  Charities,  or  its  secretary,  the  only  knowledge  we  have 
is  that  which  we  may  obtain  under  the  Fifth  Section  of 
the  Act  of  1869,  which  gives  the  Board  power  to  investi- 
gate the  conduct  of  the  institution. 

Q.  I  am  familiar  with  the  legislation  upon  that  subject, 
but  I  want  to  know  what  you  really  do  ? 

A.  We  have  a  general  agent  and  commissioners. 

Q.  What  has  been  your  experience  as  to  the  expenditure 
of  public  money ;  in  other  words,  do  you  think  money  has 
been  used  to  special  advantage  by  public  institutions? 

A.  My  own  experience  has  been,  I  find  very  little  misuse 
of  it,  I  would  say  none,  but  some  will  be  through  the  lack 
of  proper  knowledge  on  the  part  of  the  trustees  or  super- 
intendents of  institutions  where  money  might  have  been 
saved  by  the  use  of  other  materials  or  different  methods  in 
construction. 

Q.  Does  your  Board  make  any  comparison  of  prices  paid 
by  these  different  institutions?  Do  you  ascertain  from 
these  institutions  in  the  different  localities  how  much  they 
pay  for  a  barrel  of  flour? 

A.  Yes,  we  have.    These  institutions  come  before  us  with 


764 

reference  to  money  required  and  we  can  compare  their  ex- 
penditures per  capita,  for  the  service  rendered  with  other 
institutions  under  similar  conditions;  that  is,  in  the  same 
neighborhood.  When  it  shows  that  the  per  capita  of  main- 
tenance of  one  institution  is  greater,  we  begin  to  analyze 
the  cause  of  that,  putting,  as  it  were,  the  superintendent 
or  representative  on  the  witness  stand,  to  make  good  their 
statements  as  to  the  cost  of  maintenance.  Then  we  depend 
pretty  largely  on  the  Auditor  General's  office  or  the  Trav- 
eling Auditor  for  the  information  which  we  obtain  from 
time  to  time. 

Q.  Have  you  made  any  investigation  as  to  the  cost  of 
i'aple  articles  used  by  certain  institutions  ? 

A.  No,  not  in  a  general  way;  but  in  a  specific  way, 
wherever  the  question  arose  as  to  the  cost  of  mainten- 
ance. 

Q.  Do  you  think  it  would  be  advisable  for  the  State 
to  have  a  central  purchasing  body-^do  you  think  with 
reference  to  that,  that  a  central  purchasing  body  could 
or  could  not  purchase  supplies  more  cheaply  and  then 
distribute  them  by  requisition  to  the  different  hospitals 
of  the  Commonwealth? 

A.  That  might  apply — that  is  quite  possible  as  to  cloth- 
ing and  bed  linen,  table  linen  and  articles  of  that  kind. 

Q.  Flour,  sugar,  salt? 

A.  I  would  say  as  to  food  products  and  articles  of  that 
kind  for  general  consumption,  that  question  has  been 
before  our  Board  and  the  question  then  arose  as  to  pos- 
sible loss  by  shrinkage  and  things  of  that  kind,  which  led 
us  to  drop  all  recommendations  of  that  kind.  But  as  to 
the  other,  there  is  a  possibility  there.  There  is  also  in 
this  question  the  local  interests  as  against  it.  Where 
it  is  possible  to  have  the  provisions  supplied  in  the  com- 
munity in  which  the  institution  is  located,  we  believe  it 
is  best  on  the  theory  that  they  get  more  or  less  local  help 
by  this  practice. 


766 

Q.  That  is,  private  contributions? 

A.  Yes.  That  money  as  far  as  possible,  all  things  being 
equal,  should  again  return  to  the  people  who  have  con- 
tributed it. 

By  Mr.  Hunter : 

Q.  Do  you  find  that  there  is  any  loss  to  institutions  re- 
ceiving State  aid  in  the  matter  of  collections? 

A.  Mr.  Hunter,  we  have  that  in  nearly  all  occasions. 
We  are  in  a  mill  district,  a  man  comes  in  with  the  intention 
of  staying  a  couple  of  weeks  and  he  pays  ten,  twelve,  or 
fourteen  dollars,  and  he  stays  three,  four,  five  or  possibly 
six  weeks.  Now,  we  have  that  man's  account  on  our  books, 
and  we  are  doing  the  best  we  can  to  collect  it,  that  is 
about  as  good  an  answer  as  I  can  give. 

Q.  In  consequence  of  the  aid  rendered  by  the  State,  in 
providing  better  hospital  conditions  throughout  the  State, 
and  many  of  which  are  incomplete,  do  you  consider  the 
State  under  any  moral  obligation  to  these  institutions  ? 

A.  No,  I  don't,  Mr.  Hunter,  I  think  that  theory  has  been 
rather  abused,  and  with  reference  to  the  question  which 
Mr.  Brown  put  to  one  of  the  previous  representatives  as 
to  whether  we  had  too  many  hospitals  in  most  every  com- 
munity, with  reference  to  the  City  of  Pittsburgh  as  the 
city  now  exists  we  have  2,200  beds.  We  have  about  1,200 
of  these  in  the  hospitals  occupied,  that  would  be  55  to  60 
per  cent.  Since  that  report  was  made  to  me  and  tabulated 
there  has  been  a  number  of  institutions  finished,  and  there 
is  a  number  on  the  way.  Now,  we  all  agree  that  when  you 
are  running  an  institution  of  any  kind  to  its  fullest  capa- 
city and  under  the  supervision  of  proper  management, 
you  are  running  it  most  economically.  We  all  know  that 
an  institution  built  and  provided  to  take  care  of,  say  three 
hundred  patients,  is  going  to  lose  money  when  it  is  using 
only  half  of  its  capacity.  Now,  if  a  hospital  is  erected 
in  a  community  where  there  is  an  institution  provided 
with  three  hundred  beds,  and  prepared  to  take  care  of 


766 

three  hundred  people,  it  is  just  the  same  as  any  other  oc- 
cupation, creating  competition,  and  the  Board  of  Charities 
has  endeavored  to  prevent  that  duplication  of  institutions. 

By  Mr.  Woodward : 

Q.  Don't  you  find  that  a  number  of  the  new  hospitals, 
especially  in  the  smaller  communities,  are  organized  and 
brought  about  through  quarrels  among  physicians? 

A.  No  doubt  about  that. 

Q.  Then  the  State  is  asked  to  assist  them  in  maintaining 
two  institutions  where  one  would  suffice  ? 

A.  Yes,  sir. 

By  Mr.  Brown : 

Q.  Then  why  don't  your  Board  say  so  and  stop  that? 

A.  I  can  show  you  a  number  of  applications  that  this 
Board  turned  down,  and  yet  they  got  the  money. 

Q.  You  say  they  got  it? 

A.  Yes,  we  disapproved  of  their  application  because  we 
didn't  believe  that  the  institution  was  necessary  in  that 
community,  or  that  the  hospital  was  not  needed  at  all,  and 
could  be  taken  care  of  otherwise. 

Q.  Is  there  any  reason,  in  your  opinion,  why  certain 
hospitals  could  not  be  consolidated? 

A.  I  don't  know  that  there  should  be  any  reason  why 
they  should  not  do  it. 

Q.  If  it  withheld  appropriations  under  your  report,  they 
would  probably  consolidate,  anyhow? 

A.  I  think  they  would.  "We  have  endeavored  to  en- 
able institutions  to  do  this.  Now,  the  same  condition  exists 
in  the  homes,  while  on  the  subject.  We  have  in  this 
neighborhood — not  just  in  the  immediate  city,  but  in  this 
district — five,  I  think,  institutions  for  the  care  of  un- 
fortunate girls  and  women,  and  I  believe  that  they  could 
be  properly  cared  for  in  three  institutions.  Now,  in  that 
work  I  tried  to  get,  myself,  the  institutions  in  this 
neighborhood  to  unite  or  consolidate.  I  would  not  say 


767 

I  would  put  them  all  in  one,  but  I  think  two  or  three  at 
the  outside  would  be  able  to  do  the  work. 

By  Mr.  Moyer: 

Q.  Mr.  Torrence,  what  would  you  say  as  to  recommend- 
ing to  the  Legislature  something  like  that — have  a  paid 
Board  of  Charities  of  sufficient  compensation  to  devote 
their  time  entirely  to  this  proposition,  increasing  their 
powers  so  as  to  supervise  these  institutions,  inasmuch  as 
the  State  has  been  spending  money  for  their  maintenance 
and  the  upkeep  of  their  buildings  ? 

A.  That  would  be  a  very  delicate  question  for  me. 

Q.  Assuming  that  the  present  body  would  be  wiped  out 
of  existence  ? 

A.  Well,  then,  it  would  be  a  department  of  the  State, 
the  same  as  any  other  department  of  the  Commonwealth 
Government.  The  question  would  then  arise  as  to  the 
cost  of  it  as  compared  with  the  present  method.  As  it  is 
now,  the  administration  of  charity,  under  the  law  of  '69, 
is  comparatively  inexpensive.  It  would,  I  think 

Q.  And  comparatively  ineffective  also? 
A.  Yes,  ineffective  in  this  way,  that  we  haven't  the 
mandatory  or  compulsory  powers  to  enforce. 

Q.  You  are  shorn  of  your  power? 

A.  Yes.  Going  back  a  few  years,  sixty  years  for  that 
matter,  in  1850,  when  the  Board  of  Charities  was  or- 
ganized, there  were  some  institutions  having  expenditures 
of  $134,000.  In  the  last  biennial  period  there  were  256 
institutions  receiving  State  aid  under  the  jurisdiction  of 
the  Board  of  Charities.  They  received  in  the  two  years, 
from  time  to  time,  $722,000.  Aside  from  that  there  were 
about  200  institutions,  such  as  orphan  asylums  and  homes 
for  girls,  which  receive  no  appropriation,  but  still  come 
under  the  same  supervision.  It  is  only  two  years  since  the 
Legislature  gave  the  two  assistants  which  I  asked  for  in 
previous  years,  and  they  have  done  a  great  deal • 


768 

Q.  How  many  institutions   are   there  receiving   State 
aid? 
A.  Two  hundred  and  fifty-six. 

Q.  Two  hundred  and  fifty-six,  that  is  allowing  a  couple 
of  days  to  each  one? 
A.  Yes,  sir. 

By  Mr.  Hunter : 

Q.  How  many  not  receiving  State  aid? 
A.  Possibly  200. 

By  Mr.  "Woodward : 

Q.  Would  you  think  more  agents  would  better  the 
service  ? 

A.  There  is  no  doubt  of  that. 

By  Mr.  Brown: 

Q.  What  direct  influence  have  these  assistants  had? 

A.  Very  largely  in  the  manner  in  which  the  books  were 
kept.  We  have  had  a  great  deal  of  trouble  of  getting  re- 
ports from  the  smaller  institutions. 

Q.  Has  it  resulted  in  any  economy  at  all  ? 

A.  I  think  it  has.  It  has  pointed  out  dangerous  con- 
ditions in  smaller  institutions,  county  homes,  etc.,  where 
there  was  not  proper  protection  against  fire,  and  where 
there  was  not  proper  protection  against  elevator  accidents, 
and  things  of  that  kind. 

By  Mr.  Moyer: 

Q.  Notwithstanding  the  fact,  Mr.  Torrance,  of  your 
recommendations,  the  Legislature  would  do  just  exactly 
as  it  pleases  regarding  the  matter.  Your  body  can  only 
recommend?  . 

A.  Yes,  sir,  that  they  have  done.  Now,  while  on  the 
subject,  there  is,  I  think,  another  recommendation  to 
the  Legislature,  being  two  bills  I  had  introduced,  one 
for  the  removal  of  the  penitentiary,  and  another  for  the 
removal  of  the  Western  Penitentiary,  of  its  reconstruction, 


769 

which  would  be  of  economical  character,  but  worthy  of 
this  Commission's  consideration.  I  also  entered  another 
bill,  and  that  was  for  the  establishment  of  workhouses 
through  the  counties  similar  to  the  one  we  have  here.  It 
is  a  sort  of  a  boarding  house  for  the  criminal  class  of 
several  counties  under  a  specific  Act.  Instead  of  sending 
the  offenders  to  the  local  jail  or  penitentiary,  they  have 
been  sent  here,  and  the  institution,  to  a  certain  extent,  is 
self-sustaining.  Now,  my  recommendation  was  that  the 
counties  might  have  an  institution  similar  to  that  of  the 
Allegheny  county  workhouse,  and  let  the  counties,  I 
think,  if  not  able  to  contribute  to  the  building  at  all,  let 
them  agree  by  proper  legislation  to  pay  so  much  for  the 
board  of  their  prisoners. 

By  Mr.  Woodward : 

Q.  That  is  for  short-term  prisoners? 

A.  Yes,  and  in  that  way  it  would  relieve  the  State  of 
what  I  think  will  be  quite  necessary  within  the  next  de- 
cade, and  that  is  building  one  additional  penitentiary,  or 
building  an  addition  to  the  present  penitentiaries. 
By  Mr.  Hunter : 

Q.  Do  you  think  our  present  Western  Penitentiary  is 
well  located? 

A.  Every  high  river  we  have  we  get  in  there,  necessitat- 
ing the  removal  of  the  machinery  from  the  lower  story 
of  the  building.  Another  thing  that  is  a  recommendation 
for  this  plan  is  the  very  satisfactory  result  we  have  had 
in  Allegheny  county.  The  same  allowance  is  made  for  the 
board  of  their  insane,  and  have  a  proviso  that  they  would 
have  an  equipment  and  treatment  equal  to  that  in  the 
State  institutions  at  Dixmont,  Harrisburg,  Norristown, 
and  Warren,  and  that  has  induced  the  counties  to  put  up 
a  better  class  of  county  homes,  and  that  has  resulted  also 
in  taking  care  of  a  very  considerable  percentage  of  our 
insane.  Our  insane  population  of  the  State  is  about  fifteen 
thousand  at  the  present  time,  and  we  have  not  sufficient 
capacity  for  them.  j 

39 


770 

By  Mr.  Brown: 

Q.  How  many  are  we  caring  for? 

A.  We  have  an  insane  population  in  the  institutions  of 
fifteen  thousand. 

Q.  How  many  outside  the  State  institutions  are  being 
cared  for? 

A.  From  what  I  can  gather,  Mr.  Brown,  there  is  pos- 
sibly 20  or  25  per  cent,  outside.  Mr.  Boyle  thinks  the 
population  is  not  so  large,  possibly  not  more  than  10  per 
cent,  not  being  cared  for.  But  that  does  not  alter  the 
fact,  that  they  are  supposed  to  be  cared  for.  Dixmont 
was  to  take  care  of  five  hundred  patients  and  already 
has  a  population  of  six  hundred.  They  had  at  the  last 
time  I  was  there  about  nine  hundred,  now  if  you  crowd 
nine  hundred  people  to  where  five  hundred  were  intended 
you  are  doing  a  detriment  to  the  people  who  are  in  that 
institution. 

Q.  You  believe  that  the  State  should  finish  State  institu- 
tions before  appropriating  to  private  institutions? 

A.  Yes,  sir.  We  have  $13,000  invested  at  Allentown, 
and  it  isn't  of  any  use  to  us  until  it  is  finished.  Now 
what  I  say  to  you  of  Dixmont  is  true  almost  to  the  same 
extent  of  the  other  five  hospitals,  that  is,  Norristown, 
Warren,  Harrisburg,  Danville  and  Wernersville. 

By  Mr.  Woodward : 

Q.  While  you  are  speaking  of  Dixmont  institution, 
a  couple  of  years  ago  I  was  on  the  Commission  investigat- 
ing the  insane,  and  we  suggested  to  that  institution  that 
they  ask  for  money  to  relieve  their  crowded  condition 
there,  and  they  informed  the  Commission  that  they  did 
not  want  any  more  State  patients;  that  they  intended  to 
cut  loose  from  the  State,  and  have  Dixmont  become  a 
private  institution,  and  since  then,  I  understand,  they  have 
decided  not  to  do  that. 

A.  Since  that  time,  Mr.  Woodward,  Dixmont  has  sepa- 
rated from  the  West  Penn  Hospital,  and  has  its  own  charter 
and  is  a  corporation. 


771 

Q.  Do  you  know  if  they  are  willing  to  build  up  yet? 
A.  Yes,  sir,  I  think  they  are. 

By  Mr.  Brown: 

Q.  Mr.  Torrence,  have  you  folks  made  any  calculation 
as  to  what  it  would  cost  to  finish  the  institutions  now 
under  construction — about  how  much? 

A.  Well,  I  would  hardly  attempt  to  say.  There  is  Allen- 
town,  Spring  City  and  Fairview  (?).  I  suppose  it  would 
take  a  million  and  a  half  or  two  millions. 

Q.  For  the  present  institutions? 

A.  Yes,  sir. 

Q.  How  much  would  it  cost  to  build  institutions  to 
properly  care  for  the  insane  that  are  uncared  for  by  these 
institutions  ? 

A.  That  would  only  be  a  guess  on  my  part.  We  are 
sadly  in  need  of  more  institutions.  I  have  brought  here 
with  me  Mr.  Boyle,  who  is  familiar  with  these  lunacy 
questions.  On  the  whole  I  think  the  State  will  rank  with 
any  of  the  other  Commonwealths  in  the  care  of  its 
charities. 

Q.  Is  the  Board  of  Charities  prepared  to  recommend 
that  the  State  shall  not  give  any  more  money  to  those 
institutions  which  are  not  under  her  control? 

A.  That  is  the  policy  of  the  Board. 

Q.  What  would  become  of  all  these  private  institu- 
tions ? 

A.  That  would  be  a  very  sad  thing  for  them,  and  for 
the  community  if  they  are  essential. 

Q.  Do  you  think  from  your  experience  that  they  would 
be  able  to  provide  for  them  locally? 

A.  Some  of  them  would. 

Q.  How  about  the  general  welfare  of  the  community  T 

A.  I  think  it  would  be  bad. 

Q.  Which  would  be  the  worst  now,  to  allow  those  peo- 
ple to  go  uncared  for,  or  to  go  on  and  appropriate  money 
to  these  institutions  and  have  it  used  that  way? 


772 

A.  There  is  not  only  the  economical  question  to  be  con- 
sidered there,  but  the  question  of  the  welfare  of  the  State 
that  arises,  and  it  would  be  pretty  hard  for  anyone  to 
say. 

Q.  "Which  would  result  in  the  greatest  good  to  the  great- 
est number? 

A.  Here  is  a  class  of  people,  some  are  and  some  are  not 
citizens,  there  are  criminals,  and  the  insane  wards  and 
other  people  being  cared  for,  sick,  crippled,  injured,  etc. 
Now,  we  believe  in  the  doctrine  of  the  submerged  tenth, 
we  had  better  take  care  of  our  own  people.  That  is  a 
pretty  hard  question  to  answer. 

Q.  Well,  I  suppose  those  in  prison  would  rather  be 
abandoned? 

A.  I  suppose  they  would.  If  you  would  go  into  an  in- 
stitution such  as  we  have  in  this  State,  and  find  them  at 
night  sleeping  on  the  floors,  and  you  will  be  almost  unable 
to  walk  through  the  corridors  for  fear  of  tramping  on 
them,  you  will  realize  what  necessity  there  is  for  the  care 
of  them. 

Q.  Well,  it  certainly  has  gotten  to  be  a  critical  situa- 
tion from  my  point  of  view,  and  that  is  the  reason  we 
are  trying  to  see  if  there  is  not  some  way  to  help  them? 

A.  Of  course,  there  is  this,  that  the  institutions  are  fur- 
ther advanced  than  they  were  three  or  four  years  ago,  and 
it  won't  be  so  hard  in  the  future,  in  my  mind,  if  the  Board 
of  Charities  should  not  be  continued,  and  there  is  not  this 
duplication  of  which  we  in  our  judgment  and  experience 
believe  to  be  impossible  in  these  private  charities.  Then 
if  this  is  adopted,  there  will  be  plenty  of  revenue  without 
any  burden  on  the  taxpayer  for  these  institutions. 


773 


PATRICK  C.  BOYLE,  of  the  Board  of  Charities: 

Mr.  Torrance  has  told  you  that  we  have  made  the  en- 
dorsement which  would  require  that  there  be  built 
another  institution  for  the  care  of  the  insane.  Mr.  Tor- 
rance has  just  spoken  to  you  that  Allentown  has  been  in 
process  of  construction  for  almost  ten  years — seven  or 
eight  years.  That  they  have  very  few  people  there,  and 
it  will  be  some  years  before  they  can  take  care  of  the 
number  cared  for  in  either  of  the  other  five  institutions. 
At  the  other  five  institutions  there  is  an  overcrowding 
fully  exceeding  50  per  cent,  of  their  capacity.  That 
means  that  we  need  at  the  present  time  two  whole  institu- 
tions to  take  care  of  the  overflow. 

By  Mr.  Brown: 

Q.  And  Allentown  could  have  been  finished  in  two  years, 
or  four  years  at  the  outside? 

A.  If  sufficient  money  had  been  appropriated. 

By  Mr.  Woodward: 

Q.  Do  you  find  that  patients  are  as  well  taken  care  of 
in  the  county  institutions  as  they  are  in  State  institu- 
tions ? 

A.  In  most  of  the  counties  they  are  better  taken  care 
of.  Woodville  stands  at  the  top,  and  is  in  excellent  con- 
dition. And  if  the  chronic  insane  were  taken  out  of  the 
State  institutions  and  put  in  the  county  homes  there  would 
be  an  instant  relief  from  the  pressure.  The  State  would 
pay  $2.00  per  week  to  the  counties  for  the  care  and  main- 
tenance of  the  chronic  insane. 

Q.  The  people  whom  you  think  should  be  placed  in 
the  county  home,  and  not  in  insane  asylums,  they  are  help- 
less but  not  violent  ? 

A.  Yes,  sir,  absolutely  so.  Take  the  case  of  the  insane 
asylums  and  the  State  hospitals,  those  that  we  have  now 


774 

would  be  sufficient  for  many  years  to  come  if  the  counties 
would  do  their  share  of  the  work,  but,  unfortunately,  many 
of  them  are  not  able. 

Q.  The  theory  being  that  the  counties  should  take  care 
of  their  own  ? 
A.  Yes. 

By  Mr.  Hunter : 

Q.  Mr.  Boyle,  wouldn't  it  be  a  good  idea  for  the  counties 
to  club  together  for  the  purpose  of  this  kind,  as  stated  by 
Mr.  Torrance? 

A.  Oh,  yes,  it  would  be  a  grand  thing,  and  for  the  ad- 
joining counties. 

Q.  That  is,  to  properly  care  for  them? 

A.  Oh,  yes.  Now  Hollidaysburg,  Blair  county,  is  in 
position  to  do  that.  They  have  a  proposition,  I  think,  from 
one  or  two  counties.  Clearfield  wanted  to  send  their 
chronic  insane  over  there  to  the  insane  department  of  that 
county.  That  is  one  instance  where  it  might  be  done. 
They  are  doing  that  in  some  of  the  Western  States. 

By  Mr.  Moyer : 

Q.  They  are  doing  that  in  New  York  also.  In  recent 
years  in  the  State  Legislature  there  has  been  considerable 
effort  put  forward  to  have  the  public  school  system  sup- 
ported entirely  by  the  Commonwealth.  The  chief  objec- 
tion to  that  is  that  it  takes  away  responsibility  from  the 
counties,  and  that  the  school  would  not  be  as  satisfactory 
as  it  is  to-day  ? 

A.  It  might  not  be  as  satisfactory. 

Mr.  Woodward:  Mr.  Torrance,  as  a  result  of  these 
charities,  what  would  you  think  of  an  Act  that  would 
provide  against  any  institution  receiving  State  aid  unless 
they  were  organized  specially  by  the  State? 

Mr.  Torrance :    I  would  think  very  well  of  it. 

Mr.  Woodward :  Provide  for  the  incorporation  of  such 
institutions  by  special  Act? 


775 

Mr.  Torrance:    Yes? 

Mr.  Woodward:  You  couldn't  incorporate  them  very 
well  by  special  Act? 

Mr.  Torrance:  It  would  be  for  State  and  educational 
I  urposes. 

Mr.  Boyle :  I  will  submit  a  brief  to  the  Commission. 


776 


EUSTACE  S.  MORROW,  Controller  of  the  City  of 
Pittsburgh : 

I  say  that  I  can  only  endorse  what  the  Mayor  has  said, 
with  some  emphasis.  I  don't  believe  in  wiping  out  entirely 
all  classifications,  because  I  think  an  evil  would  be  worked, 
but  I  believe  in  a  modified  classification  of  real  estate  in  a 
city  like  Pittsburgh,  and  possibly  Philadelphia.  I  want 
to  say,  too,  that  an  injury  has  been  done  by  the  passage 
of  the  Automobile  Act.  We  license  vehicles.  There  is 
quite  a  complaint  that  automobiles  go  free  when  they  have 
to  pay  a  tax. 

By  Mr.  Brown: 

Q.  Why  don't  your  city  authorities  tax  them?  You 
have  under  your  police  power  the  right  to  put  a  tax  on 
them,  and  it  does  not  interfere  with  the  State  authorities 
at  all? 

A.  We  had  an  ordinance,  but  the  Attorney  General  held 
that  the  ordinance  of  1909  wiped  out  the  right  of  the  city 
to  levy  any  license. 

Q.  On  automobiles  ? 

A.  Yes.  There  is  one  more  thing  I  would  like  to  say, 
I  mean  in  relation  to  State  tax.  I  think  it  is  wrong  for 
the  State  to  tax  municipal  bonds.  A  municipality  is  the 
child  of  the  State,  and  I  think  the  State  might  leave  the 
municipality  go  free. 

Q.  You  don't  have  any  trouble  in  floating  your  bonds? 

A.  Oh,  no,  our  credit  is  good,  but  still  we  have  com- 
plaint when  making  taxation. 

Q.  Your  bonds  are  all  issued  tax  free? 

A.  No.  Oh,  no,  no,  no.  We  find  a  ready  market  in  the 
East  for  our  bonds.  I  want  to  say  I  fully  endorse  what 
Mayor  Magee  has  said  regarding  manufacturing  interests. 
You  take  manufacturing  interests  out  of  the  city 


777 

Q.  Why  do  they  go  out  of  Pittsburgh  ? 

A.  Our  expenses  are  very  heavy,  and  our  tax  rate  may 
be  very  heavy.  If  the  State  would  give  us  the  power  to 
modify  the  tax  on  manufacturing  corporations — take  Jones 
&  Laughlin's  interests  on  both  sides  of  the  river — great, 
large  mills — why,  they  would  have  to  get  out  of  town  if 
we  taxed  them  to  the  full  value  of  the  ground. 

Q.  That  is  the  disadvantage  of  being  in  a  city? 

A.  There  is  no  disadvantage  to  being  in  the  city. 

Q.  Does  not  that  condition  exist  all  over  the  county? 

A.  That  is  true,  but  still  we  want  to  keep  the  manufac- 
turing interests. 

Q.  Are  there  any  other  features  of  our  present  laws 
that  you  can  think  of  that  ought  to  be  amended? 

A.  I  can't  think  of  anything  now. 

Q.  Your  city  gets  three-fourths  of  the  personal  property 
tax? 

A.  Oh,  no,  the  county  does — I  don't  know  anything 
about  the  county.  I  don't  know  how  much  they  get.  We 
have  no  personal  tax,  but  business  tax. 


778 


PETER  WITT,  of  Cleveland,  Ohio. 

I  came  to  deliver  a  lecture  here  last  night,  and  my 
friend,  George,  asked  me  if  I  wouldn't  come  over  here  and 
give  you  my  views  of  the  Ohio  laws  that  you  may  steer 
away  from  the  mistakes  made  in  the  State  of  Ohio.  Of 
course,  the  question  of  taxation  has  never  been  reduced 
to  a  scientific  basis  and,  of  course,  we  do  not  have  the  ideal 
one,  either.  When  you  talk  of  personal  property  taxa- 
tion here,  it  means  something  entirely  different  to  me  from 
what  we  have  in  the  State  of  Ohio,  and  I  very  much  fear 
that  I  might  get  into  trouble  if  I  would  give  you  the  benefit 
of  a  few  thoughts  on  the  subject.  Of  course,  on  the  general 
subject  of  taxation  I  presume  Ohio  is  the  most  backward 
of  any  State  in  the  United  States.  From  1836— from  that 
day  to  this — very  few  changes  have  been  made.  In  1851, 
when  the  present  Constitution  of  Ohio  was  adopted,  it 
was  provided  that  all  property,  both  real  and  personal, 
should  be  taxed  at  its  full  and  true  value,  and  that 
lands  and  buildings  should  be  taxed  once  in  ten  years, 
except  railroad  property.  It  is  provided  that  all  persons 
shall  make  a  return  of  all  personal  property  owned  by 
them.  There  is  an  exemption  of  one  hundred  dollars  on 
household  effects. 

In  the  City  of  Cleveland  we  have  over  two  hundred  mil- 
lion dollars  on  deposit,  yet  the  tax  return  says  there  is  only 
a  million  there.  We  have  our  assessors,  and  of  course, 
they  are  very  good  assessors  in  most  instances.  We  send 
them  out  to  make  an  equitable  return  when  the  owner 
refuses  to  make  it.  While  the  average  assessor  can  readily 
distinguish  the  difference  between  a  fifty  cent  chair  and 
furniture  like  this  (meaning  furniture  in  Chamber  of  Com- 
merce room),  he  would  hardly  be  able  to  make  a  fair 
valuation  on  furniture  he  would  see  in  this  room. 


779 

W.  D.  George :  I  might  say  I  am  in  the  real  estate  busi- 
ness here  in  Pittsburgh,  and  after  hearing  for  two  days 
what  has  been  said  on  the  subject  of  taxation,  1  feel  like 
saying  something  myself.  This  question  of  classification 
to  which  Mayor  Magee  has  spoken  of  to-day,  is  the  first 
time  his  Honor  has  publicly  expressed  his  opinion  on  the 
subject.  We  have  been  watching  with  a  great  deal  of  in- 
terest that  law.  We  have  three  classifications:  there 
is  agricultural,  rural,  and  full  valuation,  and  the  result  of 
it  as  it  has  been  administered  here  in  Pittsburgh  is  that  we 
find  the  finest  homes  in  Pittsburgh,  on  Fifth  avenue,  More- 
wood  avenue,  and  those  high-priced  residence  districts,  all 
in  the  district,  all  assessed  at  the  rural  classification — two- 
thirds  taxes  on  them — and  yet  we  come  into  Lawrenceville 
and  lower  Allegheny  and  the  South  Side,  and  in  the  very 
nature  of  things,  the  whole  location  is  utilized  for  build- 
ing purposes  and  under  the  laws  it  comes  in  for  the  full 
classification. 

By  Mr.  Brown : 

Q.  Do  these  rural  districts  have  the  same  facilities  for 
schools? 

A.  Yes,  sir,  ordinarily.  Not  only  that,  but  we  go  out 
further  and  we  find  a  district  out  there  where  a  chap  is 
going  on,  holding  on  to  the  property  as  against  the  growth 
of  the  community  and  it  is  either  taxed  as  agricultural, 
which  is  one-half,  or  at  the  most  rural,  which  is  two-thirds, 
holding  back  for  development,  which  the  city  should  try 
to  discourage;  but  when  a  builder  or  some  other  person 
goes  out  there  and  builds  a  house  on  it,  immediately  the 
tax  goes  up,  and  as  a  result  of  that  condition  of  affairs 
here  in  Pittsburgh,  so  much  of  our  community  is  engaged 
in  speculating  in  land  instead  of  using  it.  Manufactures 
come  here!  You  see  manufacturers  won't  come  to  Pitts- 
burgh. Why  don't  they  come?  Because  the  land  values 
are  so  high  that  they  can't  come,  owing  to  speculation, 
and  if  they  do  come,  they  can't  get  their  men  in.  Rents 


780 

are  so  high.  And  they  can  go  out  in  Ohio  or  some  place  else 
and  can  locate  there  to  better  advantage — manufacturing 
is  cheaper  and  living  is  cheaper. 

Now,  that  law  allowing  the  classification  of  real  estate 
should  unquestionably  be  done  away  with.  That  is  work- 
ing a  great  inequity  in  all  communities,  and  is  working 
into  the  hands  of  the  people  who  are  holding  the  land  out 
of  use.  Of  course,  I,  as  a  single  taxer,  would  go  fur- 
ther and  the  man  who  has  some  legitimate  use,  would 
have  something  for  the  community,  and  I  would  think  he 
is  a  good  cithizen ;  he  is  the  man  we  want  to  attract  here. 

By  Mr.  Brown : 

Q.  Is  there  enough  land  in  Pittsburgh  to  supply  the  de- 
mands of  manufacturing  corporations  ? 

A.  Right  up  along  the  railroad  there  you  see  the  num- 
ber of  people  who  are  absolutely  sitting  there  just  waiting 
until  the  interest  or  the  necessity  of  the  railroad  will  re- 
quire that  property  for  legitimate  use.  Over  on  the  South 
Side,  when  the  Wabash  attempted  to  force  an  entrance 
into  town,  $1.00  a  square  foot  was  the  price  for  that  land, 
and  manufacturers  couldn  't  afford  to  utilize  that  land  very 
well,  but  the  people  held  on  to  it  until  it  developed  and 
the  Wabash  paid  $6.00  a  square  foot  for  the  same  land 
within  a  year  after  it  had  been  sold  for  $1.00  per  foot. 

Q.  How  can  you  distinguish  between  a  monopoly  of 
land  and  something  else? 

A.  There  are  two  values  to  land,  you  will  find,  and 
that  is  the  use  value — that  is,  the  value  which  any  person 
can  pay  for  it  and  legitimately  use  it — and  then  there  is 
the  other  value,  which  is  the  speculative  value,  the  value 
which  a  man  gets  on  a  piece  of  property  when  he  says, 
"Within  ten  years  somebody  will  have  to  have  this  land 
for  some  purpose,  and  I  will  sit  on  it  a  while  until  he  has 
to  have  it  and  have  to  pay  me  enough  to  give  me  a  profit 
on  it. ' '  I  would  tax  it  and  make  him  use  it,  and  it  would 
do  away  with  unequal  assessments.  I  challenge  any  man 


781 

to  go  out  under  present  conditions  and  value  real  estate. 
People  are  coming  in  and  asking  me  to  set  a  value  on  real 
estate.  The  value  has  been  inflated  to  such  an  extent 
because  of  speculations  that  it  is  away  beyond  the  price 
that  anybody  can  legitimately  use  it  for. 

Q.  Are  the  assessors  assessing  it  at  the  inflated  values? 

A.  Yes,  sir,  they  are.  They  overlook  the  question  that 
so  much  of  our  value  of  real  estate  is  speculative  value. 
Over  on  the  North  Side,  they  are  selling  real  estate  for 
less  than  its  assessed  value,  and  if  any  plot  of  real  estate 
had  to  be  sold  in  Pittsburgh  at  public  sale,  in  the  down- 
town sections,  you  could  not  get  the  assessed  value  for  it. 
You  are  speaking  of  personal  property  tax.  Mr.  Smith 
said  that  they  actually  collected  two-thirds  of  all  the  per- 
sonal property  which  is  subject  to  taxation.  You  go  up  to 
his  office  and  ask  his  chief  man  what  proportion  of  the 
property  which  they  get  for  taxation  they  get  from  the 
records  of  the  county  and  what  proportion  is  handed  in 
on  these  personal  returns.  The  chief  clerk  tells  me, 
and  he  is  the  man  who  knows — he  tells  me  that  at  least 
two-thirds  of  it  is  property  which  is  handed  in  from  the 
records.  That  is  the  mortgage  tax.  Now,  a  big  proportion 
of  that  tax  is  the  mortgage  tax.  There  is  no  question  about 
that,  and  that  is  the  tax  on  the  poor,  unfortunate  people 
who  have  to  pay  because  they  are  in  debt.  I  own  a  piece 
of  property,  and  I  own  it  clear.  My  neighbor  owns  a  piece 
of  property  and  it  is  mortgaged  and  he  pays  the  same  tax, 
and  the  mortgage  tax  on  top  of  it;  but  the  money  at  in- 
terest in  these  trust  companies  here 

Q.  You  mean  moneys  at  interest? 

A.  I  am  speaking  about  the  personal  property  tax  which 
the  State  collects.  Allegheny  county  collects  $800,000. 
That  is  a  fair  reversion  of  taxable  property,  even  if  two- 
thirds  of  it  is  collected. 


782 


WILLIAM  N.  McNAIR,  Attorney  at  Law. 

With  the  permission  of  the  Committee  it  will  take  only 
a  few  words  to  explain  some  data  prepared  by  Mr.  Hardy. 
Mr.  Hardy  will  explain  the  data  which  he  has  prepared. 

Mr.  Hardy:  I  separated  the  real  estate  from  the  im- 
provements in  1909.  The  real  estate  amounted  to  $696,200. 
In  the  year  1909,  I  did  the  same  thing.  The  value  of  the 
real  estate  amounted  to  $1,422,880.  That  was  in  the  Second 
Ward  of  the  Borough  of  Carnegie.  The  Second  Ward  has 
a  population  of  4,500.  What  I  would  think  we  should 
recommend  especially  would  be  the  abolition  of  classifica- 
tion. A  piece  of  ground  laid  out  should  not  be  assessed 
any  more  than  a  piece  of  ground  not  laid  out.  It  should  all 
be  assessed  at  the  same  basis. 

The  fundamental  maxim  laid  down  by  authorities  on 
taxation,  that  the  subjects  of  every  State  ought  to  con- 
tribute to  the  support  of  the  Government  as  nearly  as 
possible  in  proportion  to  the  revenue  which  they  respect- 
ively enjoy  under  its  protection.  The  persons  who  enjoy 
the  greatest  revenue  by  reason  of  the  protection  of  the 
State,  its  industries  and  progress  are  those  who  own  land. 
Especially  in  the  large  centers  of  population  in  this  State, 
lands  are  increasing  in  value  and  the  owners  thereof  are 
receiving  constantly  increasing  revenue  and  they  ought 
to  be  made  to  contribute  to  the  support  of  the  State  in 
proportion  to  this  increase. 

Ernest  Selfer :  My  borough  is  right  on  the  edge  of  the 
City  of  Pittsburgh.  Every  man  in  that  borough  is  sup- 
posed to  pay  an  occupation  tax  of  so  much  a  head.  Now 
those  men  are  compelled  to  pay  this  tax.  They  look  across 
to  the  city  where  there  is  no  tax  and  some  of  them  move 
into  the  city  to  escape  that  tax.  As  a  citizen  of  the  State 
I  think  that  this  is  inequitable.  I  think  that  the  city  should 


783 

be  compelled  to  collect  that  tax,  or  else  the  tax  should  be 
taken  off  altogether. 

By  Mr.  Moyer : 

Q.  Is  it  poll  tax? 

A.  Occupation  tax.  The  trouble  now  is  that  every  man 
in  the  borough  pays  borough  tax,  as  well  as  the  school  and 
poor  tax.  If  he  gets  a  heavy  bill  of  taxes,  he  thinks  he  can 
move  across  the  line  and  not  pay  it.  If  there  is  any  re- 
vision of  the  tax  laws,  I  think  that  should  be  taken  up. 

Q.  Doesn't  that  show  laxity  on  the  part  of  the  city  offi- 
cials? 

A.  I  don't  know  that. 

Q.  If  the  city  does  not  collect  the  tax  and  it  is  the  law, 
where  does  the  responsibility  lie  ? 

A.  If  that  is  the  law,  the  city  should  be  forced  to  collect 
it. 

By  Mr.  Brown : 

Q.  Do  you  think  anybody  moves  from  your  borough  to 
the  city  to  escape  that  tax  ? 

A.  I  think  some  of  them  go.  If  you  go  on  the  other  side 
you  don't  have  to  pay  it,  and  if  you  stay  in  the  borough 
you  have  to  pay  that  tax. 

Adjourned  at  5.30  P.  M.  to  meet  at  10.00  A.  M.  Saturday 
morning. 


784 

PUBLIC  MEETING,  PITTSBURGH,  PA., 

MORNING  MARCH  26, 1910. 

C.  E.  Bown,  Assistant  City  Solicitor  of  the  City  of 
Pittsburgh:  Gentlemen,  as  the  law  officer  of  the  city, 
having  charge  of  street  railway  matters,  my  attention  has 
been  called  somewhat  closely  for  the  past  months  to  that 
question  in  particular,  and  in  relation  to  the  public  service 
corporations  of  the  municipality  in  general. 

With  your  permission  I  would  like  to  give  a  brief  sketch 
of  our  department,  or  our  system  here,  so  that  you  will 
understand  how  I  have  arrived  at  the  conclusions  I  come 
to. 

First,  the  street  railway  company  was  chartered  in 
1859.  They  were,  of  course,  horse  car  companies.  The 
ordinances  at  that  time  contained  conditions  which  were 
then  thought  to  be  applicable  to  corporations  of  that  kind, 
particularly  requirements  as  to  keeping  the  streets  clean 
and  in  repair.  There  were  some  17  companies  chartered 
by  the  Legislature  between  the  years  1859  and  1874.  Eight 
of  those  companies  never  built  lines,  but  were  abandoned. 
Two  of  them  were  subsequently  merged  or  sold  to  other 
companies.  Seven  of  these  charters  are  in  existence  today 
and  the  present  company  claims  right  under  them. 

From  1874  to  1887  there  were  possibly  some  eight  or  ten 
companies  chartered  under  the  Act  of  1879,  which  author- 
ized the  formation  of  railway  companies  in  cities  of  the 
second  and  third  class.  The  Act  was  subsequently  declared 
unconstitutional,  but  practically  all  of  these  companies 
availed  themselves  of  the  Act  of  1859  and  are  in  existence 
to-day. 

Eighteen  hundred  and  eighty-seven  marked  the  trans- 
ition from  the  old  horse  line  to  the  cable  system.  A  num- 
ber of  traction  companies  were  organized  under  the 
Traction  Motor  Power  Act,  passed  that  year.  The  theory 


785 

of  the  Act  was  that  companies  organized  under  it  were 
organized  merely  for  the  manufacture  and  supply  power  to 
the  street  railway  companies.  In  other  words,  it  did  not 
grant  any  subsequent  franchises  to  companies  organized 
under  it.  There  had  to  be  in  existence  a  company  or- 
ganized under  some  other  law  which  made  the  contract 
with  the  traction  companies  organized  under  the  Act  of 
1887.  The  method  was  for  the  old  company  to  lease  the 
lines  to  the  traction  company.  That  also  marked  the  first 
outburst  of  modern  ideas  on  capitalization.  The  old  com- 
panies did  not  have  more  than  $100,000,  while  most  com- 
panies were  organized  at  approximately  $1,000,000  and 
in  some  instances,  of  course,  more  than  that,  and  bonded 
in  some  cases  for  an  equal  sum.  The  capital  stock  repre- 
sented, of  course,  the  good  will  and  franchises,  and  was 
exchanged  for  the  stock  of  the  old  company  for  the  fran- 
chises. From  1887  for  a  few  years  the  street  railways 
operated  principally  by  cable  power,  and  in  1889  the  first 
General  Act  was  passed  in  this  Commonwealth  authoriz- 
ing the  formation  of  street  railway  companies.  That 
marked  the  beginning  of  electric  street  railways  and  also 
marked  a  further  increase  in  the  method  of  capitalization. 
Under  the  latter  Act,  the  Act  of  '89,  a  large  number  of 
companies  were  organized,  possibly  there  had  been  as 
high  as  200  in  this  county  organized  under  that  Act. 
Naturally  competition  arose,  and  after  competition,  con- 
solidation, and  the  companies  here  were  gathered  under 
two  large  companies,  the  Consolidated  Traction  Company 
and  the  United  Traction  Company.  Between  them  they 
controlled  about  130  subsidiary  companies,  including  in 
these  the  old  companies  that  have  the  Legislative  charters. 
Of  course,  every  leaf  or  every  turning  over  was  made  a 
further  occasion  of  the  increase  of  the  capital,  each  one 
representing  generally  a  number  of  different  profits, 
brokers'  profits,  constructors'  or  contractors'  profits,  and 
so  on.  You  are  probably  familiar  with  that  to  some  extent. 
The  ordinances  of  the  city  that  were  granted  to  each 
company  from  1887  on  were  of  different  character  from 


786 

what  had  been  granted  to  the  early  companies.     They 
were  either  in  every  case  practically  in  perpetuity  or  for 
the  terms  of  the  company's  charter,  which  was  usually 
for  999  years.     They  were  without  compensation  to  the 
city  and  without  condition  as  to  operation.    The  resul  tof 
this  matter  of  operation  would  not  be  hard  to  foresee.     It 
did  result  in  the  gathering  together  of  all  these  properties 
ultimately  under  one  company,  the  Pittsburgh  Railways 
Company,  which  is  a  company  what  we  call  an  omnibus 
charter,  a  charter  of  1881,  giving  the  company  practically 
every  known  power  to  transact  business.    This  Pittsburgh 
Railways  Company,  on  the  other  hand,  is  merely  a  hold- 
ing or  operating  company    and  its  stock  is  held  by  the 
Philadelphia  Company,  which  is  also  a  company  having 
one  of  these  omnibus  charters ;  and  that  company  owns 
or  controls  the  heating  or  lighting  utilities  of  this  neighbor- 
hood, practically  all  of  them.    There  are  one  or  two  other 
small  lighting  companies,  but  the  Philadelphia  Company 
does  most  of  the  natural  and  lighting  business.    The  result 
has  been  that  the  Pittsburgh  Railways  Company  has  not 
had  sufficient  new  capital  to  keep  its  equipment  up-to-date, 
having,  and  it  has  now,  arrived  at  the  point  where  it  finds 
what  it  should  have  for  use  as  available  working  capital 
tied  up   in   these  stocks   and  securities   that   have    been 
issued  from  time  to  time  in  the  past.    And  another  thing 
most  of  the  people  have  agreed  generally  that  is  the  key- 
note in  the  present  situation,  that  if  the  Company  had  an 
opportunity  of  increasing  its  capital  stock  we  should  nor 
be  facing  the  present  situation.     I  need,  I  suppose,  not 
enlarge  on  the  details  of  that  situation,  and  I  do  not  think 
this  is  the  time  or  the  place  to  make  an  harangue  as  to 
the  wrongs  the  community  has  suffered  at  the  hands  of 
this  corporation.     You  all  know  that  the  service  is  not 
what  it  ought  to  be ;  the  company's  officers  even  admit 
that.    That  naturally  brings  up  the  questions  of  remedy, 
if  one  can  be  provided.     As  I  have  mentioned,  the  city 
is  practically  without  remedy.    The  only  franchises  which 


787 

contain  conditions  of  any  kind  are  those  to  the  earlier 
companies,  having  legislative  charters.  Those  conditions 
were  inserted  with  a  view  to  conditions  widely  different 
to  what  they  are  now.  Consequently  we  must  turn  to  the 
State  if  we  are  to  secure  any  remedy  for  present  conditions, 
and  when  we  do  that  we,  of  course,  come  to  the  Railroad 
Commission  Act  of  1907. 

Now,  in  discussing  this  Act,  I  do  not  wish  to  be  con- 
sidered  as  offericsr  criticisms  upon  the  Commission  or 
even  upon  the  attitude  of  the  Pittsburgh  Railways  Com- 
pany toward  that  Commission.  The  City  of  Pittsburgh  has 
an  action  pending  before  the  Commission,  and  it  would 
be  ungracious  for  me  to  say  that  the  proceeding  would 
not  result  in  helping  the  city,  but  I  do  want  to  call  your 
attention  to  things  that  I  consider  defects  in  the  Act,  and 
some  powers  which  I  think  require  to  be  amended  or  sup- 
plemented. In  the  first  place,  the  Act  applies  only  to 
common  carriers,  telephone  and  telegraph  companies.  I 
think  it  ought  to  be  made  to  include  all  public  utility 
corporations.  You  can  see  that  the  question  of  heating 
and  lighting  is  very  closely  associated  with  the  street 
railway  matter.  We  suppose,  and  I  think  it  is  a  matter 
of  fact,  that  the  Philadelphia  Company  relies  very  largely 
upon  the  profits  of  its  lighting  and  heating  companies  to 
offset  the  loss  arising  from  the  operation  of  the  street 
railway  company.  The  consequence  of  that,  these  rates 
are  put  up  to  the  highest  possible  point,  and  now  we  hear 
threats  of  the  rate  of  gas  going  higher.  I  have  heard  that 
they  are  to  be  raised  on  the  first  of  May.  Consequently, 
I  say  that  this  ought  also  to  be  a  subject  of  State  regula- 
tion. 

Now,  gentlemen,  in  arriving  at  my  knowledge  of  the 
facts  which  I  have  presented  to  you,  I  was  put  to  a  great 
deal  of  difficulty,  for  various  reasons.  One  was  this  State 
Street  Railway  Act  of  1889,  by  which  corporations  are 
not  required  to  register  their  charters  in  the  county  in 
which  they  do  business.  Consequently,  I  had  to  go  to 


788 

Harrisburg  whenever  I  wanted  any  information  as  to  their 
charters.  Then  th^re  are  a  number  of  other  matters  that 
are  infinitely  connected  with  the  organization  and  opera- 
tion of  these  corporations  that  are  not  matters  of  public 
record,  and  that  ought  to  be.  This  brings  me  to  another 
recommendation,  and  that  is,  that  these  corporations 
should  be  required  to  file  with  some  officer  of  the  county 
or  municipality  wl'.ere  they  do  business  certified  copies  of 
their  charter,  ordinances,  extensions,  leases,  and  agree- 
ments and  instruments  generally  of  all  kinds  on  which  they 
rely  for  the  exercise  of  any  right  within  that  district. 
In  that  way  it  would  be  possible  for  the  officers  of  the 
city  to  be  informed  of  the  various  privileges  relative  to 
the  right  and  liabilities  of  the  party,  and  we  would  not 
be  in  the  position  where  we  are  now  where  it  has  taken 
us  practically  a  year  to  get  at  the  facts  of  the  situation. 
It  seems  to  me,  to  refer  to  the  Act  of  1907,  that  the  vital 
defect  in  the  Act  is  that  the  decrees  of  the  Commission 
are  not  made  mandatory.  In  other  words,  the  Commission 
is  merely  a  body  to  inquire  and  recommend.  It  is  pro- 
vided in  the  Act  that  if  the  corporation  shall  not  obey 
the  recommendations  of  the  Commission,  that  then  they 
shall  certify  the  statement  of  the  facts  to  the  Secretary 
of  Internal  Affairs  or  the  Attorney  General.  Now,  these 
officers  have  full  power  to  act  in  case  the  corporation  is 
violating  the  law,  and  the  evasion  or  disobedience  of  the 
Commission's  decree  is  not  necessarily  a  violation  of  the 
law — of  course,  it  may  be,  or  may  not.  If  it  is  a  violation 
of  the  law,  we  have  already  a  remedy.  If  it  is  not,  the  city 
or  Commonwealth  are  without  remedy.  I  think  in  this 
matter  that  we  mi^ht  copy  after  the  Massachusetts  law. 
In  stating  this  question  I  have  referred  principally  to  the 
laws  of  Massachusetts,  for  the  reason  that  they  are  the 
outgrowth  of  forty  years'  experimenting  upon  this  sub- 
ject. They  have  had  a  Railroad  Commission  for  over  forty 
years.  They  are  the  result  of  that  period.  And  in  Massa- 
chusetts the  decrees  of  the  Commission  in  certain  cases  are 


789 

made  mandatory  through,  the  imposition  of  penalty.  I 
refer  particularly  to  the  provision  in  their  code  by  which 
they  can  impose  a  penalty  upon  any  corporation  failing 
to  provide  additional  rolling  stock  when  ordered  by  the 
Commission.  I  think  a  penalty  would  be  a  very  proper 
and  very  wise  means  of  arriving  at  the  result  of  compelling 
the  corporations  to  obeyance.  I  might  also  say  that  in 
New  York  they  have  a  penalty  and  the  results  have  been 
that  the  company  have  not  sought  to  delay  or  avoid  or 
disobey  the  decrees  of  this  Commission.  There  are  a 
number  of  other  features,  which  I  think  might  be  incor- 
porated in  our  laws  relating  to  this  matter — the  matter 
of  real  estate  valuation  and  also  the  valuation  of  fran- 
chises is  important.  For  instance,  in  this  city,  while  the 
company  issue  some  transfers,  it  by  no  means  will  provide 
an  adequate  system,  or  the  system  which  it  ought  to  pro- 
vide. If  we  had  H  means  of  putting  a  regulation  in  the 
franchises  it  would  enable  us  to  meet  their  plea  that  they 
could  not  issue  transfers  because  they  cannot  make  money 
or  profit.  The  question  of  transfers  is  also  another  one — 
of  course,  the  Commission  has  power  to  deal  with  that 
as  with  other  matters.  Whether  or  not  the  City  ought 
not  to  be  empowered  to  deal  with  some  of  these  questions 
is  a  matter  of  great  deal  of  doubt.  Personally,  I  think 
they  ought  to  be  left  to  the  Commission,  if  the  powers  of 
the  Commission  are  enlarged.  In  my  conversations  with 
other  men,  they  seem  to  be  in  favor  of  municipal  rule  of 
transportation,  which  would  have  power  to  make  certain 
regulations.  That  is  a  matter  of  detail  which  should  be 
considered  in  dealing  with  this  question. 

I  think  in  my  communications  with  this  body  I  referred 
to  some  other  matters.  Yes,  the  matter  of  the  issuance 
of  securities  is  one  that  should  be  under  the  jurisdiction 
of  the  Commission.  At  present  our  Commission  has  power 
to  inquire  into  the  issuance  of  securities  if  they  deem  it 
advisable.  In  Massachusetts  all  new  securities  must  be 
authorized  by  the  Commission,  and  there  is  a  provision 


790 

that  they  shall  not  be  issued  unless  the  Commission  finds 
it  to  be  necessary  You  can  readily  see  if  we  here  had 
some  such  provision  at  present  what  it  would  have  saved 
us  now  and  what  such  a  provision  will  probably  save  us 
in  the  future. 

In  connection  with  tha+  the  Massachusetts  laws  also 
provides  that  the  Commission  must  give  its  consent  to  all 
leases  and  agreements  by  any  and  all  corporations.  I 
might  give  you  one  or  two  instances  to  show  you  how  that 
has  been  abused  in  the  past.  First,  the  Pittsburgh  & 
Birmingham  Passenger  Railroad  Company,  going  over  the 
river  to  the  South  Side  on  the  Smithfield  street  bridge — 
the  original  lease  »^f  the  Passenger  Railroad  to  the  Trac- 
tion Company  in  1887  provided  for  a  rental  of  $12,000  a 
year.  The  lease  of  the  traction  company — United  Traction 
Company — made  some  five  or  six  years  later  was  at  a 
rental  of  over  $150,000  per  year.  That,  of  course,  was 
partly  justified  by  tlif  changes  in  the  system  of  operation, 
but  not  by  any  means  to  that  extent.  That  went  on  in 
the  case  of  all  these  corporations.  -And  these  rentals  which 
are  being  paid  to  d?iy  are  one  very  large  source  of  trouble 
to  the  companies  to-day. 

The  grade  crossing  is  another  matter  that  has  given  the 
city  a  great  deal  of  trouble.  The  Pittsburgh  Railways 
Company  interposes  the  plea  that  the  number  of  crossings 
at  grades  of  the  steam  railroads  interferes  with  the  opera- 
tion of  its  cars.  The  city  has  practically  no  power  to 
deal  with  these  questions  except  by  agreement  between 
the  railroad  and  the  city,  and  the  street  railway.  The  Act 
of  1901  is  not  applied  to  a  city  of  the  second  class,  and  the 
Act  of  1871  does  not  apply  to  crossings  of  steam  railroads. 
Our  trouble  has  been  to  get  the  Pittsburgh  Railways  Com- 
pany to  stand  its  proper  share  of  expense  to  abolish  these 
crossings.  In  the  State  of  Massachusetts  that  has  been 
worked  out  satisfactory,  the  law  specifies  the  portion  of 
expense  which  shall  be  borne  by  the  various  corporations 
and  the  municipal  districts.  Some  such  system  as  that 


791 

would  speedily  do  away  with  these  crossings  which  are 
present  to-day. 

The  matter  of  an  uniform  system  of  accounting  is  one 
which  the  Commission  should  be  compelled  to  require  of 
all  such  corporations.  Without  this  it  is  really  impossible 
to  tell  what  these  corporations  are  doing  and  in  many  cases 
what  would  be  fair  or  unfair  regulation.  That  is,  of  course, 
connected  with  the  valuation  of  physical  properties  and 
franchises  and  I  think  is  in  accordance  with  the  most 
modern  thought  on  this  subject.  In  Massachusetts  also 
they  have  provided  for  a  periodical  inspection  of  equip- 
ments, rights-of-wray,  bridges,  and  so  forth  of  such  cor- 
porations by  some  officer  of  the  Commission.  Personally, 
I  am  inclined  to  t-iink  that  is  not  so  important  as  the 
other  matters,  although  I  might  say  that  at  least  in 
one  respect — that  is,  if  we  had  that  provision  here — we 
would  have  probably  done  away  with  the  inadequate  me- 
thods which  the  company  use  here,  which  is  really  a 
disgrace. 

These  complete  Tny  suggestions,  gentlemen,  for  the 
present.  The  subject  ir>  a  large  one,  and  I  have  not  yet 
had  the  time  to  go  into  it  as  thoroughly  as  I  wish  to,  but  it 
seems  to  me  that  some  provision  along  the  lines  that  I 
have  indicated  should  be  adopted.  They  have  been 
adopted  in  other  places,  notably,  as  I  have  stated,  in  Mas- 
sachusetts and  also  New  York,  Wisconsin,  Illinois,  Ohio, 
and  I  think  possibly  in  Michigan,  of  course,  in  a  number 
of  Western  States.  Other  States  are  considering  them. 
I  see  that  the  State  of  Maryland  is  at  present  holding  hear- 
ings before  some  Commission  similar  to  your  body  on 
this  subject.  The  State  of  California,  I  believe,  is  con- 
templating taking  such  steps.  Now,  in  many  other  places 
they  have  a  means  of  dealing  with  these  corporations  which 
we  have  not.  I  doubt  if  there  is  any  place  in  the  country 
where  the  grants  of  the  municipality  to  these  corporations 
were  of  the  same  kind  as  those  made  in  this  city  during 
the  years  1887  to  1897.  They  deprived  the  city  practically 


792 

of  any  power  to  protect  itself  at  all.  Now,  if  they  need 
this  method  of  State  regulation  in  other  places  where  the 
municipalities  have  reserved  some  right  of  protection, 
much  more  do  we  need  it  here.  As  I  have  said,  this  is 
not  the  place  or  the  time  to  indulge  in  the  recital  of  the 
wrongs  which  this  community  has  suffered  at  the  hands 
of  the  public  service  companies,  and  the  Pittsburgh  Rail- 
ways Company,  but  we  do  feel  that  we  have  suffered  and 
are  suffering  to-day  a  great  and  grievous  wrong ;  that  this 
is  not  a  question  entirely  of  policy,  but  there  is  a  moral 
aspect  to  it  and  that  we  come  to  you  asking  you  to  ex- 
ercise the  State's  power,  which  the  State  has,  of  super- 
vising these  corporations  and  compelling  them  to  do  their 
duty. 

By  Mr.  Brown : 

Q.  You  tax  in  the  City  of  Pittsburgh  what  of  these 
corporations  ? 

A.  I  want  to  speak  about  that.  We  tax  the  real  estate 
of  these  corporations  in  the  old  city. 

Q.  What  do  you  tax  in  the  new  city? 

A.  We  do  not  tax  them  in  the  Greater  City.  The  Su- 
preme Court  has  recently  decided  that  we  are  not  entitled 
to  tax  their  real  estate  on  the  North  Side. 

Q.  The  Supreme  Court  reversed  your  lower  Court? 

A.  Yes,  sir. 

Q.  Your  local  Court  decided  for  you  and  the  Supreme 
Court  reversed  it? 

A.  Yes,  sir. 

Q.  What  other  tax  do  you  levy  upon  them? 

A.  Practically  nothing.  In  1893  the  City  passed  an 
ordinance  levying  a  license  tax  which  netted  it  in  the 
neighborhood  of  $20,000  a  year.  In  1896  that  was  amended 
by  raising  the  amount,  and  the  company  contested  the 
validity  of  the  new  ordinance  and  the  Court  held  that  it 
was  invalid  in  that  it  was  an  attempt  to  impose  a  property 
tax  and  not  a  license  tax.  We  received  some  $20,000  from 


793 

the  North  Side  company.  Aside  from  the  real  estate  tax 
which  the  City  receives  and  the  amount  which  I  cannot 
give  you,  that  $20,000  per  year  is  all  that  we  are  receiving 
to-day. 

Q.  Under  the  Constitution  the  City  has  the  right  to 
levy  a  license  tax  upon  these  corporations  before  they  al- 
low them  to  operate  within  their  limits  ? 

A.  Yes,  sir. 

Q.  Then  your  criticism  is  one  of  the  City  of  Pittsburgh 
and  not  the  corporation? 

A.  It  is  attributable  to  the  officers  of  the  City  of  Pitts- 
burgh who  at  that  time  had  the  power  with  these  fran- 
chises. However,  that  was  brought  about,  though,  we  are 
confronted,  as  I  say,  with  a  condition,  and  not  a  theory, 
and  if  it  is  possible  to  remedy  that  condition  we  do 
not  think  we  should  be  made  to  suffer  for  the  acts  of 
the  Trustees  of  the  city  at  that  time. 

Q.  And  as  a  lawyer  you  will  appreciate  that  that  be- 
came part  of  the  contract  between  the  city  and  the  cor- 
porations ? 

A.  There  is  enough  proper  things  to  bring  about  that 
abrogation. 

Q.  Do  you  think  Pennsylvania  has  the  right  to  set 
aside  or  abrogate  this  contract  between  the  corporations 
and  the  City  of  Pittsburgh? 

A.  I  think  that  Pennsylvania  has  the  right  to  pass  a 
law  along  the  lines  I  have  indicated  in  my  address,  looking 
to  the  regulation  of  these  corporations  in  these  matters. 
That  has  been  very  largely  thrashed  out. 

Q.  How  about  the  underlying  securities,  now? 

A.  That  is  one  that  I  have  not  given  much  attention  to. 
Some  of  the  persons  that  I  have  talked  with  about  that 
feature  think  that  a  plan  can  be  devised  for  handling 
these  securities,  that  is,  the  provision  of  a  fund  from 
the  surplus  earning,  if  there  should  be  any,  looking  toward 
the  gradual  and  ultimate  retirement  of  the  water  in  the 
securities. 


794 

Q.  Now,  are  the  earnings  of  those  corporations  suffi- 
cient for  the  creation  of  such  a  fund? 

A.  They  are  said  not  to  be,  but  that  is  a  matter  on  which 
we  lack  at  the  present  time  sufficient  information,  and 
that  merely  emphasises  a  point  that  1  want  to  make,  and 
that  is,  that  municipalities  and  the  State  in  dealing  with 
these  questions  are  handicapped  by  lack  of  sufficient  know- 
ledge of  conditions.  If  these  companies  were  compelled 
to  adopt  a  uniform  system  of  accounting,  and  make  full 
and  complete  report,  we  could  then  tell  whether  they  were 
telling  the  truth  or  not  about  their  profits,  and  have  some 
idea  of  what  they  are  working  on. 

Q.  Do  you  think  they  have  the  right  to  increase  the 
price  of  gas  and  other  public  utilities  for  the  reason 
that  the  railways  company  is  being  run  at  a  loss? 

A.  I  think  that  is  the  present  situation. 

Q.  That  they  are  at  present  running  the  railways  at  a 
loss? 

A.  At  a  loss  in  this  way:  take,  for  instance,  one  of 
the  underlying  companies,  the  Citizens'  Passenger  Rail- 
way Company.  That  company  was  leased  first  to  the 
Citizens'  Traction  Company,  then  the  Citizens'  Traction 
and  its  companies  leased  to  the  Fort  Pitt  Traction  Com- 
pany, and  that  in  turn  was  leased  to  the  Consolidated  Trac- 
tion Company,  and  the  Consolidated  Traction  Company 
was  leased  to  the  Pittsburgh  Railways  Company.  The 
stock  of  the  Pittsburgh  Railways  Company  is  held  by  the 
Philadelphia  Company,  and  that  in  turn  is  held  by  a  San 
Francisco  Company.  The  point  I  make  is  this :  The  Con- 
solidated Traction  Company  and  the  United  Traction 
Company  own  a  great  portion  of  the  stock  of  these  under- 
lying companies  which  receive  these  dividends  and  rentals, 
and  in  that  way  it  would  easily  be  possible  for  the  com- 
pany to  make  a  showing  that  it  was  being  operated  at  a 
loss,  if  the  full  details  of  all  these  transactions  were  not 
given,  by  which  it  would  be  possible  to  analyze  the  thing, 
and  find  out  just  where  the  money  was  going. 


795 

Q.  Are  you  familiar  with  the  Philadelphia  agreement 
between  the  City  of  Philadelphia  and  its  transit  company? 

A.  No,  I  am  not.    I  have  heard  of  that  agreement. 

Q.  How  could  the  State  of  Pennsylvania,  under  the 
present  Constitution,  give  the  Commission  mandatory 
powers  ? 

A.  That  is  a  question  which  I  am  not  just  prepared 
to  answer.  I  intend  to  take  that  up  and  to  follow  your 
suggestion  of  submitting  a  brief  as  to  proposing  a  bill 
along  these  lines,  but  I  might  say  this :  that  in  my  view 
of  the  case  the  Commission  would  not  be  a  Court  having 
the  present  powers  of  the  Courts  of  the  Commonwealth. 

Q.  But  if  it  has  any  one  power  it  would  come  within 
the  prohibition? 

A.  I  should  think  not. 

Q.  What  would  be  the  mandatory  power  in  your  mind 
that  should  be  given  to  the  State  Commission? 

A.  The  power  to  compel  corporations  to  supply  ad- 
ditional rolling  stock,  and  to  issue  transfers.  Suppose, 
instead  of  making  it  mandatory,  you  should  agree  that 
way — accomplish  that  end  by  imposing  a  penalty  for 
violation  ? 

Q.  How  are  you  going  to  enforce  a  penalty  without 
going  into  Court? 

A.  You,  of  course,  have  to  go  into  Court  to  enforce  the 
penalty  as  you  do  in  any  other  case. 

Q.  You  would  give  the  Commission  that  power  and  the 
Court  would  have  power  to  enforce  it? 

A.  That  was  my  notion.  Other  things  have  arrived  at 
this.  It  is  a  serious  and  complicated  matter  and  one  on 
which  I  am  not  prepared  to  speak  with  any  degree  of 
assurance  yet.  T  believe  there  is  a  way  of  accomplishing 
it  in  this  State. 

Q.  How  does  your  local  company  feel  as  to  the  subject 
of  a  municipal  bureau? 

A.  I  don 't  know,  Mr.  Brown,  how  they  feel  Tabout  that. 


796 

A  municipal  bureau  such  as  I  have  had  in  mind,  whose 
powers  would  be  limited  to  gathering  and  compiling 
statistics  and  information  and  keeping  track  of  the  rail- 
road companies  in  the  city.  I  think  that  the  company 
would  not  oppose  it.  They  might  feel  that  we  ought  not 
to  have  a  municipal  commission  or  board  with  any  powers 
of  regulation. 

Q.  How  would  they  feel  about  the  State  having  a  board 
with  the  powers  you  suggest? 

A.  I  suppose  they  would  be  against  it. 

(Mr.  Brown  will  submit  a  brief.) 


797 


A.  C.  CANFIELD,  representing  Allegheny  County 
Laundrymen 's  Exchange. 

To  the  Joint  Committee  of  the  Senate  and  House  of  Repre- 
sentatives of  the  Commonwealth  of  Pennsylvania: 
Gentlemen :  In  answer  to  your  invitation  of  March  11,  to 
meet  your  Committee  in  Pittsburgh  to  give  you  our  ideas 
and  data  on  any  tax  that  we  may  be  interested  in,  would 
say,  we  come  as  representatives  of  the  Allegheny  County 
Laundrymen 's  Exchange  in  regard  to  the  capital  stock  tax 
of  five  mills  on  corporations,  as  passed  under  the  Act  of 
1885  and  supplements  thereto.  "We  are  not  objecting  to  the 
tax,  as  we  believe  that  any  concern  incorporated  should  be 
willing  to  pay  the  Commonwealth  for  the  privilege  that 
they  receive,  but  we  do  think  that  all  corporations  should 
be  taxed  alike,  and  that  there  should  be  no  exemption 
whatever  under  the  tax.  We  believe  that  if  all  corpora- 
tions were  taxed  under  the  Act,  that  the  tax,  being 
five  mills,  would  be  reduced  a  very  large  per  cent.  We 
see  no  reason  that  manufacturers  should  be  exempt  from 
this  corporate  tax  and  laundries  covered  by  it.  Are 
not  our  modes  of  operation  the  same.  In  fact,  at  least 
50  per  cent,  of  our  output  is  paid  for  in  labor,  and  the 
laundries  of  Allegheny  county  spend  more  than  a  million 
dollars  every  year  in  labor.  Our  work  is  carried  on  by 
machinery  the  same  as  manufacturers  and  our  city  and 
county  tax  us  the  same  as  manufacturers  on  this  ma- 
chinery. If  we  are  not  manufacturers,  why  should  we 
be  taxed  for  this  machinery?  In  our  business  in  Allegheny 
county  in  normal  times  we  employ  between  three  thousand 
and  thirty-five  hundred  skilled  employees.  We  use  during 
the  year  several  hundred  carloads  of  coal,  or  its  equivalent 
in  gas,  in  our  power  plants.  The  work  of  the  laundries  in 
Allegheny  county  is  a  performance  of  part  of  the  labor 
of  the  households  of  the  communities  in  which  they  are 


798 

located,  and  any  tax  on  this  labor  is  one  that  tends  to 
make  the  cost  of  home  greater  and  increase  the  living  ex- 
penses of  the  people  of  the  community,  as  to-day  the  work 
of  a  laundry  is  absolutely  necessary  and  its  work  cannot 
be  performed  in  the  individual  homes  of  the  people  of 
the  communities. 

When  you  consider  these  facts,  gentlemen,  we  appeal  to 
you  and  ask  that  we  either  be  put  on  the  same  basis  as 
manufacturers  or  that  the  manufacturers  bear  their  share 
of  the  tax  and  therefore  reduce  it  very  largely  from  what 
it  is  now. 

By  Mr.  Brown : 

Q.  Your  contention  is  that  the  various  manufacturing 
companies  should  be — your  protest  is  because  the  other 
corporations  are  not  in  the  same  position  as  you?  They 
produce  something  for  the  general  wealth  of  the  com- 
munity ? 

A.  Are  we  not  doing  that,  too?  They  buy  coal  and  use 
coal,  but  in  addition  to  that  we  do  something.  It  seems 
to  me  that  the  question  is  on  the  tax.  They  receive  certain 
privileges  and  certain  benefits  by  this  corporate  tax.  They 
should  be  as  able  to  pay  it  as  we  are.  I  see  no  reason 
why  one  concern  should  pay  that  tax  and  some  others 
not.  It  seems  to  me  that  when  a  tax  is  levied  and  it  is  a 
corporate  tax,  it  should  apply  to  all  corporations. 

Q.  What  is  the  sentiment  in  this  community  on  this 
subject? 

A.  I  have  never  taken  up  the  subject,  for  the  reason 
that  this  is  a  manufacturing  community  and  naturally  they 
will  not  take  up  anything  that  will  interfere  with  them. 
In  Ohio  the  corporate  there  is  one-half  of  one  mill  instead 
of  five  mills.  For  instance,  last  year  we  paid  the  Com- 
monwealth about  $750,  and  yet  with  all  the  millions  in- 
vested in  this  county,  in  manufacturing,  on  the  same  tax, 
they  paid  nothing  on  their  capital  stock. 

Q.  Does  this  tax  bear  heavily  upon  your  interests? 


799 

A.  As  I  say,  last  year  we  paid  $750,  which  I  believe 
was  a  very  heavy  tax. 

Q.  You  think  that  is  out  of  proportion,  do  you? 
A.  Yes,  sir. 

Q.  What  do  you  think  would  be  a  fair  tax? 
A.  I  wouldn't  object  to  one  mill. 

Q.  You  wouldn't  object  to  paying  the  same  tax  if  the 
others  pay  the  tax  the  same  as  you  ? 

A.  No,  we  do  not.  1  remember  some  years  ago  the  Park 
Steel  Company  had  12  million  dollars  worth  of  property, 
and  they  did  not  pay  a  cent  of  capital  stock  tax.  They 
were  only  three  squares  from  us,  and  we  paid  $350.  We 
were  employing  at  that  time  more  hands  than  they  were  in 
proportion  to  the  capital  invested.  I  understand  their 
labor  was  only  perhaps  10  per  cent,  of  their  entire  output. 
We  use  machinery  the  same  as  manufacturers. 

Q.  You  don't  think  that  the  same  factory  with  the  same 
machinery  and  the  same  people  making  shirts  would  be  in 
any  different  position  than  you  laundrying  shirts? 

A.  I  don't  see  a  great  deal. 

Q.  Considering  the  general  welfare  of  the  community? 
A.  I  do  not. 

Q.  You  would  impose  a  similar  tax  on  all  corporations? 

A.  Well,  what  I  think  is  right  is  that  a  tax  be  imposed 
on  all  corporations,  and  if  we  couldn't  have  it  that  way 
we  would  like  to  be  put  in  the*  same  class  as  manufactur- 
ing corporations. 

Q.  You  are  satisfied  with  the  present  rate? 
A.  No,  if  you  put  up  the  tax  on  manufacturing  corpora- 
tions, it  would  be  reduced  very  much. 

Q.  Can  you  give  us  the  sentiment  of  your  people  re- 
garding the  appropriations  of  money  to  hospitals  and 
private  institutions  ? 

A.  As  far  as  I  know  there  is  no  objection  to  it. 

Q.  Do  you  think  the  State  money  is  wisely  used? 


800 

A.  So  far  as  the  matter  has  been  discussed  they  all  think 
that  way. 

By  Mr.  Moyer: 

Q.  Do  you  think  there  are  too  many  hospitals  in  this 
city? 

A.  I  think  not.    I  do  not  think  there  are  enough. 

Q.  It  has  been  said  that  there  are  1,000  unoccupied  beds 
in  the  hospitals — what  would  you  say  as  to  such  con- 
ditions ? 

A.  I  don't  believe  that  condition  exists  all  the  year 
around,  but  I  have  been  informed  by  physicians  that  there 
were  times  when  they  could  not  properly  take  care  of  poor 
people  that  sought  entrance  to  the  hospitals.  Of  course, 
when  the  weather  is  mild,  there  is  not  as  much  demand 
for  hospitals  as  there  is  during  the  winter  months.  I  do 
not  think  Pittsburgh  has  any  too  many  hospitals. 

By  Mr.  Brown : 

Q.  Do  the  factories,  as  a  rule,  contribute  to  the  hospitals  ? 
A.  That  I  couldn't  t*ll  you. 


801 


LEE  S.  SMITH,  President  of  the  Chamber  of  Commerce 
of  Pittsburgh. 

Gentlemen:  So  far  as  the  Chamber  of  Commerce 
is  concerned,  it  has  not  said  much  on  this  subject, 
it  is  a  subject  which  will  require  a  great  deal  of 
deliberation.  We  realize  that  it  is  most  important  and 
we  hope  at  an  early  date  to  have  a  meeting  and  give  a 
report  to  the  Commission.  We  asked  the  Commission  to 
come  here  and  learn  as  much  as  you  could. 

By  Mr.  Brown : 

Q.  Mr.  Smith,  does  the  Chamber  of  Commerce  repre- 
sent all  the  manufacturing  interests  of  the  City  of  Pitts- 
burgh ? 

A.  I  think  so. 

Q.  What  other  interests? 

A.  Manufacturing,  mercantile,  professional,  we  have  no 
limitations,  lawyers,  ministers  and  merchants  and  every- 
body else. 

Q.  Is  it  your  thought  that  your  association  will  take 
some  definite  action  on  the  subject? 

A.  I  think,  yes.  I  would  say,  Mr.  Brown,  that  the 
Chamber  of  Commerce  of  Pittsburgh  devotes  its  time  to 
civic  and  public  affairs  instead  of  commercial.  It  is  not 
a  trade  organization  as  most  organizations  of  the  same 
name  are.  We  try  to  help  the  City  Government. 

Q.  We  have  received  a  number  of  letters  from  all  over 
the  State,  other  than  manufacturing  interests,  stating  that 
manufacturing  corporations  ought  to  be  taxed.  In  other 
words,  that  the  exemption  under  the  Act  of  1885  ought 
to  be  removed. 

A.  Yes. 

Q.  Now,  I  had  hoped  when  we  came  here  that  there 
would  be  some  definite  position  taken  by  the  manufactu- 
40 


802 

rers  here  so  as  to  give  the  Commission  some  information 
and  data  which  they  could  take  into  consideration 
with  the  other  sentiment  that  has  been  sent  from  all  over 
the  State. 

Meeting  adjourned  at  12.30  P.  M.    Hearings  closed  at 
Pittsburgh. 


803 


Public  meeting  of  the  Committee  held  in  the  Government 
Building,  Common  Pleas  Court  Room,  Williamsport, 
Penna.,  on  Friday  morning,  April  8,  1910,  at  10  A.  M. 

Present : 

GABRIEL  H.  MOYER, 

Vice  Chairman,  Sec'ty,  Presiding. 
WILLIAM  H.  KEYSER, 
JAMES  F.  WOODWARD, 

of  the  Committee; 
FRANCIS  SHUNK  BROWN,  ESQ., 

Counsel. 

The  session  was  given  up  to  the  State  Grange.  The 
State  Grange  was  represented  in  the  session  by  State 
Master  W.  T.  Creasy,  Leonard  Rhone,  of  Centre  Hall ;  W. 
F.  Hill,  of  Huntingdon ;  E.  B.  Dorset,  of  Mansfield ;  J.  T. 
Ailman,  of  Thompsontown ;  A.  W.  Dennison,  A.  Kely,  and 
George  Moscrip,  of  Towanda;  John  A.  McSparran,  of 
Furniss,  Lancaster  county,  and  A.  Nevin  Detrich,  of 
Chambersburg. 

The  Chairman : 

The  general  purposes  of  this  Committee  for  which  it  was 
created  have  been  fully  set  forth  in  the  circular  letter  sent 
out  by  the  Committee  and  which  many  of  you  have  re- 
ceived. We  hardly  think  it  necessary  that  anything  more 
may  be  said  in  this  connection.  We  will  proceed  to  hear 
the  State  Grange  of  Pennsylvania.  We  understand  they 
are  quite  numerously  represented  to-day. 

By  Mr.  Creasy : 

Mr.  Chairman,  and  gentlemen  of  the  Commission: 

I  take  great  pleasure  in  introducing  to  you  the  Hon. 

Leonard  Rhone,  of  Centre  Hill. 


804 

Mr.  Leonard  Rhone : 

Mr.  Chairman,  and  gentlemen  of  the  Committee  of  the 
Senate  and  House  of  Representatives  of  Pennsylvania: 
We  appear  before  you  as  a  Committee  of  the  Pennsyl- 
vania State  Grange,  to  represent  and  set  forth  certain 
conditions  that  confront  the  farmers  and  real  estate  own- 
ers of  the  State  of  Pennsylvania,  which  are  brought 
about  by  revenue  laws  enacted  by  the  Commonwealth,  from 
time  to  time,  as  the  conditions  of  the  Commonwealth  re- 
quire. In  the  progress  of  development,  legislation  is 
likened  unto  most  any  business — conditions  that  suited 
thirty  years  ago  do  not  apply  now.  Consequently,  the 
Commonwealth  must  remodel  its  laws  so  as  to  comply 
with  the  needs  and  necessities  of  the  Commonwealth. 

That  I  may  not  take  up  too  much  of  your  time  this  morn- 
ing in  presenting  our  side  of  the  case,  we  have  prepared  a 
statement  in  writing  of  the  conditions  as  we  find  them, 
taken  from  State  reports ;  and  I  would  ask  Mr.  James 
McSparran,  of  Lancaster  county,  to  read  that  report  be- 
fore we  proceed  to  make  our  argument. 

Mr.  James  McSparran  (reading)  : 

We,  farmers  and  citizens  of  Pennsylvania,  appointed  a 
committee  by  the  Pennsylvania  State  Grange,  Patrons  of 
Husbandry,  authorized  to  address  your  honorable  Com- 
mittee, herewith  set  forth  certain  discriminations  and 
hardships  imposed  upon  real  estate,  farm,  and  home  owners 
by  the  unequal  and  unjust  tax  laws  of  Pennsylvania  which 
exact  from  real  estate  appraised  for  taxation  at 
$4,209,076,056  a  tax  of  $77,568,406  annually,  or  an  average 
of  18  mills  on  the  dollar,  while  under  the  authority  of  the 
same  laws  only  $22,184,129  are  collected  from  per- 
sonal and  corporate  property  which  is  appraised  at 
$7,109,086,575,  or  an  average  tax  of  only  3J  mills  on  the 
dollar. 

In  addition  to  the  foregoing  discrimination  against  real 
estate,  cited,  the  counties  are  required  to  pay  direct  to  the 
State  $9,539,311  (Report  of  Auditor  General,  page  2). 


805 

It  may  be  contended  by  some  that  real  estate  is  under- 
valued for  taxation.  So  is  personal  and  corporate  property 
to  a  much  larger  extent,  as  indicated  by  the  statistical  re- 
ports of  the  Commonwealth. 

This  subject  was  fully  investigated  by  the  Pennsylvania 
Tax  Conference  a  few  years  ago.  A  complete  record  was 
made  from  the  books  of  the  County  Commissioners  of  the 
assessed  value  of  real  estate  for  taxation  and  what  lands 
actually  sold  for  in  the  market  which  clearly  indicated 
that  real  estate  was  assessed  for  fully  75  per  cent,  of  its 
selling  price  in  the  several  counties  of  the  State,  while 
personal  and  corporate  property,  according  to  the  statis- 
tical reports  of  the  State  and  taxes  collected,  are  not  as- 
sessed at  more  than  50  per  cent,  of  their  market  value. 

Take,  as  an  example,  the  appraised  market  value  of 
manufacturing  plants  in  Pennsylvania,  which  is  stated  at 
$1,126,406,543  (Report  of  Secretary  of  Internal  Affairs, 
1908  (part  3,  page  301),  while  its  estimated  appraised 
value  for  taxation  is  only  $155,088,250,  and  taxes  paid 
$948,351  (Report  Auditor  General,  1908,  page  214)  ;  so 
that  if  there  is  any  under-valuation  of  property  for  taxa- 
tion it  applies  more  forcibly  to  personal  and  corporate 
property  than  it  does  to  real  estate. 

When  the  Legislature  enacted  laws  changing  the  finan- 
cial policy  of  the  State,  it  exempted  personal  and  cor- 
porate property  from  local  taxation  and  made  it  taxable 
wholly  for  the  support  of  the  Department  of  State,  and 
then  in  return  made  real  estate  taxable  wholly  for  county, 
city  and  local  governments. 

When  this  policy  was  inaugurated  by  the  State,  the 
wisest  statesmen  did  not  foresee  the  enormous  growth  of 
the  value  of  personal  and  corporate  property,  which  now 
has  reached  the  prodigious  sum  of  over  $7,109,086,575. 

In  the  race  of  development,  personal  and  corporate  prop- 
erty has  outstripped  real  estate  by  over  $2,900,000,000. 

During  the  same  period  the  taxes  on  real  estate  have 
increased  to  $77,568,406,  while  on  personal  and  corporate 


806 

property  the  taxes  have  fallen  behind  real  estate  more 
than  $55,000,000. 

We  might  cite  numerous  cases  of  how  the  discrimination 
affects  the  home  owner,  but  we  will  give  only  a  few  illus- 
trations of  the  situation. 

Take  two  citizens  of  the  Commonwealth;  one  buys  a 
home  for  $1,000  and  is  required  to  pay  a  tax  from  $20  to 
$30  for  the  support  of  schools,  roads,  poor,  etc.  The  other 
invests  his  $1,000  in  personal  property  bonds  and 
mortgages  and  is  taxed  $4  for  the  support  of  the  State 
and  nothing  for  the  home  government,  the  benefit  of  which 
he  enjoys  equally  with  the  other. 

This  unjust  discrimination  is  authorized  by  the  laws  of 
Pennsylvania,  a  republic  that  counsels  its  people,  "To  love 
mercy  and  do  justice."  "We,  therefore,  appeal  to  your 
honorable  Committee  of  our  State  Government  to  carefully 
investigate  this  complaint  of  the  farmers,  home-owners 
and  tenants  of  Pennsylvania. 

RECAPITULATION. 

HOW  THE  TAX  ACCOUNT  STANDS  IN 
PENNSYLVANIA. 

The  aggregate  appraised  value  of  real  estate  in  Penn- 
sylvania is  $4,209,076,056. 

The  taxes  paid  by  real  estate  is  $77,568,406. 

Average  rate  of  taxation  on  real  estate,  18  mills. 

Appraised  value  of  personal  and  corporate  property, 
$7,109,086,575. 

Taxes  paid  on  personal  and  corporate  property,  after 
deducting  commissions,  licenses  and  other  miscellaneous 
sources  of  income,  amounting  to  $9,539,311.49,  leaves  a 
tax  on  personal  and  corporate  property  of  only  $16,313,237. 

Average  rate  of  taxation  on  personal  and  corporate  prop- 
erty, 3J  mills. 

If  personal  and  corporate  property  were  taxed  at  the 
same  average  mill  rate  as  real  estate  would  be  taxed  under 
an  equitable  arrangement,  crediting  licenses,  fees,  com- 


807 

missions,  etc.,  to  personal  property  amounting  to 
$9,539,311.49,  personal  property  would  be  required  to 
pay  $68,461,641  instead  of  $16,313,237,  so  that  an  average 
rate  of  10  mills  would  provide  all  the  revenues  necessary 
to  administer  all  the  divisions  of  the  State  Government. 

Crediting  to  personal  and  corporate  property  commis- 
sions, licenses,  and  other  miscellaneous  sources  of  income, 
amounting  to  $9,539,311.49,  would  make  a  total  of 
$78,000,952  as  the  share  of  personal  property. 

If  taxes  were  collected  equitably  real  estate  would  be 
required  to  pay  only  $46,092,836,  instead  of  $77,568,406, 
or  a  saving  to  the  real  estate  owners  annually  of 
$31,475,570. 

The  real  estate  owners  are,  annually,  grossly  robbed  of 
$31,475,570.  Fourteen  millions  of  this  amount  is  directly 
extorted  from  the  farmers  and  seventeen  millions  from 
residents  in  cities  and  towns,  whether  they  be  owners  or 
tenants.  It  is  this  policy  of  the  State  that  has  driven  away 
from  the  farms  and  rural  communities,  according  to  the 
last  census  report,  over  one  hundred  thousand  people  from 
twenty-two  counties  of  the  State. 

To  correct  these  discriminations  against  the  farm  and 
home  owners  of  Pennsylvania,  we  respectfully  insist  that 
the  State  either  assume  a  larger  proportion  of  the  cost  of 
the  local  governments  or  give  the  local  governments  au- 
thority to  tax  personal  and  corporate  property  in  each 
unit  of  government. 

The  State  could,  without  any  detriment  to  its  own 
finances,  remit  to  the  counties  the  $9,539,311  now  collected 
by  the  State  from  the  counties.  And  in  all  justice,  the 
State  should  pay  the  minimum  wages  of  public  school 
teachers,  for  the  minimum  term,  which  would  assist  the 
local  governments  upwards  of  $14,000,000.  And  could 
further  relieve  the  local  governments  by  appropriating 
a  minimum  sum  per  mile  to  the  counties  and  townships 
for  road  purposes  equal  to  100  per  cent,  of  the  road  taxes 
paid  in  each  township,  limiting  the  amount  to  twenty-five 


808 

(25.00)  dollars  per  mile;  and  relieve  the  counties  and 
townships  of  the  partnership  business  in  constructing 
State  roads.  Let  the  State  assume,  with  the  aid  of  the 
National  Government,  the  entire  construction  of  inter- 
State  and  inter-county  roads. 

If  there  are  not  sufficient  revenues  for  the  State  Govern- 
ment, an  additional  tax  of  one  mill  could  be  placed  on  all 
personal  and  corporate  property  (without  any  hardship), 
with  a  small  tax  on  the  gross  productions  of  mines,  oil  and 
gas  wells,  and  similar  enterprises. 

Besides,  there  are  numerous  other  sources  from  which 
revenues  might  be  derived,  such  as  manufacturing  com- 
panies. 

If  the  State  treated  the  agricultural  class  with  justice 
and  equity,  the  farmers  would  be  contented  in  their  vo- 
cation, and  Pennsylvania  would  have  more  prosperous  and 
happy  agricultural  communities,  which  are  the  main-stay 
of  the  prosperity  of  our  Commonwealth. 

In  proof  of  the  correctness  of  the  foregoing  statements, 
we  herewith  sumbit  a  tabular  statement  drawn  from  the 
official  reports  of  the  State  Government. 
Respectfully  submitted, 

WILLIAM  T.  CREASY, 

LEONARD  RHONE, 

W.  F.  HILL, 

S.  S.  BLYHOLDER, 

A.  M.  CORNELL, 

JOHN  A.  McSPARRAN, 

THOS.  SHARPLESS, 

H.  G.  TEAGARDEN. 

A  tabulated  statement  of  the  appraised  value  of  real 
estate,  corporate  and  personal  property  for  purposes  of 
taxation;  amount  of  taxes  paid  and  average  mill  rate  of 
each  subject,  with  a  statement  of  the  actual  cost  of  State, 
city,  county,  borough  and  township  governments  of  Penn- 
sylvania for  1908,  latest  reports  available.  Compiled  under 


809 

the  direction  of  the  Legislative  Committee  of  the  Penn- 
sylvania State  Grange  from  the  official  State  reports  of  the 
Auditor  General,  State  Treasurer,  Secretary  of  Internal 
Affairs,  Commissioner  of  Banking  and  Insurance  Commis- 
sioner, citing  the  volume  and  pages  from  which  the  facts 
are  drawn.  By  Leonard  .Rhone,  Past  Master  of  the  Penn- 
sylvania State  Grange.  This  tabulated  statement  will 
be  used  in  our  argument. 

Mr.  Leonard  Rhone,  addressing  the  Committee : 

Mr.  Chairman :  The  appraised  value  of  the  capital  stock 
of  corporations,  banks  and  personal  property  has  been 
taken  from  the  Report  of  the  Auditor  General  of  the  Com- 
monwealth, and  there  should  be  no  question  as  to  the  cor- 
rectness of  the  statement  along  that  line,  because,  being 
computed  by  the  Auditor  General,  the  accounting  officer  of 
the  State,  they  should  be  undoubtedly  correct.  We  have 
taken  the  amount  of  tax  paid  as  reported  by  the  Auditor 
General,  and  computed  the  mill  rate.  This  is  not  the 
method  of  the  State  in  collecting  the  tax,  because,  taken  in 
the  case  of  the  corporation,  the  tax  is  five  mills  upon  the  ap- 
praised value  of  the  capital  stock  and  four  mills  upon  the 
assessed,  so  that  the  mill  rate,  as  computed  here,  is  simply 
taking  the  amount  of  capital  stock  and  the  tax  paid.  We 
do  this  so  as  to  be  able  to  make  an  intelligent  comparison 
with  the  methods  by  which  real  estate  is  appraised  and  as- 
sessed. Some  of  this  property,  such  as  railroads  and  other 
great  corporations,  we  have  taken  the  statement  from  the 
report  of  the  Secretary  of  Internal  Affairs,  as  to  capital 
stock  represented  in  these  great  industries  that  are  re- 
ported by  volume  4  of  the  report  of  the  Secretary  of  In- 
ternal Affairs.  Therefore,  they  are  presumed  to  be  correct. 
The  taxes,  as  I  have  said,  were  taken  from  the  report  of  the 
Auditor  General,  and  the  mill  rate  computed.  As  to  the 
capital  stock  of  national  banks,  we  have  taken  the  state- 
ment from  the  report  of  the  Comptroller  of  the  Currency. 
As  to  the  amount  of  tax  paid  in  the  State  of  Pennsylvania, 


810 

we  have  taken  the  statement  from  the  report  of  the 
Auditor  General  and  computed  the  mill  rate ;  the  same  with 
saving  funds,  State  banks  and  other  private  institutions. 
As  to  insurance  companies,  we  have  taken  the  capital  stock 
from  the  report  of  the  Insurance  Commissioner,  and  the 
amount  of  tax  paid  from  the  Auditor  General's  report, 
and  computed  the  mill  rate;  so,  in  our  statement,  these 
are  not  mere  assertions,  but  they  are  confirmed  by  these 
reports. 

The  value  of  the  personal  and  corporate  property,  as 
you  will  observe  from  the  report,  as  read,  aggregates  over 
seven  billions  of  dollars.  This  was  not  the  condition  in 
seventy-four,  at  the  time  of  the  adoption  of  the  new  Consti- 
tution. Prior  to  that  time  all  real  estate  was  assessable 
for  State  purposes,  and  the  laws  then  were  changed  so 
as  to  exempt  real  estate  from  taxation  for  the  State  and 
exempting  personal  property  from  taxation  for  local  gov- 
ernment, and  at  that  time  the  conditions  were  nearly  equal, 
and  there  was  no  hardship.  This  is  where  the  argument 
comes  in;  what  suited  thirty  or  forty  years  ago  does  not 
apply  to-day  no  more  than  changes  apply  in  manufactur- 
ing or  any  other  industries.  Therefore,  the  policy  of  the 
State  is  hardship  after  hardship  to  the  real  estate  owners. 
Where  is  there  any  reason  if  a  man  has  a  thousand  dol- 
lars invested  in  a  house,  that  he  should  pay  twenty,  or 
thirty,  or  forty  dollars  tax ;  and  another  man  in  the  same 
town  who  has  his  thousand  dollars  invested  in  bonds  and 
mortgages  and  only  has  to  pay  a  tax  of  four  dollars  ?  The 
person  who  invests  his  money  in  a  home,  helps  to  build 
up  the  town,  making  it  habitable,  supports  the  schools, 
the  streets  and  the  poor,  is  more  important  to  that  com- 
munity than  the  man  who  loans  his  money.  I  know  of 
persons  who  draw  salaries  of  five  thousand  dollars  a  year 
who  are  assessed  at  five  hundred  by  the  County  Commis- 
sioners— put  in  that  class.  Attorneys  who  possibly  have 
an  earning  of  from  five  to  ten  thousand  a  year  are  assessed 
in  the  class  of  two  hundred  and  fifty  dollars.  Then,  other 


811 

attorneys  who  are  just  starting  in  business,  they  are  as- 
sessed in  the  same  way.  There  is  no  justice  in  that  con- 
dition. It  is  a  discrimination  in  favor  of  the  strong  against 
the  weak.  And  at  all  events,  it  is  the  business  of  the  Com- 
monwealth to  see  that  justice  is  done  between  its  citizens 
and  its  industries.  It  is  as  important  to  the  prosperity  of 
our  State  that  we  should  have  prosperous  farms,  pros- 
perous manufacturing  plants  and  prosperous  enterprises 
of  other  kinds,  as  it  is  to  have  these  great  moneyed  institu- 
tions that  are  making  an  average  of  7  per  cent,  on  their 
capital,  when  the  farmer  cannot  earn  on  an  average,  down 
on  his  farm,  more  than  3  per  cent.  This  is  the  condition 
that  confronts  them.  It  occurs  to  us  to  urge  the  govern- 
ment to  so  change  these  conditions  as  to  enable  us  to  keep 
our  people  on  the  farms. 

What  is  the  condition  to-day  at  the  death  of  the  head 
of  a  family  because  of  these  harships?  The  estate  is  sold 
to  strangers,  and  the  widows  and  orphans  are  driven 
out  to  become  clerks  in  your  City,  and  to  seek  positions  of 
that  kind,  because  they  cannot  hold  the  homestead  and 
they  have  not  sufficient  earnings  ahead  to  engage  in  busi- 
ness themselves.  This  side  of  the  question  should  be  looked 
into  as  well  as  the  other  side,  and  we  hope  that  your  Hon- 
orable Committee  will  inquire  into  this  statement,  provided 
to  us  by  the  State  Reports  and  showing  that  we  have 
made  no  misrepresentations. 

We  are  here  as  business  men,  not  as  reformers.  We  do 
not  claim  the  world  is  all  wrong.  We  are  here  simply  as 
business  men  to  ask  you  to  correct  what  is  wrong  and 
make  it  possible  for  these  homesteads  of  Pennsylvania  to 
continue  to  their  descendants  from  generation  to  genera- 
tion, and  we  will  have  the  most  prosperous  and  happy 
Commonwealth  of  any  State  of  this  great  Union. 

Take  the  State  of  New  York — take  the  railroads  of 
Pennsylvania  that  run  from  Pennsylvania  into  New  York 
State — when  they  cross  the  line  they  are  assessed  at 
$15,000  per  mile  and  three  tax  levies  upon  the  same  roads 


812 

that  don't  pay  anything  to  the  local  Government.  They 
are  taxed  for  the  support  of  the  State  and  the  county  and 
for  the  townships  and  the  boroughs.  If  these  large  con- 
cerns of  capital,  who  are  running  the  transportation  busi- 
ness of  our  country,  can  do  this  in  New  York  they  cer- 
tainly should  be  able  to  do  it  here  in  Pennsylvania.  Take 
people  who  live  on  the  line  between  Pennsylvania  and  New 
York.  I  have  been  told  that  the  tax  on  Pennsylvania  farms 
is  fully  50  per  cent,  greater  than  in  New  York.  If  you 
cross  to  the  State  of  Ohio  the  same  condition  prevails. 

Then,  again,  as  to  manufacturing  plants.  Where  is 
the  constitutionality  of  exempting  the  capital  stock  of  a 
manufacturing  company  when  the  Constitution  of  the  Com- 
monwealth clearly  states  that  the  tax  shall  be  uniform  upon 
the  same  class  of  subjects?  And  yet,  under  the  laws  of 
Pennsylvania,  they  exempt  one  of  the  most  prosperous  en- 
terprises and  one  of  the  largest  and  greatest  enterprises 
that  we  have  in  our  State  from  taxation  on  its  capital 
stock.  If  they  can  pay  this  tax  in  New  York — if  manu- 
facturing companies  can  pay  this  tax  in  New  York,  why 
are  they  so  prosperous  in  New  York?  It  is  true  we  have 
not  any  of  the  small  manufactories  that  they  have  in 
New  York  of  agricultural  implements,  but  the  great  iron 
and  steel  industries  are  all  nearly  centralized  in  Penn- 
sylvania, and  we  feel  proud  that  we  have  such  prosperous 
business  conditions  along  that  line.  But  where  is  the 
necessity  of  men  accumulating  their  millions  and  then  giv- 
ing them  away  for  libraries  or  building  auditoriums  for 
great  institutions?  They  are  simply  appropriating  our 
money;  they  have  failed  to  pay  that  which  they  should 
to  the  State  from  which  they  derive  their  authority.  It 
is  the  business  of  the  Commonwealth  to  see  that  these 
wrongs  are  corrected. 

"When  we  buy  a  reaping  machine  that  might  cost  sixty 
dollars,  until  it  reaches  the  consumer,  the  farmer,  we 
must  pay  one  hundred  and  twenty  dollars ;  so  it  takes  1 00 
per  cent,  of  the  amount  to  put  this  machine  into  the 


813 

market.  This  is  altogether  unnecessary,  because  the  man- 
ufacturers could  adopt  a  more  liberal,  more  business-like 
method  of  reaching  their  consumer;  and  this  applies  to 
the  whole  matter  throughout.  It  is  these  wrongs  that  we 
ask  you  to  correct.  There  is  a  great  deal  we  could  add  to 
the  subject,  but  1  stand  here  as  a  farmer  to  insist  upon  a 
correction  of  these  outrageous  impositions  upon  the  agri- 
cultural people  for  the  last  thirty  years.  I  have  never 
engaged  in  any  other  enterprise,  and  I  would  not  be  here 
to-day  if  it  was  not  to  plead  the  case  of  these  people. 
If  they  are  not  accomplished  students  in  the  art  of  public? 
speaking  and  public  reading,  they  are  good  citizens  and 
useful  citizens  necessary  to  the  Commonwealth.  Weed  out 
the  farmer  and  what  would  the  great  State  of  Pennsyl- 
vania be?  Consequently,  we  ask  you  to  look  carefully  into 
the  welfare  of  these  people  and  try  to  retain  them  on  their 
farms.  People  of  the  rural  districts,  it  is  said,  are  gen- 
erally driven  to  the  city  because  of  the  higher  salaries 
they  get  there;  but  the  one  great  cause  is,  as  I  have  said, 
that  the  parents  of  these  young  men  and  young  women 
have  not  been  able  to  earn  enough  to  start  them  up  in 
business;  and  when  the  head  of  the  family  dies,  the  home- 
stead goes  into  the  hands  of  strangers,  and  thus  good  citi- 
zens— these  useful  people  to  the  several  communities,  are 
driven  out.  Who  takes  their  places?  Capitalists  buy 
these  farms  at  50  per  cent,  of  their  worth  and  they  put 
on  these  farms  mostly  people  from  Germany  or  from 
Holland,  and  those  industrious  and  enterprising  people  who 
come  from  foreign  countries.  A  very  few  have  Irish  and 
Italians  on  their  farms,  but  Germans  invariably — Penn- 
sylvania is  made  up  of  German  stock.  It  becomes  us  as  a 
State  to  see  that  these  people  are  protected  in  their  rights, 
If  there  is  any  slavery  more  detestable  than  the  Southern 
slavery — that  is  to  say,  to  the  negroes  in  the  South,  it  is 
this  slavery  to  the  Pennsylvania  farmer.  Consequently, 
we  ask  you  to  stop  this  condition  of  things. 

I  thank  you  for  the  opportunity  of  appearing  before  you. 
There  are  others  in  the  Committee  who  wish  to  be  heard. 


814 

By  Mr.  Brown: 

Q.  Mr.  Rhone,  we  have  been  informed  that  the  appraised 
value  of  the  manufacturing  plants  in  Pennsylvania  aggre- 
gates about  three  billions.  You  fix  the  figures  at 
$1,126,000,000.  That  would  give  you  a  little  higher  figure 
to  start  with.  Is  the  trouble  with  the  present  laws  the  fail- 
ure to  enforce  the  law?  Take,  for  instance,  the  collection 
of  the  personal  property  tax? 

A.  That  is  one  of  the  laws  we  try  to  enforce.  I  don't 
believe  in  talking  of  our  public  servants  as  being  rascals. 
I  think,  as  a  rule,  that  our  public  officers  try  honestly  to 
enforce  the  laws  as  they  find  them. 

Q.  Take  the  personal  property  tax.     Is  it  the  failure  to 
collect  more  or  the  failure  of  the  people  to  report  more? 
A.  That  might  be. 

Q.  Isn't  the  present  law  sufficient?  We  have  a  law  tax- 
ing personal  property.  You  think  the  State  should  appro- 
priate more  money  to  the  counties? 

A.  Yes. 

Q.  If  the  present  laws  for  taxing  personal  property  were 
enforced  (I  assume  they  are  all  thoroughly  enforcable) 
there  would  be  more  income  received  ? 

A.  There  is  the  corporations. 

Q.  Let  us  take  the  personal  property  tax.  Have  you 
anything  to  suggest  as  to  a  better  method  of  compelling  our 
people  to  report  the  moneys  they  have  at  interest?  Have 
you  anything  to  suggest  as  to  how  we  could  increase  the 
present  property  return? 

A.  I  don't  question  it  at  all.  I  have  shown  you  in  the 
case  of  manufacturing  companies,  the  appraised  value 
as  given  by  the  report  of  the  Secretary  of  Internal  Affairs, 
and  the  value  upon  which  the  counties  are 

Q.  How  can  you  enforce  the  present  laws  more  effectively 
so  as  to  obtain  a  fairly  average  return  of  personal  prop- 
erty? 

A.  Require  the  stamp  of  the  assessor  upon  papers  to 


815 

make  the  interest  collectable,  and  it  will  bring  forth  every 
dollars. 

Q.  Have  you  gentlemen  given  any  thought  as  to  the 
method  of  appointing  or  electing  assessors  in  the  several 
districts — whether  they  should  be  elected  by  the  people  or 
subject  to  local  interests,  or  appointed  by  the  State? 

A.  We,  as  American  citizens,  prefer  to  select  our  own 
people. 

Q.  Some  of  the  County  Commissioners  who  appeared 
before  us  objected  to  that.  They  say  these  men  are 
subject  to  local  influence,  and  in  order  to  secure  their  next 
election,  would  make  trifling  returns.  We  heard  them  from 
Delaware,  Montgomery,  etc. 

A.  I  believe  the  people  locally  can  select  people  among 
them  that  are  just  as  honest  as  anyone,  and  just  as  cap- 
able of  making  honest  returns  and  assessments.  If  you 
require  the  stamp  of  the  assessor  on  the  paper  they  will 
bring  forth  every  dollar.  It  is  always  the  small  fellow  that 
we  want  to  extort  more  from.  When  the  railroad  com- 
panies are  rated  at  four  hundred  millions  of  dollars,  why 
don't  you  get  after  them  and  compel  them  to  make  a 
proper  return  of  their  capital?  We  are  not  after  the 
little  fellow.  We  think  the  people  who  have  their  mill- 
ions of  capital  shoud  pay  as  much  on  the  dollar  as  those 
who  have  a  few  thousands. 

Q.  You  tax  trackage,  and  water  tanks,  and  everything, 
according  to  your  idea  ? 

A.  No,  not  necessarily.  You  can  simply  increase  the 
rate  of  tax  upon  the  capital  stock  and  the  rate  of  tax  upon 
their  gross  receipts  within  the  Commonwealth,  or,  if  you  can 
increase  it  on  all  bonds,  without  any  change  of  laws. 

Q.  The  present  law  does  take  into  consideration 
all  these  different  elements  in  fixing  the  appraised  value  ? 

A.  The  capital  stock  of  a  corporation  is  no  measure  of 
the  value  of  the  property.  Many  of  these  corporations 
are  down  for  as  much  as  their  original  capital  is  worth. 


816 

Q.  Your  thought  is  to  tax  their  property,  independent  of 
everything  ? 

A.  Yes,  just  the  same  as  you  tax  the  farmer. 

Q.  Are  you  folks  favorable  to  taxing  mortgages  ? 

A.  We  feel  that  all  classes  of  this  kind  should  be  taxed 
equally  all  the  way  through.  When  the  owner  buys  a 
farm  and  mortgages  it,  the  part  the  owner  has  bought  and 
paid  for  should  be  taxed  to  the  owner,  and  the  other  to 
the  mortgagee. 

Q.  The  theory  is  that  it  is  taxed  to  the  mortgagee.  We 
were  told  in  Philadelphia  that  if  we  taxed  the  manufac- 
turer they  would  simply  add  the  tax  on  the  article  and 
the  farmer  and  everyone  else  would  have  to  suffer  it.  Take 
your  harvesting  machine,  for  instance,  for  which  you  pay 
one  hundred  and  twenty  dollars,  when  it  costs  sixty. 
Don 't  you  suppose  the  manufacturer  added  his  tax  on  that  V 

A.  That  is  taken  for  granted  that  when  you  ask  this 
tax  the  burden  is  shifted  to  somebody  else. 

Q.  Your  thought  is  that  if  a  tax  is  put  upon  the  manu- 
facturing plants  the  farmer  is  willing  to  take  his  chances 
as  to  the  ultimate  result  ? 

A.  Surely.  We  are  not  afraid  to  meet  these  people  and 
fight  it  out  if  you  will  give  us  the  opportunity.  Tax  manu- 
facturing plants  as  you  tax  other  corporations  and  per- 
sonal property.  Place  sufficient  additional  tax  upon  per- 
sonal and  corporate  property  to  bring  it  upon  an  equality 
with  the  mill  rate  on  real  estate,  and  we  are  satisfied. 

Q.  What  about  taxing  other  articles  that  you  have  not 
mentioned  here  that  are  not  already  taxed  ? 

A.  There  are  some  thirty  thousand  business  enterprises 
making  returns  to  the  Commonwealth.  We  cannot  go 
behind  the  records  of  the  Commonwealth,  because  if  we 
do  we  are  simply  guessing  at  it. 

Q.  What  is  your  thought  as  to  appropriations  of  money 
to  institutions  not  under  control  of  the  State  ?  There  is  a 
very  large  outlay  in  this  connection  ? 


817 

A.  It  is  a  large  outlay  and  it  is  a  source  from  which 
cities  absorb  a  surplus  from  the  State  Treasury.  The 
people  in  the  country  have  no  hospitals,  scarcely,  to  draw 
money  from  the  State  for  that  purpose.  It  is  true  that 
certain  hospitals  will  need  certain  assistance  locally,  and 
we  think  as  a  rule  it  is  no  more  than  charitable  to  take 
care  of  the  unfortunate.  But  here  is  the  condition  that  is 
not  just.  Take  the  great  railroads  and  manufacturing 
plants;  they  furnish  more  people  for  the  hospital  than  all 
the  other  people  in  the  Commonwealth  put  together;  and 
they  should  especially  pay  for  the  people  they  main  and 
put  in  hospitals. 

Q.  "We  have  listened  to  very  eloquent  addresses  of  gen- 
tlemen who  say  land  is  the  only  thing  that  should  be 
taxed  ? 

A.  Yes. 

By  Mr.  Moyer: 

Q.  What  is  your  thought  regarding  the  tax  on  other 
natural  resources?  For  instance,  take  coal? 

A.  That  question  has  just  been  decided  by  the  Supreme 
Court  of  the  United  States  in  Texas  gas.  They  put  a 
gross  income  tax  on  their  oil  wells.  It  was  carried  into 
the  Supreme  Court,  and  the  Supreme  Court  permitted  the 
Commonwealth  of  Texas  to  levy  a  gross  income  tax  on  oil 
wells  and  gas  wells.  You  could  do  the  same  with  mining 
companies. 

Q.  Is  the  Grange  in  favor  of  placing  a  tax  upon  coal  ? 

A.  Yes;  a  gross  income  tax. 

By  Mr.  Brown : 

Q.  About  taxing  inheritances,  Mr.  Rhone — direct  inheri- 
tances— what  is  your  thought  upon  that  subject  ? 

A.  I  am  not  sufficient  of  a  lawyer  to  know  whether  that 
could  be  done. 

Q.  Whether  it  should  be  done ;  whether  it  is  advisable  to 
do  that? 


818 

A.  I  think  we  have  had  laws  on  the  statute  books  of 
the  State  to  the  effect  that  men  of  means  of  the  Common- 
welth  leaving  large  amounts — over  a  certain  amount — are 
liable  to  taxation  for  State  purposes. 

Q.  Now,  as  to  the  question  of  assessment,  Mr.  Rhone, 
does  the— 

A.  The  assessors  never  asks  the  question,  "What  does 
your  farm  bring  in  ? "  That  question  we  are  never  asked ; 
they  come  on  your  farm  and  appraise  it  at  what  they  think 
it  ought  to  be  assessed  at. 

Q.  "What  is  your  experience  of  the  fairness  of  these  as- 
sessments ? 

A.  That  is  a  question  upon  which  there  has  been  a  great 
deal  of  discussion.  No  doubt  some  assessors  will  show 
favoritism  to  their  friends.  In  my  experience,  there  is  no 
gross  discrimination  as  to  farmers  shown.  Take  my 
farm  and  that  of  my  neighbor.  They  are  about  the  same 
number  of  acres  and  are  assessed  at  the  same  valuation. 

Q.  Have  you  made  any  inquiry  as  to  whether  or  not 
this  same  spirit  has  been  shown  respecting  the  taxation  of 
personal  property? 

A.  I  do  not  know  that  it  is  not. 

Q.  As  far  as  your  experience  goes,  there  has  been  no 
preference  shown  an  individual  ? 

A.  No,  there  is  more  discrimination  in  the  valuation  of 
real  estate  in  cities  than  there  is  in  rural  communities, 
because  in  rural  communities  everybody  knows  what  his 
neighbor's  property  is  assessed  at.  In  the  city  a  whole 
black  may  be  assessed  lower  than  another  block  and 
nobody  knows  it  but  the  officers,  and  if  they  are  a  party 
to  it,  of  course,  they  will  not  reveal  it.  We  have  more 
discrimination  in  cities  along  that  line  than  we  have  in 
the  country. 

By  Mr.  Moyer : 

Q.  From  your  experience,  do  you  find  that  the  general 
run  of  assessors  in  the  rural  districts  or  communities  do 
their  duty? 


819 

A.  Yes ;  and  I  don 't  think  there  is  a  better  business  man 
or  farmer  in  Center  county,  where  I  live,  than  the  assessor 
of  our  township.  I  believe  he  is  conscientiously  honest  in 
the  transaction  of  his  business. 

Q.  That  is,  the  assessors  of  your  county,  so  far  as  your 
personal  knowledge  is  concerned  ? 

A.  Yes. 

Q.  The  testimony  before  this  Committee  has  been  to  the 
effect  that  the  assessors  have  been  wilfully  neglectful  of 
their  duty.  That  has  been  very  strongly  brought  out. 

A.  That  is  along  the  very  line  of  the  County  Commis- 
sioners driving  after  the  small  fellow.  Why  don 't  you  drive 
after  these  large  corporations? 

By  Mr.  Brown: 

Q.  You  would  not  call  a  man  who  has  fifteen,  twenty  or 
forty  millions  a  small  man,  would  you? 

A.  No,  sir. 

Q.  Suppose  you  were  told  that  a  man  who  has  ten  mil- 
lions of  personal  property  was  omitted  by  the  assessor, 
what  would  you  say? 

A.  I  would  say  the  assessor  certainly  grossly  neglected 
his  duty  and  would  be  liable  to  be  arranged  before  Court. 

By  Mr.  Boyer : 

Q.  The  testimony  of  the  County  Controller  of  Lancaster 
was  to  the  effect  that  in  that  county  about  five  millions 
failed  to  be  returned  at  all  for  the  purpose  of  taxation  ? 

A.  That  might  all  be. 

Q.  Where  would  the  fault  lie? 

A.  It  might  lie  in  two  places,  one  the  local  assessor  and 
the  other  the  County  Commissioners.  The  County  Com- 
missioners might  indicate  to  the  assessors  what  they  wanted 
them  to  do.  The  assessors,  who  depend  upon  their  political 
support,  are  simply  influenced  by  these  interests. 

By  Mr.  Brown: 

Q.  What  means  would  you  suggest  to  compel  these  people 
to  pay  the  tax  on  their  moneys  at  interest  ? 


820 

A.  Put  the  assessors  stamp  to  it,  and  then  they  can  collect 
the  interest  as  soon  as  it  is  returned.  The  United  States 
Government  did  that  during  the  war. 

By  Mr.  Brown: 

Mr.  Brown:  Have  the  gentlemen  of  the  Committee  any 
more  questions  to  ask  Mr.  Rhone? 

(No  further  questions.) 


821 


HON.  GEORGE  MOSCRIP,  having  been  introduced  to  the 
Committee  by  Mr.  Creasy,  addressed  the  body  as  follows. 

Mr.  Chairman  and  Gentlemen  of  the  Committee:  This 
matter  of  taxation — of  getting  equal  taxation  in  Pennsyl- 
vania— is  one  that  is  affecting  the  people  who  own  real 
estate  more,  perhaps,  than  anybody  else. 

One  of  the  methods  that  has  been  suggested  to  help 
equalize  taxation  is  the  passage  of  an  Act  to  pay  the  min- 
imum salary  for  the  minimum  term  in  the  matter  of  school 
teachers.  If  you  remember,  a  few  years  ago,  somebody 
out  in  Erie  county  discovered  an  Act  that  would  make  all 
the  schools  be  paid  for  by  the  corporations.  On  second 
thought,  I  think  the  people  who  exploited  that  idea,  how- 
ever, found  it  is  not  quite  a  practical  thing.  But  it  is  a 
practical  thing  that  we  pay  all  the  people  who  serve  every 
district  under  a  State  law.  If  we  should  pay  the  minimum 
salary  for  the  minimum  term,  every  district  would  come  in 
in  the  same  way,  so  that  it  is  a  fair  proposition. 

Now,  as  to  the  justice  of  a  law  of  this  kind.  If  we  stop 
to  consider,  we  believe  that  all  property  should  help  to 
support  the  common  school,  and  the  owner  of  corporate 
property  has  exactly  the  same  use  of  the  schools  as  the 
owner  of  real  estate ;  yet,  in  the  State  of  Pennsylvania, 
the  real  estate  people  pay  mostly  all  for  the  support  of 
public  schools.  For  instance,  for  the  last  year — the  year 
ending  June  1,  1909 —  the  entire  cost  of  the  public  schools 
for  the  year  was  $38,523,925.39.  Now,  then ;  the  corpora- 
tions whom  you  have  been  told  have  over  seven  billions 
of  property,  paid  7-J  millions  of  that  thirty  eight  mil- 
lions and  the  real  estate  people  paid  the  other  thirty-one 
millions.  Now  then,  these  people  have  exactly  the  same 
interest  in  the  common  schools  that  the  people  on  the  farms 
have.  The  share  of  the  State  tax  of  the  cities  and  bor- 
oughs is  about  forty  millions — the  owners  of  the  farms 


822 

about  thirty  millions;  that  makes  up  seventy  millions  of 
this  property  that  goes  for  the  support  of  schools,  etc. 
Now,  suppose  we  could  do  something  that  would  regulate 
this  matter  so  that  the  corporations  would  pay  more  than 
the  seven  and  one-half  millions.  Now,  then,  if  we  should 
pass  a  law  making  the  minimum  salary  for  the  minimum 
term  paid  for  by  the  State,  we  would  just  lift  that  much 
money  now  over  the  heads  of  the  real  estate  owners  on 
to  the  corporations ;  and  then  that,  anyway,  would  not  be 
one-half. 

I  took  a  little  trip  up  to  the  State  of  New  York  recently, 
and  I  found  in  one  district — in  one  township — in  New 
York  State  that  a  railway  was  assessed  at  three  hundred 
thousand  and  for  all  local  taxes.  That  is  a  great  help 
to  the  district.  I  don't  like  their  entire  system  as  well  as 
I  do  our  own  system.  In  our  system  the  State  taxes  are 
divided  up  and  the  State  revenues  are  as  nearly  equal 
as  possible;  but  in  that  case,  if  no  railroad  was  in  the 
township  they  would  have  to  pay  a  larger  tax.  I  noticed 
that  in  districts  where  no  railroads  were  the  tax  was  much 
higher.  Where  the  railroads  were,  they  taxed  locally. 

There  are  in  the  State  of  Pennsylvania  34,706  teachers. 
If  we  should  pay  these  teachers  for  the  seven  months — the 
minimum  term — if  we  should  pay  these  teachers  for  the 
minimum  term  at  the  minimum  salary  that  would  run 
approximately  forty-five  dollars  a  month,  possibly  in  a  few 
exceptions  a  little  more  than  that.  That  would  take 
$10,932,390.  Now,  in  the  City  of  Philadelphia  there  were 
4,457  teachers  last  year,  and  their  minimum  salary  is 
fifty  dollars  a  month,  and  this  fifty  dollars  a  month  would 
mean  a  revenue  to  the  City  of  Philadelphia  from  the  State 
of  $1,559,950.  It  would  give  Philadelphia  much  more 
money  than  it  is  getting  now.  They  get  about  $900,000. 

There  is  another  phase,  and  that  is  this:  We  have 
throughout  the  State  of  Pennsylvania  a  good  many  dis- 
tricts that  are  unable  to  maintain  the  minimum  term  for 
the  reason  that  the  tax  limit  is  13  mills  and  these  districts 


823 

are  so  poor  that  the  tax  only  continues  the  term  of  six 
months.  I  say  this  is  a  shame  to  the  State  of  Pennsyl- 
vania; it  is  a  disgrace  to  the  State  of  Pennsylvania  that 
we  should  not  give  the  opportunity  of  the  minimum  term 
to  the  poorest  districts  of  the  State.  If  we  pass  this  law 
it  will  provide  for  these  districts — I  know  it  would.  I 
know  the  poorest  districts  of  Bradford  county  would  be 
well  provided  for. 

Now,  there  is  another  class  of  people  that  the  gentleman 
who  has  preceded  me  has  told  you  about:  That  is  the 
farmer.  I  know  what  the  city  man's  idea  is  of  the  farmer. 
They  think  it  is  the  fellow  they  meet  at  the  State  Fair — 
at  the  County  Fair,  perhaps  up  at  the  front.  Don't  you 
know  that  the  average  country  farmer  is  the  fellow  who 
gathers  his  family  about  him  and  pulls  his  feet  under  the 
table  ?  Take  any  ordinary  township,  this  is  the  condition. 
Now,  then,  the  minimum  salary  for  the  minimum  term 
would  provide  for  every  such  district.  They  would  only 
have  to  pay  the  tax  for  water  power,  repairs,  etc.,  and 
the  teachers,  which  is  the  main  expense,  would  all  be  paid 
for  him  because  the  salary  is  the  minimum  salary  in  these 
districts. 

Now,  could  you  do  anything  better — could  this  Com- 
mission do  anything  better  than  to  recommend  that  this 
law  be  passed  that  would  touch  so  many  people,  and  so 
many  people  who  need  it?  While  you  are  doing  this  you 
will  be  doing  good  to  every  citizen  in  the  Commonwealth. 
As  I  say,  you  will  give  the  City  of  Philadelphia  six  hundred 
thousand  dollars  of  State  money.  Now,  when  you  give 
to  the  City  of  Philadelphia  six  hundred  thousand  dollars 
of  the  State  money,  you  are  doing  something  for  the  home- 
owners of  the  City  of  Philadelphia.  It  was  thought  at 
the  session  of  the  last  Legislature  that  it  would  be  the 
proper  thing  to  build  a  State  highway  from  Philadel- 
phia to  Pittsburgh,  sixty  feet  wide.  I  ask  you  in  all 
consciousness  whether  they  could  not  better  support  a 
measure  that  would  give  their  citizens  the  benefit  of  six 


824 

hundred  thousand  dollars  of  tax  lifted  off  their  homes? 
Someone  told  me  that  every  road  that  goes  out  of  Phila- 
delphia that  is  worth  mentioning  is  a  macadam  road.  I£ 
that  is  so,  who  will  be  benefited  by  these  roads  in  Phila- 
delphia? Men  who  do  not  own  a  horse  or  an  automobile 
cannot  get  any  benefit  from  it,  but  every  man  who  owns 
a  home  would  get  the  benefit  of  a  law  of  this  kind.  1 
think  we  cannot  do  this  Commonwealth  any  more  good 
than  by  passing  a  law  of  this  kind,  which  will  touch  every 
county,  and,  therefore,  of  proportionate  benefit  to  all 
the  counties. 

The  teachers'  wages  in  the  State  were  about  eighteen 
millions  of  dollars,  so  you  see  a  large  share  of  this  thirty- 
eight  millions  is  for  teachers'  wages.  But  you  must  re- 
member, the  State  already  provides  for  its  schools.  They 
talk  about  the  magnificent  appropriations;  you  can  see 
it  all  in  capitals  the  way  they  pronounce  the  word  ''mag- 
nificent;" but,  nevertheless,  gentlemen,  if  we  compare 
the  Commonwealth  of  Pennsylvania  with  other  States,  our 
appropriation  is  not  large ;  if  we  compare  it  with  New 
Jersey,  it  is  not  large. 

As  I  stated,  seven  million  five  hundred  thousand  was 
paid  by  the  corporations  and  the  rest  was  paid  by  the  real 
estate  owners — over  thirty-one  millions  of  dollars. 

In  the  way  I  have  suggested,  all  the  ordinary  districts 
where  there  is  no  high  school  and  where  they  only  have 
the  seven  months'  term,  would  be  well  provided  for. 
Where  there  is  a  term  of  longer  than  seven  months,  that 
would  be  paid  for  by  the  local  authorities;  and  where 
the  teachers  are  paid  more  than  forty  dollars  a  month, 
that  would  be  provided  by  the  local  authorities;  so  it  is 
manifestly  fair.  The  schools  are  for  everybody,  and  every- 
body should  share  in  the  expense.  I  believe  this  Commis- 
sion cannot  do  a  better  thing  than  to  recommend  an  equal- 
ization in  this  matter.  These  schools  are  for  everybody, 
and  all  should  share  in  the  expenses ;  and  if  you  pass  this 
law,  you  go  that  far  toward  this  proposition. 


825 

When  the  appropriation  is  made,  what  should  it  be  for? 
For  some  particular  thing  which  touches  the  few  and  does 
not  touch  the  many?  Now,  in  the  case  of  charities,  that 
is  all  right.  When  you  appropriate  money  for  roads, 
should  it  be  appropriated  for  localities,  or  should  the 
money  be  appropriated  under  a  State  highway  law  ?  The 
State  highway  law  says  there  shall  be  money  appropriated 
to  every  county  in  the  State  according  to  the  miles  of 
roadway.  Where  the  money  is  appropriated,  there  is 
where  it  should  go.  If  it  is  right  for  the  State  to  pay 
entirely  for  a  road  for  the  few  of  the  other  counties,  isn't 
it  right  that  they  should  pay  for  every  locality  in  the  State? 
That  would  be  a  step  toward  the  equalization  of  taxa- 
tion. 

By  Mr.  Brown : 

Q.  All  that  would  require  more  revenue? 
A.  Yes. 

Q.  And  that  revenue  is  to  be  gathered  in  the  way  indi- 
cated by  Mr.  Rhone? 

A.  Now,  a  word  about  that.  The  fact  is  potent  here  to 
every  person  and  to  this  Commission  that  seven  and  a  half 
billions  of  property  only  pays  about  one-third  of  what  is 
required  for  taxation  in  the  State  of  Pennsylvania.  They 
get  all  the  protection  of  the  State ;  these  corporations  en- 
joy the  privileges  of  police  protection  that  is  paid  for  by 
the  State ;  and  yet,  you  must  figure  that  a  little  over  seven 
millions  of  tax  is  paid  by  the  corporations  and  the  balance 
of  about  seventy  millions  have  been  paid  by  the  real  estate 
owners.  Now,  the  real  estate  owners  in  the  boroughs  and 
cities,  what  do  they  own?  Homes.  Is  there  any  income 
from  their  homes?  None  at  all.  And  yet  they  are  taxed 
in  my  own  county  over  3  per  cent,  in  some  districts.  I 
want  to  say,  gentlemen,  that  the  matter  of  just  and  equal 
taxation  is  one  of  the  most  difficult  matters  that  has  ever 
confronted  mankind  in  the  State  of  Pennsylvania.  Take 
the  manufacturing  corporations.  But  I  would  like  to  say 


826 

that  when  you  get  a  Commission  made  up  of  men  like 
this  Commission,  it  seems  there  should  be  some  method 
adopted  within  the  Constitution  to  make  a  concern  with  a 
large  income  pay  a  large  tax.  I  would  like  to  recite  one 
instance  along  this  line:  I  think  it  was  in  1897  that  a 
bill  was  passed  taxing  all  trust  companies  four  mills  on 
the  dollar,  but  at  the  end  of  the  bill  they  made  a  little 
provision  that  instead  of  the  computation  that  it  would 
take  to  find  the  actual  value  of  these  shares,  they  could 
just  pay  10  mills  on  the  par  value  of  these  shares.  Now, 
a  certain  trust  company  in  Pittsburgh  made  its  report  in 
1908  with  a  capital  stock  of  fifteen  hundred  thousand  dol- 
lars; that  made  fifteen  hundred  shares  at  one  hundred 
dollars  a  share.  The  surplus  was  something  like  twenty 
millions  and  the  undivided  profit  was  nine  hundred  and 
ninety-seven  thousand;  and  the  method  of  computation 
suggested  was  that  they  add  the  fifteen  hundred  thousand 
and  the  surplus  and  the  undivided  profits  together  and 
divide  by  the  number  of  shares  and  get  the  value  of  a 
share.  That  is  what  that  would  show.  If  they  had  fol- 
lowed this  they  would  have  paid  into  the  State  one  hundred 
and  five  thousand  dollars.  But  they  did  not.  "When  a 
bank  can  make  so  much  money  that  they  can  divide 
twenty-four  millions  it  is  about  time  they  should  be  gone 
after.  I  have  no  excuse  to  make  for  men  who  do  not  return 
their  property.  The  way  to  tax  them  is  to  make  them  sur- 
render their  money  for  every  dollar  of  it. 


827 


JOHN  A.  McSPARRAN,  of  Furniss,    Lancaster   county, 
Pennsylvania. 

There  are  three  general  principles  that  underlie  taxa- 
tion that  we  feel  are  applied  in  Pennsylvania  and  which 
should  be  remedied  by  a  law  on  our  statute  books.  The 
first  of  these  is  that  the  Pennsylvania  tax  laws  are  in  a 
class  by  themselves.  They  tax  what  is  specified  and  what 
is  not  specified,  goes  untaxed.  It  is  a  proposition  that 
should  be  evident  to  everyone  that  those  who  enjoy  the 
benefits  of  government  should  help  pay  for  the  govern- 
ment, and  that,  as  a  consequence,  all  class  of  property 
should  assist  in  the  payment  of  the  burdens  of  govern- 
ment ;  and  that,  if  there  are  to  be  any  exemptions,  those 
exemptions  should  be  stated  in  a  bill,  and  that  all  other 
property  should  be  subject  to  taxation.  That  our  laws 
has  a  great  weakness  in  this  respect  has  been  brought  out 
particularly  this  morning.  As  it  is  to-day,  the  burden  of 
proof  rests,  as  to  that,  with  the  assessor.  If  a  question  is 
raised  as  to  whether  or  not  that  particular  class  of  prop- 
erty is  liable  to  taxation,  it  is  up  to  the  assessors  to  show 
that  it  is ;  and  he  must  have  the  moral  courage,  as  well  as 
the  information,  to  show  that,  while  possibly  not  just 
mentioned  exactly,  yet  it  would  come  under  some  of  the 
heads  mentioned  by  the  bill.  If  our  assessors  did  not  have 
upon  them  the  burden  of  proof  to  assess  that  property,  it 
would  be  up  to  the  owner  of  the  property  to  show  that 
his  property  came  within  the  limits  of  that  exemption. 
As  a  consequence  there  would  be  a  great  deal  of  work 
taken  off  the  duties  of  the  assessor  in  meeting  these  desired 
and  these  attempts  on  the  part  of  the  owners  of  the  dif- 
ferent classes  of  property  to  escape  taxation.  This  is  in 
operation  in  other  States  of  our  Union.  All  property  is 
supposed  to  bear  the  burdens  of  the  government  and  is 


828 

taxed  unless  exempted ;  and  it  should  be  so  in  the  tax  laws 
of  Pennsylvania.  Those  that  have  the  exemption  that  are 
unconstitutional  should  be  wiped  out.  Our  Constitution 
reads,  Article  9,  Section  one:  "All  taxes  shall  be  uniform 
upon  the  same  class  of  subjects."  Now,  our  tax  laws  in 
Pennsylvania  have  exempted  large  associations  of  capital, 
etc.,  by  certain  laws  and  they  exempted  them  when  they 
were  not  specified  in  the  exemptions  written  in  onr  Consti- 
tution. Then,  in  Section  two,  it  reads:  "All  laws  exempt- 
ing property  from  taxation  other  than  the  property  above 
enumerated,  shall  be  void. ' '  Yet,  there  are  on  the  statute 
books  of  Pennsylvania  these  illegal  exemptions  of  prop- 
erty as  laws  of  this  State.  Now,  any  tax  law,  no  matter 
how  it  is  constructed,  must  of  necessity  observe  the  consti- 
tutional provisions  of  the  State ;  and  yet  this  has  not  been 
done.  That  is  one  of  the  leaks  in  regard  to  the  collection 
and  equalization  of  taxation  in  Pennsylvania.  The  in- 
stance that  has  been  cited  with  regard  to  the  bank  is 
only  another  instance  that  applies  along  this  line. 

These  great  corporations  escape  these  taxes  largely  be- 
cause they  are  large  enough  and  sufficiently  well  organ- 
ized to  thoroughly  enter  into  the  meaning  of  the  benefits 
of  an  exemption  of  that  kind,  while  the  small  manufactur- 
ing concern  has  the  greater  proportion  of  its  capital  in- 
vested in  its  plant,  has  spent  more  upon  the  ground — often 
times  in  the  building  itself  that  is  taxed  for  local  purposes 
and  the  outcome  of  that  exemption  has  been  that  the  little 
manufacturing  concern  of  Pennsylvania  has  been  paying 
more  taxation  in  proportion  than  the  big  corporations; 
and  our  laws  have  to  say  largely  just  as  in  the  bank  ques- 
tion. The  little  bank  that  has  no  surplus  cannot  take  ad- 
vantage of  the  exemption;  for  if  it  did,  it  would  pay  a 
greater  amount  than  it  did  under  the  law ;  but  the  large 
institution  can  take  advantage  of  it;  and  the  constitu- 
tion says  that  taxation  shall  be  uniform  on  the  same 
class  of  subjects.  There  you  can  easily  see  that  there  are 
great  leaks  in  taxation  that  are  simply  outrageous  in  their 
injustice. 


829 

By  the  Chairman : 

Q.  A  Judge  of  Dauphin  declared  that  Act  constitu- 
tional ? 

A.  Yes,  but  why  was  an  exemption  ever  put  in  there 
upon  which  the  question  of  constitutionality  would  have 
to  be  passed  at  all?  If  it  is  right  to  collect  four  mills 
from  a  little  bank,  it  is  right  to  collect  four  mills  from  a 
bank  that  does  its  business  by  the  millions.  Why  was  it 
ever  put  in  there?  The  Constitution  plainly  stated  that 
the  tax  shall  be  uniform  on  the  same  class  of  subjects. 
That  exemption  was  evidently  put  in  there  to  favor  the  big 
corporations,  because  it  could  not  favor  the  little  one.  It 
was  either  put  in  there  by  mistake  or  it  was  put  in  there 
to  favor  the  larger  corporations ;  and  you  can  get  on  which 
ever  horn  of  the  dilemma  you  please.  You  take  this 
question  of  the  great  capital  invested  in  manufacturing. 
That  capital  is  oftentimes  invested  in  manufacturing  in 
a  place  that  receives  the  development  that  it  does  because 
of  the  gifts  of  the  Almighty  to  that  particular  section ;  as 
a  consequence  the  development  of  that  business  is  a  na- 
tural development  of  that  section.  Yet  our  law  enables 
businesses  of  that  kind  that  have  a  tremendous  capital,  that 
are  doing  a  tremendous  business  and  have  a  simply  fabul- 
ous income,  to  be  exempt  from  taxation,  when  they  are 
taking  the  raw  materials  that  God  Almighty  has  placed 
in  the  hills  of  Pennsylvania  and  are  working  them  over 
and  charging  the  people  of  Pennsylvania  and  the  rest  of 
the  world  exhorbitant  prices  for  these  gifts  of  the  Al- 
mighty. 

By  the  Chairman : 

Q.  "Why  do  you  suppose  that  law  was  passed? 

A.  If  there  was  any  real  theory  it  was  perhaps  that  it 
would  encourage  manufacturing  in  Pennsylvania.  But 
these  manufacturers  cannot  leave  Pennsylvania.  There 
was  no  need  for  any  such  condition.  Where  would  they 
go  ?  The  minute  they  crossed  the  line  of  Pennsylvania  in 


830 

any  direction  they  would  not  only  be  up  against  a  State 
tax,  but  a  local  tax  also.  Now,  why  would  they  go  out 
of  the  State — why  would  they  jump  out  of  one  State  and 
go  into  another  that  was  further  away  from  the  raw  ma- 
terial and  where  they  would  have  to  pay  more  taxes?  I 
don't  think  they  could  move.  They  couldn't  go  into  New 
York;  they  couldn't  go  into  any  State  in  the  Union  that 
I  know  of  except  Pennsylvania  and  Delaware ;  and  they 
would  be  crowded  if  they  would  attempt  to  go  into  Dela- 
ware. 

Then  the  proposition  is  that  corporate  property  should 
be  taxed  upon  its  value.  Now,  this  is  the  principle  upon 
which  the  farmers  of  this  county  are  taxed.  The  question 
arose  a  while  ago  as  to  whether  or  not  property  mortgages 
should  be  taxed ;  that  it  made  a  double  tax  upon  the  same 
money.  Any  man  that  goes  into  business  and  barrows 
money,  does  it  with  the  idea  that  he  will  not  only  make 
enough  out  of  that  money  to  pay  the  interests  on  it,  but  he 
also  expects  it  to  be  an  asset  in  his  business;  and  as  a 
consequence  it  is  not  a  double  tax  entirely  upon  the  money, 
because  there  are  two  profits  there;  it  has  two  earning 
capacities — one  for  the  man  who  loans  the  money,  and  it 
is  supposed,  also,  if  the  borrower  uses  good  business  sense, 
he  borrows  with  the  idea  of  making  for  himself  an  incre- 
ment also.  The  great  injustice  is  not  from  the  fact  that 
the  farmers  of  Pennsylvania  are  taxed  double,  or  rather 
those  who  borrow  money  are  taxed  on  the  mortgage  in- 
directly, but  it  is  from  the  fact  that  from  any  other  bus- 
iness in  the  State  that  borrows  immense  amounts  of  capital 
that  in  the  determination  of  the  value  of  the  capital  stock 
that  that  tax  is  subtracted.  For  instance,  if  a  railroad 
owns  four  millions  of  capital  stock,  its  bonded  indebtedness 
is  thirty-nine  hundred  thousand;  under  the  present  law 
it  is  at  the  discretion  of  the  Auditor  General  who  can 
take  into  consideration  the  value  of  the  stock.  He  may 
deduct  that  whole  thirty-nine  hundred  thousand  dollars 
from  the  four  million  which  will  leave  one  hundred  thou- 


831 

sand,  when  the  value  of  the  plant  is  four  million.  Now, 
there  is  the  rank  injustice  of  the  whole  situation.  When 
they  come  upon  the  farms  of  Pennsylvania  and  assess 
that  farm  they  get  the  property  value  of  that  farm  without 
any  regard  to  how  much  money  that  farmer  is  bringing  in 
on  his  investment,  without  any  regard  to  how  much  capital 
that  man  may  have  buried.  They  simply  take  the  value 
of  that  place  as  nearly  as  they  can  upon  the  basis  upoix 
which  they  are  levying  the  assessments.  When  it  comes 
to  these  immens  corporations,  they  carefully  consider  these 
things  and  give  them  the  opportunities  necessary  to  pro- 
cure these  advantages  that  come  from  the  finding  out  of 
the  value  of  the  capital  stock. 

Now,  in  Pennsylvania,  steam  railroad  companies  have 
an  aggregate  appraised  value  of  capital  stock,  funded  debt, 
current  liabilities  reported  to  the  State,  $4,456,455,599. 
There  is  a  four  mills  tax  upon  the  debt  and  eight  mills 
upon  the  gross  receipts.  That  ought  to  bring  into  the 
State  somewhere  between  four  and  eight  mills,  when  the 
facts  of  the  case  are  that  it  brings  in  two  and  eight- 
elevenths  mills.  That  is  a  leakage  that  is  simply  beyond 
all  reason  and  beyond  all  defense.  There  is  no  reason  why 
that  tremendous  amount  of  property  should  not  be  so 
handled  that  it  would  give  somewhere  near  the  amount 
the  law  expects  of  it.  It  is  entirely  too  little.  It  does  not 
bring  out  that  which  the  law  sa3^s  it  should  bring  out.  The 
reason  possibly  is  this :  The  value  of  these  corporations  is 
gotten  from  the  Secretary  of  Internal  Affairs.  These  cor- 
porations make  a  return  to  the  Secretary  of  Internal  Af- 
fairs upon  the  value  of  the  corporations;  but  when  the 
authorities  come  to  assess  the  taxables  of  the  corporations, 
then  these  figures  are  put  up  possibly  by  a  different  set  of 
men  for  that  purpose,  and,  as  a  consequence,  there  is  a 
different  report  made  when  the  question  of  tax  is  raised 
from  that  which  is  made  when  the  Secretary  of  Internal 
Affairs  asks  the  value  of  the  property.  Then  there  is  an- 
other thing — take  a  bond  held  by  interests  not  within  the 


832 

State.  It  is  at  the  same  time  a  part  of  that  property  or 
a  part  of  the  working  value  of  that  property,  and  while 
you  may  tax  the  bond  that  is  held  by  some  other  foreign 
country,  you  cannot  allow  the  value  of  that  bond  upon  that 
property  as  a  part  of  the  value  of  that  property.  That 
property  can  pay  it  just  as  the  farmers  pay  it.  They 
don't  come  to  the  farmers  and  ask  where  that  money  is 
held,  whether  or  not  it  is  within  the  confines  of  the  State. 
It  is  simply  a  question  of  arriving  at  the  value  of  that 
property  and  then  putting  the  valuation  upon  it.  Tt 
should  be  so  in  all  classes  of  property,  in  all  affairs,  and 
it  is  to  make  manifest  these  general  complaints  that  we 
want  to  place  this  system  before  you  to-day,  and  for  which 
we  are  making  our  argument.  That  there  may  be  a  general 
uniformity  in  the  whole  tax  system  of  Pennsylvania  of 
such  relation  to  the  property  of  the  State  that  the  burden 
of  proof  will  not  be  thrown  upon  the  officer  of  the  law, 
but  that  it  will  be  thrown  on  the  property  owner  to  show 
what  he  has  and  what  should  be  taxed  and  what  should 
not  be  taxed. 

By  Mr.  Brown: 

Q.  You  would  tax  the  gross  value  of  these  corporations? 
That  is  your  thought? 

A.  Yes. 

Q.  That  is  what  the  law  contemplates  now.  Your  com- 
plaint is  that  it  is  not  fully  carried  out? 

A.  That  is  my  complaint. 

Q.  You  would  exempt  the  bonds  and  other  evidences  of 
debt  from  taxation,  and  compel  the  corporations  to  pay 
a  tax  on  all  its  assets  of  every  other  kind.  That  would 
include  assets  by  money  raised  on  bonds.  In  that  case  you 
would  not  tax  the  same  bond? 

A.  No.  It  would  also  be  fair  that  where  the  returns 
of  that  property  are  locally  taxed,  that  the  assessment 
they  pay  for  local  tax  be  deducted  from  the  gross. 

Q.  The  Pennsylvania  and  Reading  Railroad  companies 
do  that? 


833 

A.  Well,  I  see  different  authorities  on  that. 

Q.  We  tax  the  Pennsylvania  Railroad  in  Philadelphia 
for  everything  except  the  water  tanks  and  road-beds? 

Q.  What  law  do  you  do  that  under  ? 

A.  A  special  Act  of  Assembly. 

Q.  Was  it  earlier  than  1899  ? 

A.  Yes,  before  that;  Act  of  1859.  Your  idea  is  to  tax 
every  one  locally  throughout  the  county? 

A.  Not  necessarily  locally. 

Q.  Your  thought  is  that  the  appropriation  should  come 
back  to  the  county? 

A.  Yes. 

By  the  Chairman : 

Q.  What  do  you  think  about  county  option?  For  in- 
stance, public  utility  corporations  to  tax  real  estate ;  should 
that  be  optional? 

A.  I  don't  see  why.  It  is  not  optional  with  the  farmer, 
and  why  should  it  be  optional  with  these  concerns  that 
are  making  large  percentages.  You  can  get  money  to  go 
into  these  things  quicker  than  you  can  get  it  to  go  into 
the  farms  of  Pennsylvania,  and  if  these  people  can  get 
this  money — borrow  by  the  millions  or  tens  of  millions, 
why  is  there  any  reason  that  they  should  come  to  the 
people  of  Pennsylvania  and  ask  for  option  on  the  question 
of  taxation?  Taxation  is  for  the  support  of  the  govern- 
ment in  which  every  man,  woman  and  child  and  every 
class  of  people  are  interested.  There  is  nothing  exempted 
from  the  benefits  of  government.  Why,  then,  should  they 
ask  for  any  exemption.  The  tax  law  simply  says  we  need 
so  much  money  from  the  State  and  they  should  get  it  in 
a  uniform  way.  That  is  what  we  are  here  to-day  for,  to 
get  rid  of  these  specialties — to  get  rid  of  these  deficiencies 
in  the  law.  Our  own  township  officers  never  raise  the  ques- 
tion, they 

Q.  The  authorities  assess  your  farms  a  great  deal  higher 
than  they  do  in  the  towns ;  is  that  true  ? 

A.  I  think,  possibly,  it  is. 
41 


834 

By  Mr.  Brown : 

Q.  These  folks  argue  they  are  producers,  that  they  em- 
ploy hundreds  of  people  and  these  people  spend  their 
money  buying  from  the  farms  and  help  increase  the  value 
of  the  farms? 

A.  Well,  that  is  true  ;  but  when  you  talk  of  the  question 
of  production,  then  we  have  the  floor  absolutely.  The 
American  farmer  produces  more  than  all  the  corporations 
in  the  country.  There  is  no  productive  class  like  the 
farmer. 

By  the  Chairman : 

Q.  There  must  be  people  provided  to  take  the  farmers' 
products  ? 

A.  Yes,  but  there  is  no  reason  why  provisions  should 
be  made  so  that  they  get  all  and  the  farmers  get  nothing 
to  raise  his  crops.  They  take  from  the  farmers — the  very 
people  who  produce  these  things  for  the  people  to  eat. 
There  is  a  gas  company  that  claims  an  exemption  as  a 
manufacturing  company,  while  an  electric  light  company 
has  to  pay  a  tax.  There  are  two  rival  companies — light 
and  heat — yet  one  is  taxed  and  the  other  is  not. 

Q.  I  imagine  that  is  because  the  gas  is  used  so  much  as  a 
fuel? 

A.  No  more  than  electricity  will  be. 

Q.  Prior  to  the  time  electricity  was  discovered — I 
imagine  no  man  in  his  sane  mind  could  say  to-day  that 
gas  companies  should  pay  their  pro  rata  share  of  the  tax. 
The  reason  for  that  is,  no  doubt,  that  it  took  the  place  of 
coal  for  heating,  etc.,  before  electricity  was  discovered 
and  that  was  probably  the  reason  why  the  law  so  indicated  ? 

A.  Well,  of  course,  I  would  not  attempt  to  say  what  the 
reason  was. 

By  Mr.  Brown : 

Q.  We  have  had  one  or  two  single  tax  advocates  that 
have  advocated  that  land  should  be  taxed  for  all  State  pur- 


835 

poses  for  State  revenue  and  it  should  be  left  to  the  counties 
to  tax  any  property  they  saw  fit.  You  must  tax  land  for 
all  State  purposes  and  allow  the  counties  the  right  to  tax 
anything  for  all  purposes.  That  permission  would  also 
give  them  the  right  of  exemption  also  from  county  pur- 
poses? 

A.  Mr.  Creasy,  my  study  has  developed  that  Pennsyl- 
vania is  considered  by  tax  experts  to  be  the  furthest  ad- 
vanced in  the  system  of  taxation,  from  a  viewpoint  of  fair- 
ness, of  any  State  in  the  Union.  How  does  it  appeal  to  you  ? 

By  Mr.  Creasy: 

Well,  we  get  more  money  from  personal  property  and 
money  at  interest  than  any  other  State. 


836 


JUDGE  A.  W.  DENNISON,  Pennsylvania  State  Grange. 

Mr.  Chairman  and  Gentlemen  of  the  Commission: — I 
was  asked  by  the  Master  of  the  State  Grange  this  morning 
to  sort  of  wait  until  last  and  pick  up  the  odds  and  ends.  I 
noticed  when  the  rest  of  them  got  through  with  the  argu- 
ment that  there  was  not  very  much  odds  and  ends  to  pick 
up.  I  had  jotted  down  a  few  items  that  I  thought  I  would 
call  your  attention  to,  and  one  by  one  I  have  checked  them 
all  off  until  they  are  all  marked  off. 

As  I  understand  the  scope  of  this  investigation,  you  are 
to  consider  and  then  make  recommendations  to  the  next 
Legislature  as  to  what  laws  they  can  pass  within  the  Con- 
stitution that  will  tend  to  equalize  taxation ;  and  you  cover 
several  different  subjects.  One  is  the  formation  or  creation 
of  corporations. 

Eepresenting  the  State  Grange  and  the  farmers  and  the 
laboring  men  of  the  State  of  Pennsylvania,  I  would  not  care 
to  go  into  a  discussion  of  the  question,  except  to  say  that 
there  is  no  antagonism  by  the  farmers  against  the  creation 
of  corporations,  or,  I  may  say,  the  creation  of  a  trust,  pro- 
vided that  they  will  obey  the  laws  just  like  you  ask  a 
private  citizen  to  obey  the  law,  and  that  they  will  not  use 
the  great  power  'that  the  great  combination  of  wealth 
gives  them  to  take  advantage  of  the  small  interests  and 
the  private  citizens  of  this  Commonwealth. 

That  subject  would  be  treated,  perhaps,  in  the  second 
scope  of  your  investigation,  which  is  the  regulation  of  cor- 
porations. How  you  should  regulate  them  under  the  State 
laws.  Because  it  is  clear  that  they  have  no  existence  until 
they  are  created  by  the  Legislature;  and  the  same  power 
that  creates  them  can  regulate  them. 

The  thing  that  interests  us  farmers  and  laboring  men  of 
Pennsylvania,  so  far  as  you  tax  corporations  and  the  sub- 
ject of  their  taxation,  simply  relates  to  the  question  of  equal- 


837 

ization  of  taxation.  Now  the  State  of  Pennsylvania  to-day 
sets  aside  practically  seven  billions  of  dollars  of  the  wealth 
of  this  Commonwealth  and  says  to  the  localities,  "Keep  your 
hands  off  that ! ' '  They  say, ' '  We  '11  tax  that  exclusively  for 
State  purposes. "  "  We  will  not  only  tax  that  seven  billions 
which  your  localities  cannot  touch,  but  we  will  come  into 
your  county  and  tax  every  writ  that  is  issued,  every  will 
that  is  made,  every  deed  that  is  recorded."  And  they  say 
to  the  localities,  "Keep  your  hands  off;  we'll  attend  to 
this. "  Then  they  took  the  license  fees  of  wholesale  and  re- 
tail liquor  dealers,  but  have  recently  said  we  could  have* 
some  of  this,  and  so  we  get  some.  Now,  in  doing  all  that, 
they  raise  something  like  twenty-five  millions  a  year.  They 
say  to  us  localities  that  we  can  take  about  four  billions  of 
real  estate  and  tax  it  for  local  purposes,  and  we  can  have 
the  retail  liquor  license  fees ;  and  in  the  State  we  get  about 
two  and  a  half  millions  out  of  that.  They  say  we  can  tax 
mules  and  horses,  and  we  get  something  like  a  half  million 
out  of  that.  Then  they  say  further,  we  can  tax  occupa- 
tions, salaries  and  emoluments  of  office,  and  we  get  per- 
haps nearly  two  and  a  half  millions  out  of  that.  On 
that  four  billions  from  the  real  estate  we  collect  seventy- 
seven  and  a  half  millions  for  use  locally.  Then  the 
State  steps  in  and  they  raise  so  much  off  their  seven 
billions  that  they  cannot  possibly  spend  it.  They  give 
some  back  again.  They  even  give  us  something  to  run 
our  hospitals  all  over  the  State.  But  it  is  apparent  to  you 
at  once  when  we  take  eleven  billions  of  dollars  worth  of 
property  that  is  asssessable  in  the  State  of  Pennsylvania,  to 
take  and  set  aside  seven  billions  out  of  the  eleven,  while  six- 
teen to  eighteen  millions  is  what  they  raise  from  other 
sources,  and  then  take  four  billions  and  raise  seventy-seven 
and  a  half  millions,  there  is  some  gross  inequality.  There  is 
something  wrong  somewhere.  Now,  that  is  what  the  Grange 
asks — what  we  believe  to  be  fair  and  right ;  that  some  change 
be  made — either  by  saying  to  these  localities  that  they  can 
tax  some  of  these  enterprises,  or,  if  you  maintain  the  sys- 


838 

tern  that  you  have,  that  you  try  to  put  them  on  an  equality 
so  that  the  farmers  and  the  home  owners  need  not  pay  a 
much  higher  rate  than  the  other  interests.  I  will  submit 
to  you  that  the  interests  that  only  pay  an  average  of  three 
mills  make  their  money  much  easier  than  the  home  owners 
who  must  pay  on  an  average  of  eighteen  mills — six  times  as 
much,  and  money  harder  to  get. 

The  next  question  is,  how  will  you  do  that?  If  you  do 
that  you  must  raise  more  State  revenue  and  appropriate  it 
in  such  a  way  as  will  relieve  local  taxation.  There  is  no 
other  way  I  know  to  do  it.  How  would  you  raise  more  State 
revenue  ?  We  have  a  school  house  in  our  township,  and  as 
a  member  of  the  School  Board  I  voted  to  raise  the  levy  five 
mills.  We  had  to  do  it.  I  didn't  do  that  because  I  have  any 
antagonism  against  the  taxpayers,  or  because  I  wanted  to 
\vrong  the  taxpayers  of  our  township,  because  my  own  tax 
was  included  in  that;  but  we  had  to  have  money,  and  the 
only  way  I  knew  to  do  it,  was  to  raise  the  levy.  The  same 
thing  can  be  done  in  the  levies  that  we  make  against  the 
corporations  if  you  propose  to  pursue  that  policy.  The 
township  School  Board  makes  a  levy  for  school  purposes. 
The  County  Commissioners  make  it  for  county  purposes. 
The  Legislature  fixes  a  rate  of  levy  for  State  purposes. 
That  rate  of  levy  has  been  fixed  at  various  amounts  on 
personal  property  and  on  banks  at  four  mills,  and  on  other 
corporations  at  five  mills.  If  you  are  going  to  raise  more 
money  it  seems  to  me  that  you  must  raise  your  levy.  I  don't 
see  any  other  way  to  do  it.  Now,  another  thing  I  want  to 
call  your  attention  to  if  you  pursue  that  policy — that  you 
will  watch  that  money  very  closely,  or  you  can  never  get  it 
to  where  it  will  be  of  any  benefit  to  the  local  taxpayer.  You 
will  find  out  when  you  get  it  to  the  Legislature  that  there 
i?  a  great  many  things  ready  to  reach  their  hands  in  and 
get  that  money.  They  will  think  the  State  officers  are  not 
paid  enough  salary;  they  will  want  to  get  a  little  more 
for  that.  They  want  a  public  park ;  they  will  want  money 
for  that.  They  want  a  road  from  Philadelphia  to  Pitts- 


839 

burgh ;  they  will  want  money  for  that.  And  from  some 
letters  I  have  gotten  from  the  Good  Roads  Association, 
I  think  they  are  trying  to  get  all  the  money  they  can  and 
put  it  on  the  roads.  So  the  danger  of  this  system  lies 
in  the  fact  that  you  will  have  to  make  some  special  effort 
to  keep  that  money  within  the  lines  that  you  contemplated 
when  you  started  out,  and  put  it  in  such  a  place  that  it  will 
surely  lower  local  taxation. 

Now,  it  seems  to  me  that  the  Grange  has  suggested  a  good 
way  to  do  it.  In  the  first  place,  as  Brother  Moscrip  sug- 
gests, the  minimum  salary  for  the  minimum  term  of  the 
school  teacher.  Then  another  good  way  would  be  to  go  into 
the  road  districts  and  appropriate  enough  money  to  pay  for 
one-half  of  the  repairs  on  the  roads  not  to  exceed  twenty- 
five  dollars  per  mile  in  each  road  district.  For  instance,  if 
there  is  one  thousand  dollars  to  be  spent  on  a  road,  let  the 
road  district  raise  five  hundred  of  it  and  the  State  raise  five 
hundred.  Then  another  way  in  which  they  could  help  the 
localities  would  be  to  let  the  State  build  and  maintain  and 
repair  all  the  macadam  roads  and  stick  to  the  policy  of 
putting  them  in  every  county.  I  was  told  last  session  down 
there  what  you  fellows  got  to  do  that  on.  Then  there  is 
another  way  to  lessen  local  taxation,  and  that  is  permitting 
the  counties  to  retain  every  dollar  in  the  county  that  they 
collect  there.  I  mean  by  that,  on  personal  property  and 
licenses. 

By  Mr.  Brown : 

Q.  Where  would  the  State  get  any  money? 

A.  The  State  under  the  present  laws  would  get  all  ex- 
cept about  five  or  six  million  dollars  that  it  gets  now ;  and 
if  you  raise  the  rate  of  levy  that  would  give  it  much  more. 
When  I  speak  of  the  counties  retaining  the  tax,  I  am  not 
speaking  of  the  capital  stocks ;  I  am  not  speaking  of  the  tax 
on  bonds ;  I  am  not  speaking  of  the  tax  on  gross  receipts ; 
but  I  am  speaking  of  the  tax  on  personal  property  and  the 
licenses  we  collect  in  each  county.  In  the  whole  State  of 


840 

Pennsylvania,  it  would  amount  to  perhaps  four  or  five  mil- 
lions of  dollars.  We  collect  now  something  like  nine  to  ten 
millions  of  dollars,  and  the  county  retains  three-fourths  on 
the  tax  of  personal  property.  What  we  advocate  is  that  we 
retain  all  of  it  and  that  we  retain  all  license  fees,  mercan- 
tile and  otherwise.  There  is  nine  or  ten  million  raised  in 
the  counties  that  way,  and  we  are  only  asking  that  the  coun- 


By  Mr.  Moyer: 

Q.  Some  reference  has  been  made  to  the  fact  that  the 
State  is  not  a  good  housekeeper.  What  assurance  would  the 
State  have,  under  a  law  of  this  kind,  that  the  county  would 
be  a  good  housekeeper  ? 

A.  Well,  I  will  say  to  Brother  Moyer  that  my  experience 
is  that  you  will  find  just  as  much  honesty  in  the  country  as 
you  will  find  in  the  cities;  just  as  honest  officials  in  the 
country  as  in  the  cities ;  just  as  honest  officials  in  our  court 
house  as  in  the  Capitol  building. 

Q.  The  inference  has  gone  forward  that  the  moneys  of  the 
State  are  not  wisely  expended;  that  the  officials  who  have 
charge  of  this  money  are  not  doing  their  duty. 

A.  Well,  that  appears  to  be  true.  But  I  see  no  reason 
why  the  counties  should  not  have  a  chance  to  spend  the 
money  or  steal  a  little  of  it  if  they  want  to  the  same  as  the 
State  officials  have  to  spend  or  to  steal  millions.  As  to  that 
matter,  I  am  a  good  deal  like  Mr.  Rhone.  I  think  a  big  ma- 
jority of  the  people  of  the  capital  building  and  a  big  ma- 
jority of  the  people  of  the  counties  are  absolutely  and 
strictly  honest.  But  I  also  believe  that  in  any  building,  in 
any  county,  in  any  State,  that  there  are  a  few  thieves  who 
try  to  crawl  in  there  and  get  hold  of  things,  and  if  the  people 
permit  them  to  do  so,  they  are  liable  to  suffer.  But  because 
they  do  that,  there  is  no  reason  why  a  general  charge  of 
dishonesty  and  incompetency  should  be  put  up  against  the 
balance  of  mankind  who  try  to  be  honest  and  try  to  do 
right. 


841 

By  Mr.  Brown : 

A.  I  think  that  the  status  of  civic  integrity  is  higher  in 
Pennsylvania  than  any  other  State  in  the  Union;  as  high 
at  least  as  any  State  in  the  Union,  and  I  think  we  should 
all  appreciate  that  and  take  it  at  one  hundred  cents  on  the 
dollar. 

Mr.  Moyer: 

Q.  You  would  be  in  favor  of  the  paying  of  this  money 
over  to  the  Commonwealth  and  then  having  it  returned 
again? 

A.  No,  sir.  The  only  reason  there  could  be  for  that 
is  that  the  State  might  perhaps  be  able  to  get  a  better 
report,  a  more  uniform  report,  or  maybe  get  industries 
reported  that  might  not  be  reported  in  the  county;  then, 
the  county  might  afterwards  be  able  to  get  hold  of  these 
interests  and  corporations  within  the  State.  So,  I  agree 
with  you  there.  Now,  there  is  one  thing  I  realize ;  when 
you  commence  to  talk  about  that  you  will  strike  a  very 
delicate  question.  That  question  is,  ' '  Shall  we  tax  manu- 
facturing corporations  in  the  State  of  Pennsylvania  ? " 
You  are  all  cognizant  of  the  fact  that  the  United  States 
Government  levies  a  tariff  on  all  manufactured  articles, 
and  we  all  know  and  realize  it;  we  believe  in  it  and  we 
defend  it;  but  we  know  positively  and  absolutely  that 
the  manufacturers  are  the  only  ones  that  receive  any 
benefit  from  it  directly.  The  protection  enables  them  to 
sell  their  products  without  competition  from  cheaper 
stock  so  they  can  get  a  higher  price.  I  may  say  further 
that  we  believe  in  our  corporations;  the  State  could 
scarcely  do  without  them.  But  we  believe  in  the  homes; 
we  believe  in  our  farms.  We  believe  in  railroads  and  all 
other  corporations,  in  that  manufacturers  hire  men,  they 
employ  labor;  and  the  railroads  employ  labor.  So  do 
the  farmers  employ  labor  when  they  can  get  it ;  but  they 
cannot  get  the  best  men  because  these  corporations  that 
we  are  favoring  step  in  and  say,  "Come  down  and  work 
42 


842 

for  me  and  I  will  give  you  lots  better  wages  than  that 
farmer  can  pay." 

By  Mr.  Brown  : 

Q.  Suppose  the  manufacturing  concern  who  seduces 
the  farmers'  employes  does  not  pay  3  per  cent,  of  the 
money  invested  in  the  corporation,  would  you  be  in  favor 
of  taxing  that  corporation? 

A.  Under  the  Constitution  of  the  State  of  Pennsylvania 
I  would  tax  that  corporation  just  exactly  the  same  as 
I  would  tax  a  corporation  that  is  engaged  in  the  iron  and 
steel  business  in  the  State  of  Pennsylvania,  that  make 
millionaires  out  of  almost  every  man  that  touches  their 
stock,  because  the  Constitution  says  that  the  tax  shall 
be  uniform  upon  the  same  class  of  subjects.  We  have 
farmers  in  our  locality  who,  for  some  reason  or  other, 
cannot  make  both  ends  meet.  They  don't  make  3  per 
cent,  or  any  other  per  cent.,  and  can  scarcely  clothe  their 
families ;  yet  we  make  them  pay  their  taxes  just  the  same 
as  the  home  owner  or  anybody  else. 

Now,  there  is  another  thing  to  be  considered  and  that 
is,  if  you  tax  them,  at  what  rate  will  you  tax  them  ?  The 
same  rate  you  tax  other  corporations,  or  the  rate  you  tax 
banks,  or  a  lower  rate? 

At  the  last  session  of  the  Legislature,  I  introduced  a 
bill  doubling  the  rate  of  levy  and  requiring  manufac- 
turing corporations  to  pay  the  same  tax  as  other  cor- 
porations. If  I  invest  my  property  in  a  farm,  or  in  a 
manufacturing  corporation,  or  in  a  bank,  or  in  anything 
else,  I  should  have  a  perfect  right  to  get  the  same  treat- 
ment under  the  law,  and  should  pay  the  same  rate  of 
taxation,  no  matter  where  I  invested  the  property.  Af- 
ter a  more  extensive  study  of  the  question,  I  became 
convinced  that  this  would  raise  an  immense  amount  of 
money,  more  than  would  be  necessary  to  equalize  the  rate 
between  corporations  and  individuals,  and  I  secured  an 
amendment  to  the  bills  in  the  Ways  and  Means  Commit- 


843 

tee,  so  as  to  provide  for  an  increase  of  one  mill  upon  the 
rate  now  in  force  and  one  mill  upon  the  capital  stock 
of  corporations — manufacturing  corporations ;  exempting 
them  from  the  assessed  value  of  any  part  of  their  property 
which  would  be  subject  to  local  taxation.  For  instance, 
a  corporation  having  a  capital  stock  of  one  hundred  thou- 
sand dollars  and  twenty-thousand  so  invested  in  real  es- 
tate as  to  be  taxed  locally — take  the  twenty  thousand 
out  of  the  hundred  thousand,  and  only  tax  them  on  tee 
eighty  thousand,  and  one  mill  on  that.  These  bills  as 
amended  were  reported  out  of  the  Committee,  but  were 
recommitted  for  argument. 

Mr.    Brown : 

Q.  Your  figures  would  bring  to  the  State  a  little  over 
a  quarter  of  a  million? 

A.  Just  the  manufacturing  corporations? 

Q.  Yes. 

A.  Yes.  These  bills  would  have  brought  about  a  seven 
million  dollar  increase.  It  seems  to  me  something  of  that 
kind  ought  to  be  done. 

By  Mr.    Moyer: 

Haven't  the  manufacturers  of  the  State  of  Pennsyl- 
vania declared  their  willingness  to  pay  a  one  mill  tax? 

By  Mr.  Brown: 

That  is,  provided  the  State  requires  more  revenue. 

By  Mr.  Dennison: 

That  is  exactly  the  bill  I  had  in  the  Legislature.  That 
will  explain  a  question  that  was  asked  Mr.  Rhone  by 
Mr.  Brown.  I  believe  you  stated  that  someone  had  fixed 
the  value  of  manufacturing  corporations  in  Pennsylvania 
at  three  billions  of  dollars  ? 

By  Mr.  Brown: 

Yes. 


844 

By  Mr.  Dennison: 

Now  then,  the  value  that  Brother  Brown  must  take 
is  here  from  the  report  of  the  Secretary  of  Internal 
Affairs.  It  is  requested  that  they  report  in  the  indus- 
trial statistics.  In  1907,  I  think,  twenty-two  hundred 
corporations  reported  out  of  a  total  of  seven  thousand. 
Thus  it  was  a  little  less  than  one  million,  and  you  can 
readily  see  why  they  reported  that  much,  when,  at  the 
same  time,  where  is  the  billions  in  this?  I  would  not 
be  surprised  to  know  it  was  a  whole  lot  more.  I  think 
if  you  will  levy  a  tax  of  one  mill  on  manufacturing  cor- 
porations and  turn  it  over  to  the  Auditor  General,  or 
State  Treasurer,  and  they  would  issue  a  report,  that  we 
could  find  out  something  about  the  value  of  these  manu- 
facturing corporations,  and  then,  instead  of  raising  a 
million,  we  would  possibly  raise  three  or  four.  You 
cannot  tell. 

By  Mr.  Brown : 

Q.  That  ought  to  raise  about  three  millions? 

A.  Yes.  Now,  there  is  another  thing  that  was  discov- 
ered and  which  I  have  had  in  mind  for  some  time  and 
that  is  the  illustration  of  a  certain  trust  company  in 
Pittsburgh.  It  is  the  clause  at  the  end  of  the  law  that 
says  they  can  pay  the  ten  mills  on  the  par  value  of  their 
capital  stock  that  permits  the  large  banks  to  pay  so  little 
tax.  I  particularly  make  the  illustration  that  they  paid 
fifteen  thousand  on  about  twenty-six  and  a  half  millions 
of  dollars  of  capital  or  actual  value,  and  if  they  had  paid 
the  same  rate  that  an  ordinary  bank  pays  they  would 
have  paid  one  hundred  and  five  thousand;  and  if  they 
had  paid  the  same  rate  that  the  county  taxpayers  do,  they 
would  have  paid  six  hundred  and  eighty  thousand  dol- 
lars. And  they  paid  fifteen  thousand.  Now,  I  fully 
grant  you  that  the  Supreme  Court  declared  that  Consti- 
tutional, but  I  believe  that  if  it  was  my  case,  I  would 
ask  for  a  referee. 


845 

By  Mr.  Brown: 

Q.  That  does  not  exempt  them  from  taxation  on  their 
bonds.  It  only  exempts  them  from  local  taxation.  I 
cannot  understand  how  they  got  off  with  fifteen  thou- 
sand. They  must  have  had  a  peculiar  line  of  securities. 

A.  Let  me  call  your  attention  to  the  fact  that  they  pay 
local  taxation  on  their  real  estate,  and  they  didn't  pay 
another  cent  of  local  taxation,  and  when  they  paid  that 
fifteen  thousand  dollars  on  their  capital  stock  they  in- 
cluded the  whole  twenty-six  millions  of  dollars ;  and  they 
didn't  have  to  pay  another  cent. 

Q.  The  local  assessor  should  have  gone  after  them. 

A.  The  local  assessor  has  nothing  to  do  with  the  case. 
The  only  thing  the  local  assessor  can  assess  is  the  real 
estate  and  the  bank  building.  That  is  all  the  local 
assessor  can  assess.  When  you  come  to  assess  the  capi- 
tal stock  or  to  assess  the  indebtedness,  the  State  says  to 
the  local  assessor:  "Keep  your  hands  ofti;  we  will  take 
care  of  that."  They  pay  ten  mills  on  the  par  value  of 
the  stock  and  the  State  does  not  ask  them  to  pay  more. 
But,  understand,  this  is  a  trust  company.  They  reported 
in  1908,  in  the  Bank  Commissioner's  report,  something 
like  $36,000,000. 

By  Mr.  Brown: 

Q.  The  ten  mills  does  not  release  them  from  local 
taxation.  The  trouble  is  the  local  assessor  does  not  go 
after  the  four  mills  tax. 

A.  I  want  to  call  your  attention  to  the  fact  that  the 
whole  banking  law  provides  that  they  shall  pay  four  mills 
on  the  value  of  their  capital  stock,  to  be  ascertained  by 
adding  the  capital  stock,  the  surplus  and  undivided 
profits;  that  when  they  pay  four  mills,  the  law  says 
they  are  exempted  from  local  taxation  except  upon  their 
building,  and  says  identically  the  same  thing  when  they 
pay  the  ten  mills — that  they  are  exempted  from  local 
taxation. 


846 

(Reads  banking  law,  and  instructs  stenographer  noi 
to  put  in  the  record.*) 

By  Mr.  Brown: 

Q.  The  assessor  should  say  what  is  paid  and  what  is 
not  paid.  There  ought  to  be  a  way  to  check  it  up. 

A.  I  have  nothing  to  say  about  the  duties  of  the  local 
assessors  and  whether  they  are  performed  or  not;  but  I 
do  say  this:  I  would  have  those  gentlemen  pay  the  four 
mills  on  the  actual  value  of  their  stock  by  adding  it  all 
together.  If  they  pay  the  ten  mills,  they  pay  it  on  the 
par  value  of  the  stock.  I  am  talking  about  money  going 
into  the  State  Treasury:  Even  though  the  Supreme 
Court  has  decided  that  to  be  constitutional  you  will 
agree  with  me  that  it  is  neither  fair,  just  or  right.  While 
they  may  have  a  right  to  do  that  under  the  Constitution, 
I  shall  ask  the  Legislature  to  do  what  is  right  and  just, 
even  though  they  have  a  right  under  the  Constitution  to 
do  an  injustice. 

By  Mr.  Brown : 

Q.  That  conies  back  to  the  tax  on  the  actual  value  of 
their  property? 

A.  There  is  another  thing  I  want  to  call  your  attention 
to.  This  is  not  a  new  question.  The  people  have  been 
after  this  for  years.  There  was  a  time  when  the  Republican 
Party  did  not  like  things,  and  they  called  a  special  session 
in  1906  and  perhaps  you  were  a  member  of  it.  They  recom- 
mended the  Governor  to  issue  another  call  in  order  to 
permit  them  to  take  up  four  different  subjects,  and  one 
of  them  was  the  return  of  all  personal  property — but  I 
will  read  to  you : 

First.  To  provide  for  the  retention  by  the  respective 
counties  of  this  Commonwealth  of  all  personal  property 
and  license  taxes  now  paid  by  them  to  the  State. 

Second.  To  enable  trolley  roads  in  this  Commonwealtn 
to  carry  freight. 

Third.     To  provide  a  system  of  taxation  in  this  bom- 


847 

monwealth  that  shall  be  uniform  and  equal  on  all  classes 
of  property  to  the  end  that  the  railroad  companies  shall 
pay  the  same  tax  on  the  dollar  of  value  as  the  farmer,  the 
business,  the  laborer,  and  the  mechanic. 

Fourth.  To  revise  and  reform  the  general  election  laws 
of  the  Commonwealth.  This  resolution  was  vetoed  by 
the  Governor,  giving  as  his  reason  that  while  of  interest 
and  importance,  they  were  subjects  for  general  Legisla- 
tion and  could  be  better  presented  at  a  regular  session. 
The  Legislature  has  been  repeatedly  asked  to  do  these 
things,  but,  I  suppose,  perhaps,  because  it  is  easier  to 
let  the  thing  run  along  than  change  it,  they  have  not 
done  it.  The  Legislature  can  afford  to  be  fair  and  just 
to  its  citizens,  and  when  you  do  that  you  have  their  re- 
spect and  you  have  their  support.  It  seems  to  me  that 
now  the  time  is  ripe,  now  that  this  Commission  has  been 
formed,  to  rectify  these  wrongs,  and  do  justice  between 
the  citizens  of  the  State  and  the  corporations  of  the  State. 
In  making  these  recommendations,  we  are  not  asking  for 
charity;  we  are  not  asking  for  special  favors;  we  are 
simply  asking  for  Justice  and  a  square  deal. 

By  Mr.  George  Moscrip : 

A  gentleman  in  Tioga  county  asked  me  to  submit  this 
proposition  to  your  honorable  body :  They  have  there  a 
building  known  as  "Merker  Block."  They  have  incor- 
porated and  say  they  have  to  pay  a  local  tax  on  Merker 
Block,  and  have  no  use  for  it  for  manufacturing  purposes 
or  any  other  purpose.  I  didn't  know  whether  you  had 
heard  of  this  case  or  not.  The  point  is  whether  it  is  just 
to  impose  a  tax  on  the  case  of  this  concern.  I  think  the 
rate  should  be  nominal.  They  pay  twenty-five  and  one- 
half  mills. 

By  Mr.  Brown : 

Mr.  Creasy,  what  is  your  thought  upon  taxing  manu- 
facturing corporations?  You  have  had  quite  an  exper- 
ience. Do  you  think  that  would  have  an  injurious  effect 
upon  the  State  revenue? 


848 

By  Mr.  Creasy: 

I  think  the  manufacturing  corporations,  as  a  rule, 
would  submit  to  a  tax  of  one  mill,  because  it  is  evident 
to  all  these  big  interests  that  are  interested  in  the  bet- 
terment of  Pennsylvannia  and  its  schools  and  roads,  that 
we  must  have  more  revenue.  I  believe  they  would  not 
object  to  a  one-mill  tax,  provided  it  was  economically 
spent,  and  distributed  with  good  judgment.  For  the 
purposes  of  building  better  roads,  I  think  the  manufac- 
turers would  reap  a  benefit  indirectly  that  would  more 
than  compensate  the  amount  paid. 

Mr.  Brown:  There  is  no  doubt  of  the  general  senti- 
ment in  Pennsylvania  for  better  roads. 

Mr.  Creasy :  That  is  why  we  are  speaking  of  distribut- 
ing this  money  to  these  counties.  It  would  put  at  least 
forty-five  hundred  men  to  work  making  good  roads.  We 
believe  these  forty-five  hundred  men  would  build  more 
good  roads  in  ten  years  than  the  State  could  by  the  very 
best  management  in  twenty  or  thirty  years.  We  are  all 
interested  in  good  roads.  The  township  authorities  could 
fix  up  these  roads  a  great  deal  cheaper  than  the  State 
could.  Let  the  State  take  hold  of  the  macadam  roads. 
These  roads  come  through  our  townships  and  our  people 
are  not  able  to  take  care  of  them,  because  the  township 
is  too  poor  to  take  that  up. 

Mr.  Brown:  Do  you  figure  in  your  assessment  of  ad- 
ditional revenues  the  need  for  additional  State  institu- 
tions for  the  care  of  insane  men  and  women.  From  letters 
received  by  us,  there  seems  to  be  a  need  for  more  institu- 
tions of  this  kind. 

Mr.  Creasy:  I  think  one  thing  should  be  changed  and 
that  is  this:  Whenever  a  plan  is  perfected  to  build  an 
institution,  it  should  not  be  allowed  to  run  along  for  years 
before  the  Legislature  appropriates  sufficient  money  to 
complete  the  building  contemplated.  I  think  every  Legis- 
lature should  appropriate  the  money  to  finish  its  own 


849 

buildings,  so  that  the  next  Legislature  would  not  be 
hampered  by  appropriating  money  that  should  have  been 
appropriated  by  the  former  Legislature. 

Adjourned  until  two  o'clock. 


850 


Public  Meeting,  Williamsport,  Pa.,  April  8,  1910. 
AFTERNOON  SESSION. 

Meeting  called  to  order  at  two  o'clock  P.  M.,  present  as 
before. 

McMcLaren :  I  enjoyed  the  talk  this  morning,  and  I 
thought  we  had  a  lot  of  good  speakers  on  the  subjects  I  did 
not  know  much  about. 

By  Mr.  Brown : 

Q.  What  other  defects  have  you  noticed  in  the  present 
law  as  to  the  collection  of  personal  tax? 

A.  I  think  the  law  is  a  good  one.  I  believe  the  greatest 
difficulty  is  in  enforcing  the  law. 

Q.  What  do  you  do  to  check  up  the  returns  of  the  assess- 
ars  ?  Do  you  give  your  guide  books  to  the  assessors  ? 

A.  No.  The  assessors  are  furnished  with  all  the  informa- 
tion we  can  get.  That  is,  the  judgments  and  mortgages 
from  the  records  here. 

Q.  You  give  them  the  blank  returns  the  Auditor  General 
furnishes  ? 

A.  No,  the  blank  returns  are  delivered  first  by  the  as- 
sessors from  house  to  house,  and  everybody  is  supposed  to 
make  the  return,  whether  they  have  anything  or  whether 
they  have  not.  If  they  have  not,  of  course  they  state  that 
and  swear  to  it.  They  don't  all  do  that,  however. 

Q.  What  check  do  you  put  on  the  assessors?  Do  you 
make  them  account  for  every  one  of  these  returns  you  give 
them? 

A.  No,  we  haven 't. 

Q.  For  every  blank  ? 

A.  No,  they  are  just  given  to  them.  The  State  sends  us 
a  great  many  more  than  we  need,  and  we  have  not  been,  in 
fact,  very  careful  as  to  how  many  the  assessor  gets. 


851 

Q.  You  depend  entirely  on  the  assessor  for  the  returns? 

A.  Yes,  sir. 

Q.  Do  you  ever  do  any  investigating  to  ascertain  whether 
or  not  the  returns  are  correct  ? 

A.  Yes,  we  have  in  some  instances  here,  we  have  imposed 
the  penalty  in  a  number  of  cases.  If  the  assessor  comes  in 
with  knowledge  that  seems  to  be  substantial,  we  have  im- 
posed the  penalty,  and  I  find  that  if  that  is  done  pretty  gen- 
erally the  people,  of  course,  eventually  will  come  in.  When 
the  penalty  amounts  to  as  much  money  as  they  have  out  at 
interest,  of  course,  they  are  coming  in  then.  Now,  we  are 
doing  that. 

Q.  What  do  you  do  to  reach  moneys  on  deposits  evidenced 
by  certificates  of  deposits  in  your  trust  companies  and 
banks  ? 

A.  Well,  I  think  the  assessors  have  just  been  relying  on 
the  individuals  to  tell  them  the  truth. 

Q.  How  would  it  do  to  have  the  banks  and  trust  com- 
panies to  make  a  return  of  all  the  moneys  at  interest? 

A.  I  think  that  would  be  very  good.  I  think  it  would 
help  the  assessors  and  the  county. 

Q.  Have  you  any  idea  of  the  amount  of  personal  property 
in  this  city  that  does  not  pay  any  State  tax  ? 

A.  No. 

Q.  Do  you  think  it  is  a  considerable  amount? 

A.  I  wouldn  't  be  surprised  but  what  it  is. 

Q.  What  is  the  sentiment  here  on  the  subject  of  taxing 
manufacturing  corporations?  You  heard  our  friends,  the 
Grangers,  this  morning  ? 

A.  Yes.    In  fact  I  never  heard  that  discussed  at  all. 

Q.  Have  you  heard  the  taxpayers  suggest  any  other  sub- 
jects of  taxation? 

A.  No.  I  have  heard  suggestions  of  probably  some  in- 
provement  on  the  system  of  the  assessors.  In  fact,  I  have 
got  two  or  three  ideas  of  my  own. 

Q.  What  are  they? 


852 

A.  Well,  now,  the  first  one,  of  course,  I  don't  suppose  it 
would  be  constitutional,  but  if  it  is  you  probably  have  heard 
of  it  before,  and  that  is  to  make  every  person  his  own  as- 
sessor. Of  course,  this  would  have  to  be  worked  out  and 
graded,  because  if  it  were  not  the  big  property  owner  would 
have  it  on  the  little  fellow  every  time,  as  he  usually  has. 
Now,  this  is  just  as  a  suggestion.  You  are  sworn  and  you 
make  your  own  assessment.  If,  within  sixty  or  ninety  days, 
or  any  period  that  your  Legislative  Committee  or  any  Com- 
mittee who  might  have  that  in  charge,  say  within  ninety 
days,  if  he  is  offered  a  bona  fide  offer  of  cash  within  ninety 
days  after  the  assessment,  with  possibly  10  per  cent,  added, 
he  has  got  to  sell. 

Q.  Some  States  have  that  now. 
A.  I  did  not  know  that. 

Q.  For  some  kinds  of  property. 

A.  Of  course,  the  big  fellow  would  have  the  advantage  of 
the  little  fellow,  because  lots  of  people  would  buy  homes 
ranging  from  five  to  ten  thousand  dollars,  and  they  could 
get  that  for  them,  and  manufacturing  establishments  in  the 
city  would  not  have  as  many  mortgages. 

Q.  What  is  your  feeling  about  the  character  of  the  as- 
sessors you  would  get  under  the  present  system?  Do  you 
think  they  fairly  assess  the  property? 

A.  The  system  is  not  very  good  at  the  best.  The  whole 
system,  it  seems  to  me,  is  not  good.  Here  is  another  idea  I 
have,  for  the  county  to  elect  three  county  assessors,  we 
have  three  city  assessors  here,  and  I  believe  they  could  more 
nearly  get  the  correct  value  of  property  than  having  an 
assessor  in  every  township  in  the  county.  Of  course,  it 
would  take  three  assessors  or  five  assessors  possibly  a  year 
or  more  to  get  over  the  county  to  do  the  work  in  the  begin- 
ning, but  after  we  have  it  once  done  I  believe  three  good 
men  would  come  nearer  to  equalizing  the  values  of  property 
a  good  deal  nearer  than  under  the  present  system. 

Q.  Do  you  think  that  you  would  get  better  assessors  by 


863 

having  them  appointed  by  the  Judges  than  by  electing 
them? 

A.  Elect  them  as  we  do  here.  Let  the  people  elect  three 
county  assessors,  and  let  the  people  of  Williamsport  elect 
three  city  assessors  for  city  purposes.  If  it  operates  well  in 
the  city,  why  not  in  the  county  ? 

Q.  What  amount  of  personal  property  do  you  return  here 
in  the  county  from  Williamsport,  can  you  recall? 

A.  You  mean  as  compared  with  the  county  outside  of  the 
city? 

Q.  No,  how  much  in  the  county? 

A.  I  cannot  state  that,  I  forget  just  what  that  is.  You 
mean  personal  tax? 

Q.  Yes. 

A.  I  am  afraid  to  make  a  statement.  In  the  county,  you 
mean? 

Q.  Yes. 

A.  I  do  not  know.  Twelve  or  fifteen  or  sixteen  millions, 
somewhere  along  there,  it  seems  to  me. 

Q.  Do  you  think  the  present  laws  are  all  right,  only  they 
need  greater  enforcement? 

A.  Yes,  I  think  the  greatest  difficulty  is  that  the  laws  are 
not  enforced.  I  think  the  present  system  of  having  a  differ- 
ent assessor  in  every  township  is  bad.  They  are  often  under 
the  influence  of  one  or  more  men,  and  sometimes  the  as- 
sessors are  honest  and  their  judgment  is  poor ;  they  may  be 
honest  but  have  very  poor  judgment. 

Q.  What  about  their  compensation.  Don't  you  think  if 
you  paid  a  little  more  you  would  get  a  better  qualified  body 
of  men  to  do  the  work  ? 

A.  In  the  townships  ? 

Q.  Yes,  sir. 

A.  I  don't  believe  that  would  make  much  difference  in 
the  townships.  I  have  another  word.  As  I  understand  the 
business  of  this  Committee  is  to 


854 

Q.  The  thought  is  that  if  you  are  not  justified  in  spend- 
ing the  State's  money  for  certain  purposes,  you  are  not 
justified  in  collecting  it,  not  to  pass  upon  individual  cases 
or  anything  of  that  sort. 

A.  What  I  am  going  to  mention,  we  are  troubled  with 
people  coming  in  sometimes  every  week,  sometimes  al- 
most every  day,  wanting  to  know  when  we  are  going  to 
pay  bounty.  It  seems  to  me  that  if  the  State  has  a 
bounty  on  certain  noxious  animals  and  that  is  to  encour- 
age the  killing  of  them,  then  it  seems  to  me  we  ought  not 
to  depend  upon  appropriations  to  pay  them.  It  seems 
to  me  the  Commissioners  of  all  the  counties  ought  to  have 
the  right  to  pay  as  they  go  along,  and  send  their  report 
to  the  Treasurer  once  a  month  or  once  each  quarter.  I 
tell  people  I  believe  the  Committee  at  the  next  session 
of  the  Legislature  will  appropriate  enough  money  to  do 
it.  That  is  all  I  can  tell  them.  I  try  to  keep  them  in 
a  good  humor. 


855 


Judge  W.  B.  Crocker:  As  a  lawyer,  I  may  state,  from 
the  principle,  I  can  see  no  reason  why  surplus  income 
should  not  be  appropriated,  a  portion  of  it,  for  public 
and  social  purposes,  as  well  as  the  surplus  income  of 
private  corporations  or  individuals,  but  the  State  Su- 
preme Court  decided  that  an  income  of  b  per  cent,  was 
not  an  unreasonable  income.  It  would  amount  to  about 
the  same  thing.  *  *  * 

I  do  not  see  why  public  service  corporations  are  en- 
titled to  any  more  consideration  than  any  others. 

Q.  Have  you  in  your  mind  any  company  earning  over 
6  per  cent,  today? 

A.  Oh,  yes.  One  water  company  I  represent  earns, 
I  think,  today  1\  per  cent. 

Q.  Have  you  allowed  for  betterments  there  at  all? 

A.  We  do  not  deduct  wear  and  tear,  because  there  is 
not  enough  wear  and  tear  in  the  present  system,  but 
whatever  wear  and  tear  there  is  we  charge  to  expenses, 
and  there  is  some  goes  into  our  sinking  fund. 

Q.  Is  that  allowing  for  addition  development,  too. 

A.  We  charge  that  to  improvement  or  maintenance 
account  whenever  we  make  extensions,  and  they  are  not 
very  heavy,  sometimes  not  over  three  hundred  dollars  a 
year. 

Q.  How  could  that  be  determined  unless  you  had  a 
public  utilities  commission,  or  something  of  that  kind,  to 
say  how  you  should  keep  your  accounts  and  should  be 
appropriated  for  one  and  what  for  another? 

A.  There  wouldn't  be  any  objection  to  that.  If  it  was 
done  uniformly  that  would  be  the  way  of  arriving  at  it. 
One  thought  occurred  to  me  in  listening  this  morning, 
and  that  is  on  the  question  of  local  taxation,  of  taxing 
mortgages  as  well  as  the  land,  or  else  deducting  from  the 
assessed  value  the  market  value.  I  do  think  agricultural 


856 

lands  are  taxed  more  in  proportion  to  their  actual  value 
than  larger  and  more  valuable  holdings  of  real  estate. 

Q.  That  is  the  fault  of  the  assessor,  it  is  not  the  fault 
of  the  law? 

A.  In  a  sense  it  is  the  fault  of  the  assessor.  The  Act 
of  '95  tended  to  equalize  assessments  in  Williamsport. 
We  increased  the  valuation  by  half  a  million.  "We  found 
the  sentiments  of  the  assessors  was  that  the  interests  of 
those  owning  these  properties  and  engaged  in  business 
connected  with  them  could  not  stand  higher  taxation,  so 
that  it  was  a  matter  of  what  you  might  call  financial 
sympathy,  but  three  years  ago  the  assessors  were  in- 
structed to  assess  the  lands  and  the  buildings  separate, 
and  the  result  was  that  we  increased  our  valuation  from 
nine  to  thirteen  millions,  and  at  the  same  time  the  tax 
rate  was  lowered  three  mills,  so  we  got  the  same  revenue, 
but  it  does  seem  a  hardship  to  make  the  mortgagor  pay 
the  tax  on  the  real  estate  and  also  the  four  mill  tax  upon 
the  mortgage. 

Q.  Of  course,  the  theory  of  the  law  is  that  he  does  not 
pay  the  tax ;  the  land  owner  pays  that. 

A.  Under  that  tax  law,  if  you  remember,  a  great  many 
arguments  were  made  about  imposing  a  State  tax  upon 
the  mortgagor.  I  think  practically  that  is  the  result  of 
it. 

Mr.  Ryder:  I  just  want  to  speak  on  State  roads,  but, 
as  I  understand  it,  this  is  on  legislation  for  roads  and 
everything  else.  It  sort  of  made  me  laugh  this  morning 
when  I  heard  the  gentleman  ask  whether  we  believe  the 
State  a  good  housekeeper  or  not.  I  think  the  State  is  the 
best  housekeeper  in  the  world.  We  have  grievances  up  in 
this  section  of  the  State.  I  suppose  they  have  them  all 
over  the  State.  We  are  led  to  believe  that  we  get  so  much 
money  from  the  State,  so  much  in  repairing  roads,  and 
when  the  time  comes  we  don't  get  it.  Now,  our  township, 
is  a  case 


857 

Mr.  Brown :  This  Committee  hasn  't  anything  to  do  with 
this. 
Mr.  Ryder :  Are  you  working  on  legislation. 

Mr.  Brown:  No,  only  on  the  formation  and  regulation 
of  corporations,  and  revenue  for  State  purposes.  I  assume 
if  the  State  can  she  ought  to  help  out  in  the  building  of 
roads. 

Mr.  Ryder:  We  believe  in  State  aid,  all  right  enough, 
but  we  believe  in  getting  it,  but  we  don't  believe  in  taking 
only  promises  for  it.  That  is  all  we  get  up  in  this  section. 

By  Mr.  Brown: 

Q.  What  is  the  reason — because  there  isn  't  enough  money 
to  go  around! 

A.  I  don't  know. 

By  the  Chairman : 

Q.  How  many  miles  of  State  road  have  you  in  Lycoming 
county  ? 

A.  We  have  in  our  township  2.7  miles  of  road,  cost 
$57,800.  That  is  the  question  I  want  to  speak  on.  That 
is,  if  you  are  looking  for  legislation  to  remedy  these 
things;  that  is,  if  you  are  interested  in  this  subject.  The 
State  claims  we  are  in  partnership  with  the  State.  I  don't 
find  any  way  where  we  are,  only  in  paying.  The  State 
goes  on  and  builds  this  road.  The  State  goes  on  and  takes 
this  money,  without  considering  the  townships '  rights  at 
all,  takes  this  money  from  the  county.  There  is  a  piece 
in  the  paper  last  night  about  it.  While  the  township  is 
willing  and  ready  to  pay  it,  it  never  had  a  word  to  say 
about  it.  There  is  $57,800  for  2.7  miles  of  road.  Then 
the  State  goes  to  work  and  promises  the  supervisors  15 
per  cent,  for  maintenance.  Now,  I  have  a  letter  in  my 
pocket  from  the  State  Highway  Department;  if  the  gen- 
tlemen care  to  hear  it  I  will  read  it  to  you.  This  may  not 
concern  you  about  paying  the  15  per  cent.,  but  the  town- 
ship pays  $4,000  for  repairing  the  road  and  got  back 


858 

from  the  State  $540.  But  the  State  goes  on  and  simply 
confiscates  this  money  and  keeps  it  and  doesn't  pay  the 
township  what  it  owes  it. 

Q.  What  remedy  do  you  suggest? 

A.  Why,  I  mean  to  say  that  when  the  State  passes  a 
law  that  it  is  going  to  pay  15  per  cent,  bonus,  I  mean  it 
should  pay  it. 

Q.  Your  thought  is  to  turn  the  money  into  the  county 
and  then  have  the  county  build  its  own  roads? 

A.  That  isn't  the  question.  The  State  has  promised 
the  township  15  per  cent,  bonus  for  all  the  cash  they  raise. 
Many  of  the  supervisors  calculated  on  that  certain  amount 
of  money  in  their  work,  and  have  worked  accordingly. 
Now,  the  State  doesn't  pay  it.  Now,  are  the  supervisors 
all  to  appear  as  liars  or  fools  before  the  public?  The 
State  owes  the  township  now  between  three  and  four  thou- 
sand dollars  on  that  15  per  cent,  bonus  alone.  We  have 
told  our  people  we  are  going  to  get  this  money.  Where 
is  it? 

Q.  They  took  it  out  of  the  township's  share  and  paid 
for  the  road  with  it,  didn't  they? 

A.  No,  they  took  this  money  off  of  the  county.  The 
county  didn't  pay  the  expenses  for  the  township  at  all. 
Our  township  is  well  able  to  pay  for  its  own  bills,  but  the 
State  refuses  to  pay  its  own  bills  under  the  present  laws. 
The  State  simply  confiscates  the  money  that  belongs  to 
the  County  Commissioners.  It  is  taking  it,  but  refuses  to 
pay  to  the  townships  what  it  owes  the  townships.  I  am 
ready  to  answer  any  questions  in  regard  to  that  if  you 
want  to  ask  any. 

Mr.  Brown:  I  think  I  understand  your  position.  It 
is  hardly  within  the  purview  of  this  Committee  to  help 
you  any. 

The  Chairman:  The  resolution  under  which  we  were 
created  was  simply  to  look  toward  the  revision  of  the  cor- 
poration and  revenue  laws  of  the  State.  We  find  that 
complaint  pretty  general  along  the  line. 


859 

Mr.  Klein:  As  a  native  American,  Pennsylvania  born, 
and  one  who  is  rather  proud  of  it,  I  am  ready  at  any 
time  to  declare  that  Pennsylvania  gives  more  to  schools 
and,  charitable  institutions  than  most  of  the  States  in  the 
Union;  and  one  of  the  things  that  has  bothered  me  some- 
times, is  how  do  the  cities  and  boroughs  get  back  any 
portion  of  the  taxes  that  go  from  them  locally?  That  is, 
as  a  public  utilities  corporation.  It  is  true  we  get  it 
back  in  public  charities  and  schools,  and  that  sort  of  thing, 
but  I  haven't  had  a  chance  to  talk  with  my  attorney  and 
don't  know  whether  I  am  asking  a  foolish  question  or  not, 
but  is  there  any  provision  for  the  cities  and  boroughs  of 
the  interior  getting  back  some  of  the  taxes  for  their  own 
benefit  that  comes  from  public  utilities,  anything  of  that 
kind?  Is  there  any  legislation  covering  that? 

Mr.  Brown :  You  are  getting  it  for  the  schools  and  chari- 
ties. 
Mr.  Klein:   Yes. 

Mr.  Brown:  Well,  those  things  you  would  have  to  sup- 
port yourself  if  the  State  did  not  get  you  the  money.  That 
is  why  it  is  handed  back  to  you.  That  is  why  it  is  di- 
vided proportionately,  so  that  each  county  gets  its  share. 

Mr.  Klein:   But  we  have  no  voice. 

Mr.  Brown:  The  law  gives  them  a  voice  by  representa- 
tion. Of  course,  that  comes  back  according  to  your  needs, 
for  your  State  institutions,  etc.,  and  you  have  an  oppor- 
tunity of  sending  your  people  to  the  State  institutions  for 
care.  That  is  why  that  is  handed  back  to  you.  The  coun- 
ties get  a  certain  amount  of  money  that  way.  Of  course, 
you  get  it  back  indirectly  by  State  Government  and  the 
protection  you  have  there.  Everything  goes  back  except 
what  is  used  by  the  State  for  proper  purposes,  for  support 
and  maintenance. 

Mr.  Klein:  But  the  city  has  no  voice.  Many  of  them 
are  struggling  with  an  indebtedness,  and  along  comes  the 
State  and  puts  a  tax  on  them,  and  they  are  not  in  shape 


860 

to  pay  it.  There  is  no  way  of  getting  a  portion  of  the 
tax  on  public  utilities  corporations  and  other  corporations 
which  are  controlled  for  a  particular  purpose? 

Mr.  Brown:   No,  I  know  of  none. 

Mr.  Klein:  That  is  what  I  thought.  Now,  as  a  mer- 
chant, I  object  to  the  State  mercantile  tax  that  we  pay  to 
the  Commonwealth.  "We  also  pay  a  State  tax  for  the  same 
purpose.  This  relates  to  firms  or  partnerships.  Now,  many 
merchants,  individual  merchants  and  firms  take  out  char- 
ters, and  their  object  for  doing  that  is  to  better  protect 
their  business  in  case  of  death,  to  give  favored  and  desir- 
able employees  an  interest  in  the  business;  and  it  makes  a 
better  proposition  in  many  ways  than  a  firm  or  a  partner- 
ship. They  have  to  pay  for  a  State  tax,  a  city  tax  and 
a  corporation  tax.  Is  there  any  provision  for  separating 
that  tax,  those  funds  that  we  raise?  Say,  for  instance, 
a  manufacturer  is  exempt;  he  pays  no  tax,  but  there  is  a 
merchant 

Mr.  Brown:  They  pay  tax  on  everything  except  their  cap- 
ital stock.  They  pay  tax  on  bonds,  and  everything  of  that 
kind. 

Mr.  Klein:  It  always  looked  to  me  as  though  the  mer- 
chant is  taxed  two  or  three  times  for  the  same  thing. 

Mr.  Brown :  In  the  first  place  your  corporation  does  not 
have  to  incorporate.  You  ask  the  State  to  give  you  a 
franchise,  which  exempts  you  from  personal  liability  for 
debts;  it  is  a  special  privilege.  We  don't  have  a  franchise 
tax  in  Pennsylvania.  Some  States  have  an  additional 
tax.  The  next  is  your  mercantile  tax. 

Mr.  Klein:   That  goes  to  the  Commonwealth? 

Mr.  Brown:  Yes,  that  goes  to  the  Commonwealth,  and 
you  have  your  local  tax,  that  is  a  police  tax,  for  local 
protection  that  you  get.  You  think  that  is  double  tax- 
ation or  treble  taxation;  one  tax  ought  to  cover  it  all? 

Mr.  Klein:  Yes. 

Mr.  Brown:    Well,  there  has  been  opposition  to  a  mer- 


861 

cantile  tax.     That  is,  a  State  mercantile  tax.     There  is  a 
great  deal  of  opposition  to  that. 

Mr.  Klein:  You  see,  it  is  really  three  taxes.  You  pay 
taxes  to  the  Commonwealth  once  for  a  mercantile  license, 
and  then  you  pay  it  again  for  the  city,  and  in  case  you 
are  a  corporation  you  have  to  pay  so  much  tax. 

By.  Mr.  Brown: 

Q.  You  think  that  is  an  undue  burden  on  the  mer- 
chants ? 

A.  I  never  had  it  entirely  clear  in  my  mind  that  it  was 
not  a  double  taxation  for  the  same  purpose. 

Q.  Has  it  ever  occurred  to  you  that  it  was  unfair  as  com- 
pared to  what  other  people  pay?  In  other  words,  do  the 
merchants  think  they  are  paying  more  than  their  share  of 
the  tax? 

A.  I  don't  know,  sir.    I  can't  answer  that. 

Q.  In  other  words,  each  man  ought  to  pay  his  share  ? 

A.  You  can't  run  the  Commonwealth  without  it. 

Q.  Now,  let  us  get  down  to  it.  Do  you  merchants  think 
you  are  paying  more  than  your  share  of  that  tax? 

A.  This  is  my  private  opinion.  I  haven 't  talked  with  any 
merchants.  I  have  been  out  in  the  State  for  two  months, 
but  knowing  that  the  Commission  was  here  I  just  ran  in 
to  hear  what  was  said.  I  made  no  preparation  for  it. 
I  can't  help  but  feel  that  in  paying  a  mercantile  tax  and 
then  paying  the  city  again  for  mercantile  purposes,  and 
then  paying  the  State  again,  if  you  choose  to  incorporate — 
the  firms  that  are  in  partnership  don't  pay  that.  It  seems 
to  me  it  is  a  matter  that  would  require  considerable  in- 
vestigation. I  know  several  concerns  that  are  incorpor- 
ated for  the  purpose  I  have  stated,  to  divide  it  among 
their  employees  and  give  them  additional  credit,  and  all 
that. 

A.  They  pay  just  the  same  as  a  man  pays  for  a 
special  privilege,  and  any  other  man  who  gets  a  special 
privilege  from  the  Commonwealth  pays  for  it. 


862 

A.  That  additional  price  or  tax  they  pay  for  perpetua- 
ing  their  business,  giving  to  the  employees  shares  of 
stock,  and  so  on. 

Q.  And  exemption  from  individual  liability  for  debts, 
and  so  on. 


863 


Public  Meeting  of  the  Committee  held  in  the  Chamber 
of  Commerce,  Erie,  Penna.,  on  Friday  A.  M.,  April  15, 
1910,  at  11  o'clock. 

Present:  Gabriel  H.  Moyer,  Vice  Chairman  and  Sec- 
retary, presiding;  William  H.  Kayser,  James  F.  Wood- 
ward, David  Hunter,  of  the  Committee.,  Francis  Shunk 
Brown,  Esq.,  Counsel. 

Auditor  General-Elect  Sisson  sat  with  the  Commission. 

The  Chairman :  The  purposes  for  which  this  Commission 
was  created  have  been  clearly  denned  in  the  circular  let- 
ter which  you  have  all  no  doubt  received.  We,  therefore, 
shall  not  waste  any  time  in  making  any  extended  remarks 
on  that  point.  We  are  here  for  the  purpose  of  gathering 
data  and  suggestions  for  legislation  to  revise  our  tax 
laws  wherein  they  are  defective ;  and  for  that  purpose 
we  shall  be  very  glad  to  hear  the  views  of  the  gentlemen 
who  have  been  asked  to  appear  before  us.  Mr.  P.  J. 
Barber  is  here,  representing  the  Erie  Lithographing  Com- 
pany, and  we  would  like  to  hear  from  him. 

MR.  P.  J.  BARBER,  Erie,  Pa. 

Mr.  Chairman,  and  Gentlemen  of  the  Commission:  I 
did  not  come  here  prepared  to  say  anything ;  I  came  pre- 
pared to  listen.  As  I  understand  the  situation,  you  are 
gathering  suggestions  as  to  methods  of  taxation. 

Sometime  ago,  when  I  was  a  candidate  for  the  Legis- 
lature, I  noticed  the  mercantile  tax  was  under  discussion ; 
and,  like  a  great  many  other  men  who  were  candidates, 
I  was  approached  upon  that  subject  as  to  where  I  stood 
on  the  matter  of  repealing  of  the  mercantile  tax,  and,  of 
course,  without  giving  it  any  investigation,  I  didn't  want 
to  be  put  on  record  until  I  had  looked  upon  the  subject 


864 

more  thoroughly  and  satisfied  myself  that  the  mercantile 
tax  was  necessary  to  provide  revenues  for  the  State  of 
Pennsylvania.  I  am  in  favor  of  repealing  any  taxation 
that  is  unjust,  that  is  class  legislation,  so  as  to  speak ;  and 
I  so  informed  this  gentleman  who  approached  me  on  the 
subject — that  I  would  investigate  it,  and  if,  in  my  judg- 
ment, it  was  objectionable,  I  would  be  the  very  one  to  vote 
for  repeal. 

The  question  of  tax  is,  of  course,  one  that  touches 
everyone  who  is  interested  in  any  property ;  and  they  are, 
naturally,  of  the  opinion  that  all  tax  should  be  avoided 
if  possible  to  do  so.  This  is  naturally  very  much  the  same 
in  one  business  as  it  is  in  another.  Our  firm,  of  course, 
pays  a  small  State  tax  something  like  seventy-six  dollars. 
We  pay  a  county  tax  of  three  to  four  hundred  dollars 
annually. 

Mr.  Moyer: 

Q.  You  are  a  Pennsylvania  corporation? 

A.  Yes,  sir.  The  consensus  of  opinion  was,  as  I  gleaned 
it,  that  the  State  has  too  much  revenue.  Now,  of  course, 
we  all  know  the  Commonwealth  is  a  good  thing;  but 
wherever  a  tax  is  unequal,  I  should  always  be  in  favor  of 
repealing  it  or  reducing  it  to  the  minimum.  I  believe 
that  (speaking  for  our  firm)  they  are  very  well  satisfied, 
as  there  has  been  no  complaint  from  the  officers  of  the 
company  up  to  the  present  time  about  the  treatment  they 
are  receiving  from  the  State ;  and  while  that  continues,  I 
have  no  hesitancy  in  saying  that  you  will  hear  no  ob- 
jections from  us. 

If  I  knew  something  specific  that  you  had  in  mind,  I 
might  be  able  to  discuss  it;  but  I  notice  in  your  call  for 
the  meeting  that  you  are  interested  in  corporations,  or 
the  regulation  of  corporations  and  appropriations  of  mon- 
ey to  institutions  not  under  State  control,  and  the  assess- 
ment and  collection  of  taxes  in  Pennsylvania. 

By  the  Chairman: 

Q.  Are   you   connected  with   the  hospitals  here? 


865 

A.  Not  in  a  specific  way.  I  am  interested  in  the  Bureau 
of  Charities  and  some  other  institutions. 

Q.  Associated  Charities? 

A.  Yes ;  that  is  an  organization  composed  of  the  various 
charitable  institutions  here — locally. 

Q.  Our  counsel,  Mr.  Brown,  will  probably  give  you 
a  line  of  thought  in  that  connection. 

A.  I  am  a  great  believer  in  appropriating  all  the  money 
a  State  possibly  can  for  the  care  of  its  poor  and  its  hos- 
pitals, because  the  hospitals  are  not  equipped  as  they 
should  be.  Both  hospitals  in  this  city  need  a  great  deal 
more  money  than  they  are  getting.  They  are  doing  a 
great  work  and  the  city  is  growing.  1  don't  believe 
the  appropriations  to  the  both  hospitals  have  grown  with 
the  city,  and  with  the  needs  of  the  city.  The  appropria- 
tions have  not  been  sufficient  for  the  needs  of  these  in- 
stitutions, and  that  is  proven  by  the  fact  that  private 
individuals  are  called  upon  yearly  to  pay  a  great  deal  of 
money  that  should  be  paid  by  the  State.  This  makes  a 
double  burden  upon  the  taxpayers.  And  when,  as  a  rule, 
the  people  who  are  liberal  are  men  of  means  who  are 
liable  to  taxation,  I  believe  it  is  unfair — always  has  been. 
This  is  the  position  I  have  taken  on  that  subject. 

By  Mr.  Brown: 

Q.  Are  you  a  manufacturing  corporation? 
A.  Yes ;  we  manufacture  in  that  we  print. 

Q.  Are  you  exempted  from  the  State  tax  on  stock? 
A.  Yes. 

Q.  Are  you  under  the  manufacturer  exemption  law? 
A.  Yes. 

Q.  Have  you  ever  made  any  effort  to  gather  the  senti- 
ment of  manufacturing  corporations  as  to  the  fairness  of 
the  levy  of  a  tax  upon  the  capital  stock  of  such  corpora- 
tions, assuming  that  the  Commonwealth  of  Pennsylvania 
is  not  today  collecting  sufficient  revenue  to  properly  sup- 
43 


866 

port  her  charitable  and  other  similar  institutions  and  to 
provide  for  the  usual  State  outlays? 

A.  No.  This  matter  didn't  come  to  me  really  in  time 
to  give  much  thought  to  that.  I  have  not  given  the 
thought  to  it  I  would  like  to  in  order  to  clearly  state  my 
opinion  on  that  question. 

Q.  Do  manufacturing  corporations,  so  far  as  you  have 
been  able  to  gather  the  sentiment,  feel  that  the  burden  is 
sufficiently  heavy  upon  them? 

A.  There  does  not  seem  to  be  any  opposition  to  the 
taxes  as  they  are  levied  at  the  present  time,  excepting 
the  merchants. 

Q.  That  is  the  mercantile  tax? 

A.  Yes,  that  is  the  only  objection  I  have  heard. 

Q.  I  am  speaking  now  of  the  capital  stock.  That  is 
the  only  thing  that  the  manufacturing  corporations  are 
exempted  from? 

A.  I  don't  see  where  they  would  have  any  objection 
to  the  exemption. 

Q.  In  answer  to  that  question  in  Philadelphia,  a  mem- 
ber of  the  Manufacturers'  Club  replied  that  they  had 
canvassed  the  subject  and  had  come  to  the  conclusion  that 
if  the  Commonwealth  of  Pennsylvania  intended  to  con- 
tinue in  her  liberal  appropriations  to  charitable  institu- 
tions, and  more  money  were  needed  for  the  building  of 
roads,  that  the  manufacturing  interests  represented  there 
would  not  be  dissatisfied  with  a  levy  of  say  one  mill. 

A.  That  is  the  amount  of  the  Federal  tax. 

Q.  And  basing  it  on  the  manufactures  of  the  Com- 
monwealth, which  aggregates  say,  three  billions,  it  would 
produce  a  revenue  of  about  three  millions.  Is  there  any 
sentiment  like  that  in  this  district  here? 

A.  I  know  of  none.  I  suppose  the  proper  man  from 
whom  to  get  your  information  would  be  the  secretary  of 
the  Manufacturers'  Association;  and  I  am  disappointed 
not  to  see  him  here. 


867 

Q.  I  understand  he  will  be  here  at  two  o'clock  this 
afternoon. 

A.  He  would  have  that  data.  I  am  only  speaking  from 
my  individual  experience.  I  have  heard  no  adverse 
criticism. 

By  the  Chairman: 

Q.  What  is  your  private  opinion  regarding  the  taxing 
of  capital  stock  of  manufacturing  corporations — say  one 
mill? 

A.  My  individual  opinion  would  be  that  if  it  were  used 
to  relieve  the  burden  or  individual  subscriptions  to  the 
hospitals  and  institutions  of  that  kind,  it  would  be  rather 
a  relief  than  a  burden,  because  it  would  distribute  it 
among  many,  whereas  now  it  is  confined  to  a  few  men 
who  are  liberally  inclined. 

Q.  Do  your  manufacturing  corporations  contribute  to  the 
hospitals  ? 

A.  Yes,  nearly  every  one  when  called  upon  for  money  on 
charitable  appeals  and  things  of  that  kind  every  year.  I 
would  rather  see  even  one-half  mill  or  one-quarter  mill  or 
something  of  that  sort  put  on  the  manufacturer,  making  it 
general. 

Q.  Do  you  think  appropriations  of  State  money  has  a 
tendency  to  diminish  private  contributions? 

A.  Yes,  it  has  a  tendency. 

Q.  Are  the  hospitals  eager  to  get  private  contributions 
at  the  same  time  they  are  receiving  State  aid  ? 

A.  That  is  a  qustion  I  would  not  care  to  enter  into,  be- 
cause that  would  be  criticising  gentlemen  who  are  interested 
in  the  institutions.  I  would  rather  have  men  who  are  more 
interested  in  that  to  answer  that  question. 

By  Mr.  Brown : 

Q.  This  is  only  among  ourselves.  Could  the  money  given 
to  the  hospitals  here  be  used  to  better  advantage  if  given  to 
one — a  combination  of  hospitals  ? 

A.  No,  I  don't  think  so. 


868 

Q.  There  has  been  a  complaint  in  Philadelphia  and  Pitts- 
burgh that  it  is  too  generally  distributed ;  that  if  the  money 
was  given  to  one,  better  service  would  result  to  the  people. 

A.  That  would  depend  on  local  conditions.  In  this  city 
one  hospital  is  under  the  auspices  of  the  Catholic  Church, 
and  there  is  another  institution.  I  believe  it  is  perfectly 
fair  to  give  both  of  these  hospitals  all  the  money  they  can 
use  for  the  benefit  of  charity  patients. 

Q.  Are  the  beds  well  filled  here? 

A.  I  think  so.  I  have  an  idea  they  are  sometimes  over- 
crowded. I  know  some  people  have  been  denied  admission, 
even  those  who  have  been  willing  to  pay  for  beds.  I  know 
of  several  instances.  As  an  ofiicer  of  one  of  the  fraternal 
orders  I  had  occasion  to  visit  both  hospitals  very  often; 
and  I  know  at  times  it  was  very  hard  for  us  to  get  patients 
admitted  when  we  were  willing  to  pay.  I  think  this  is  one 
of  the  things  the  State  could  do  that  would  be  appreciated 
in  Erie. 

Q.  I  gather  your  thought  that  the  State  should  be  liberal 
in  her  appropriations  to  these  philanthropic  institutions  ? 
A.  Yes. 

Q.  Assuming  the  money  would  be  properly  expended, 
and  the  revenues  of  the  State  were  sufficient  to  satisfy  these 
demands,  it  is  your  thought  that  every  taxable  could  be  in- 
cluded? 

A.  Yes. 

Q.  What  other  taxables  could  be  returned? 

A.  That  is  a  question  I  would  rather  someone  else  answer. 

Q.  Some  say  do  away  with  all  these  private  institutions, 
and  you  will  find  others  that  say  give  more  to  them  ? 

A.  I  would  do  away  with  some  of  the  rest  of  these  things 
if  I  were  going  to  do  away  with  anything.  When  these 
things  are  here  we  must  take  care  of  them.  If  the  present 
has  no  need,  we  must  take  care  of  them  for  the  future.  It 
seems  to  me  that  the  city  of  Erie  is  not  asking  for  as  much 
as  they  are  entitled  to  in  the  way  of  hospitals.  I  think  if 


869 

a  tax  were  levied  upon  some  of  those  that  are  now  ex- 
empted, it  would  not  be  unjust  at  all. 

Q.  We  would  like  to  hear  about  the  taxing — about  the 
sentiment  as  to  taxing  public  utility  corporations,  railroads 
and  others  ? 

A.  The  Treasurer  is  here,  and  the  Controller  and  the 
Mayor  of  the  city. 

Mr.  Brown:  We  are  here  to  gather  information  about 
the  subject  of  the  formation  and  regulation  of  corpora- 
tions, State  revenues,  the  collection  of  money  by  the  Com- 
monwealth and  the  appropriation  of  that  money.  The 
reason  we  asked  about  the  hospitals  is  that  if  it  is  not  right 
to  appropriate  money  to  institutions  not  under  State  con- 
trol, it  is  not  right  to  tax  private  people  for  these  charitable 
institutions.  If  you  have  any  thought,  Mr.  Mayor,  as  to 
whether  the  law  is  defective,  we  shall  be  glad  to  hear  from 
you  as  to  any  suggestions  you  may  have  to  offer  ? 

The  Mayor :  An  officer  I  would  like  you  to  hear  on  that 
is  the  City  Solicitor.  You  are  on  the  question  of  taxing 
public  utility  corporation  property? 

Mr.  Brown :  We  are  here  to  gather  the  views  of  the  peo- 
ple here  whether  this  should  be  taxed  locally. 

A.  Well,  on  that  point — that  was  brought  out  at  the  last 
conference  of  the  first-class  cities  last  summer.  We  think 
in  Erie  that  we  get  a  much  larger  amount  of  tax  out  of  that 
character  of  property  than  they  do  in  most  third-class 
cities.  We  follow  the  law  as  closely  as  we  can,  and  we 
are  strict  about  our  exemption — as  to  what  is  clearly  ex- 
empted— and  on  property  held  by  public  utility  corpora- 
tions, we  fight  it  out  with  them.  The  result  is  that  we  are 
getting  a  much  larger  amount  of  tax  than  most  third-class 
cities.  I  don't  know  that  we  are  getting  as  much  as  we 
should  get.  There  is  some  certain  property  that  is  abso- 
lutely essential  that  is  exempted  under  the  law. 

Q.  Is  it  your  thought  that  that  should  not  be  exempted? 
Some  of  the  counties  state  that  while  it  should  be  taxed 


870 

there  should  be  some  equitable  basis  of  taxation.     Others 
say  it  should  be  taxed  locally? 

A.  That  class  of  property  is  given  fire  protection,  police 
protection,  light,  water;  it  is  given  everything  that  the 
city  has  to  give  in  the  same  measure  that  every  other  class 
of  property  is  given.  For  that  reason,  if  for  no  other  rea- 
son, I  should  think  it  should  bear  the  same  proportion  of 
taxation  that  any  other  piece  of  property  would. 

Q.  How  about  the  return  of  the  personal  property  tax  in 
this  county,  the  money  at  interest,  for  instance;  is  that 
fairly  returned? 

A.  I  think  it  is  pretty  closely  watched.  There  is  a  gen- 
eral impression  around  that  the  returns  are  very  fair. 

Q.  Have  you  any  other  thought  or  suggestion  ? 

A.  No,  not  just  now.    How  long  will  you  be  in  session? 

Q.  All  day. 

A.  I  would  like  to  bring  the  City  Solicitor  here.  He 
would  probably  have  something  that  would  be  of  advantage 
to  you. 

Q.  We  would  be  glad  to  hear  from  the  City  Solicitor. 

A.  The  Treasurer  is  here.  He  is  very  familiar  with  the 
tax  assessment  here;  and  the  Controller  is  here,  who  is  very 
familiar  with  the  tax  levy.  If  there  are  any  questions 
you  would  like  to  ask  them,  I  know  they  would  be  pleased 
to  have  you  do  so,  and  they  will  give  you  very  direct 
answers. 

Q.  I  would  like  to  ask  the  Treasurer  about  the  collec- 
tion of  taxes.    He  sends  out  blanks  from  the  Auditor  Gen- 
eral here? 
By  the  Treasurer : 

A.  They  come  direct  from  Harrisburg. 

Q.  You  don't  send  them  out? 

A.  You  mean  who  gets  the  list  ? 

Q.  Yes. 

A.  They  keep  a  record,  I  think,  when  the  corporation 
takes  out  a  charter. 


871 

Q.  I  mean  the  blanks  for  the  return  of  money  at  inter- 
est, for  interest. 

A.  I  thought  you  meant  corporations. 

By  Marvin  Griswold: 

Q.  Do  I  understand  that  this  Commission  is  looking  after- 
revising  the  whole  system  of  State  taxation  ? 

By  Mr.  Brown : 

A.  We  are  here  to  consider  any  subject  relative  to  the 
collection  of  State  revenue. 

Mr.  Griswold,  Griswold  Mfg.  Co. :  I  am  interested  in 
manufacturing  corporations  exempted  from  taxation  on 
capital  stock  in  Pennsylvania.  I  think  we  should  collect 
a  tax  on  loans  and  deduct  that  from — for  instance,  we 
have  a  bond  issue  and  deducted  that  from  the  interest. 
It  seems  to  me  it  would  be  a  hardship  upon  the  borrowing 
concern  that  has  to  borrow  the  money,  and  it  seems 
to  be  much  more  equitable  if  we  didn't  have  that  tax  on 
the  loan  but  could  put  it  on  the  capital  stock. 

Q.  In  other  words,  not  tax  the  loan,  but  exempt  the  bond 
and  tax  the  capital  stock? 

A.  Yes,  that  would  strike  every  manufacturing  corpo- 
ration equally,  and  would  tend  to  keep  the  corporations 
from  inflating  their  value  of  capital  stock.  It  would  make 
them  give  what  it  is  actually  worth.  The  tax  would  be 
more  apt  to  bring  out  the  true  value.  They  would  not  capi- 
talize good  will  perhaps  as  heavy  as  they  have  been.  The 
borrowing  concern  who  is  borrowing  the  money  makes  the 
bond  issue,  while  the  man  who  loans  the  money  is  supposed 
to  pay  the  indebtedness  tax;  and  corporations  can  borrow 
money  cheap  when  they  have  to  pay  a  four  mills  tax ;  and 
this  they  take  into  consideration  when  they  make  a  loan. 

Q.  How  would  it  do  to  tax  the  gross  value  of  all  assets 
of  the  corporations — upon  all  their  indebtedness  ? 

A.  If  you  taxed  the  gross  value,  that  is  the  gross  value 


872 

of  the  corporation,  it  would  include  the  indebtedness.  The 
net  value  in  some  corporations  does  not  amount  to  anything. 
You  would  be  taxing  a  dead  wall.  If  you  get  away  with 
taxing  the  gross  value  of  the  capital,  it  would  be  a  good 
proposition.  A  small  tax  on  a  corporation  would  bring  in 
a  good  deal  more  money  than  a  four-mill  tax  on  loans.  We 
have  to  make  out  a  detailed  report  to  the  Auditor  General 
where  we  ask  for  exemption  in  taxation,  and  answer  a  great 
many  questions  required  in  filling  out  that  report.  We 
should  simply  make  affidavit  that  we  are  a  manufacturing 
corporation 

Q.  That  report  is  to  make  sure  that  you  should  be  ex- 
empted, and  the  thought  of  the  return  is  that  something 
might  turn  up  in  that  report  that  will  prove  somebody  not 
exempted  ? 

A.  I  have  looked  over  these  blanks. 

Q.  It  would  simplify  the  returns  if  we  took  just  the 
gross  assets — wouldn't  that  be  easier  than  the  way  it  is 
done  now? 

A.  Include  the  stock,  though.  You  know  what  capital 
stock  is.  We  have  had  a  number  of  interests  say  that  the 
easiest  way  to  get  away  from  taxation  was  to  become  in- 
corporated. There  is  too  much  given  here.  An  exemp- 
tion here  and  an  exemption  there — now,  if  you  take  the 
gross  value  of  the  assets  of  a  corporation  and  levy  a  small 
tax  on  that,  then  it  does  away  with  all  this.  These  assets 
include  the  bonded  debt,  moneys  borrowed,  moneys  at 
interest,  etc.  If  you  tax  the  gross  assets  you  are  taxing 
everything,  for  instance,  building,  machinery,  stock  in 
process  of  manufacture,  and  one  man  may  estimate  it  at 
100  per  cent,  more  than  the  next  man. 

Q.  But  under  the  law,  the  Auditor  General  has  a  right 
to  send  around  his  own  auditor  who  may  make  his  own 
appraisement.  The  thought  is  that  one  man  may  be  a 
sort  of  a  watchman  over  the  other  man's  business.  As  to 
the  advertising  of  the  assessments,  if  these  were  all  pub- 


873 

lished,  every  man  would  know  what  the  other  man's  prop- 
erty was  assessed. 

Mr.  Brown:  Do  you  pay  a  mercantile  tax? 
A.  No. 

Mr.  Moyer,  the  chairman: 

I  would  like  to  ask  the  Treasurer  a  few  questions  as  to 
the  money  at  interest  and  the  return  thereof.  How  are 
your  assessors  selected  here  ? 

By  City  Treasurer  Pinney : 

A.  Elected. 

Q.  By  the  people  ? 

A.  Yes,  sir. 

Q.  How  many? 

A.  Three. 

Q.  Do  you  receive  the  money  collected  from  the  various 
sources  of  the  county? 

A.  No,  sir,  I  am  the  City  Treasurer. 

Q.  Do  you.  collect  any  State  tax  at  all? 

A.  No. 

Q.  Aside  from  the  revenue  derived  from  your  licensed 
places? 

A.  That  is  all. 

Q.  We  should  have  the  County  Treasurer  here  as  to 
moneys  at  interest.  As  a  man  of  affairs  and  holding  pub- 
lic office  here,  Mr.  Treasurer,  what  is  your  view  regarding 
the  appropriation  of  money  to  private  institutions  where 
the  title  of  the  property  is  not  vested  in  the  Common- 
wealth? 

A.  Well,  of  course,  hospitals  and  things  of  that  kind, 
I  think,  it  is  right  for  the  State  to  help  these  along.  People 
of  that  kind  should  be  taken  care  of  by  the  State. 

Q.  Your  view  would  be  that  the  liberal  policy  that  has 
been  established  by  the  State  be  continued  ? 

A.  Yes,  sir. 

Q.  And  increased  if  possible  ? 
44 


874 

A.  Yes.  Now,  for  instance,  the  Harriot  Hospital;  they 
want  a  building  with  forty  or  fifty  more  rooms,  and  they 
haven't  enough  money  to  build  it.  "We  took  an  old  lady 
to  that  hospital  a  few  days  ago  and  failed  to  get  a  bed  for 
her;  and  we  had  to  put  a  cot  up  and  wait  a  few  days  until 
we  could  move  her  over  to  a  room  where  somebody  went 
away.  I  think  both  hospitals  should  have  more  money. 

Q.  Why  shouldn't  the  city  itself  help  such  institutions! 

A.  These  hospitals  take  everybody.  If  a  person  is  hurt 
in  some  other  State  or  city  and  brought  into  Erie,  they 
are  taken  to  these  hospitals. 

By  a  Member  of  the  Commission : 

Q.  People  from  Ohio,  for  instance? 

A.  They  are  from  lots  of  places;  and  they  are  as  wel- 
come as  any  other.  We  take  them  from  all  over  the  United 
States. 

By  the  Chairman: 

Q.  And  supported  by  the  State 's  revenue  ? 

A.  Yes,  sir. 

Q.  Do  you  think  it  is  policy  to  continue  to  take  care  of 
the  sick  and  injured  from  all  parts  of  the  United  States  by 
State  appropriations? 

A.  Yes,  if  they  come  into  the  town  and  have  no  place — 
no  home  to  go  to — let  them  go  to  the  hospital.  The  city 
should  not  take  care  of  these  cases. 

Q.  Mr.  Brown,  you  have  the  data,  in  reference  to  the 
State  of  Ohio.  Does  the  State  of  Ohio  appropriate  money 
to  private  charities? 

By  Mr.  Brown : 

There  is  no  institution  in  Ohio  supported  that  is  not 
under  State  control.  There  are  very  few  States  in  the 
Union  that  do.  You  might  say  that  none  of  them  do — 
that  is,  the  majority  of  them  don't.  There  are  thirty-four 
that  make  no  appropriation,  and  nearly  all  the  balance  of 
them  do  it  in  a  modified  way. 


875 


JUDGE  J.  B.  CESSNA,  Erie,  Pa. 

Mr.  Chairman  and  Gentlemen  of  the  Commission: 

I  have  been  asked  to  say  a  word  upon  the  line  of  bus- 
iness spoken  of. 

I  was  born  in  Pennsylvania,  but  have  lived  in  the  West 
for  twenty-five  or  thirty  years,  so  you  young  people  are 
entirely  too  young  to  be  remembered  by  me. 

I  want  to  speak  in  reference  to  the  equalization  of 
taxation ;  on  that  thought  and  that  line.  I  believe  that  real 
estate  is  taxed  too  heavily  and  that  there  is  a  discrimina- 
tion as  to  the  burden  on  real  estate  that  is  not  imposed 
upon  such  corporations  as  railroads.  I  have  been  paying 
taxes  in  Erie  for  twenty-five  years  or  thirty-five  years,  and 
I  have  a  right  to  speak  on  that  subject.  What  I  want  to 
direct  your  attention  to  is  (and  I  believe  I  am  correct  in 
saying)  that  Pennsylvania  real  estate  pays  a  tax  of  twenty- 
five  mills  on  the  dollar,  while  railroads  pay  five  mills  on 
the  dollar.  I  think  that  is  correct.  I  have  given  the  mat- 
ter some  thought  some  years  ago.  Now,  in  Philadelphia 
and  Pittsburgh,  and,  I  think,  in  Harrisburg,  there  they 
are  taxed  on  real  estate;  by  the  authority  of  an  Act  of 
Assembly  passed  prior  to  our  Constitution,  they  are  taxed 
on  real  estate.  They  are  not  taxed  on  real  estate  in  Erie, 
Pennsylvania,  and  there  is  no  good  reason  to  be  given 
why  that  should  be ;  they  are  not  burdened  too  much  and 
it  is  right  and  proper  that  they  should  pay  that  tax.  If 
they  pay  a  tax  by  authority  of  a  special  Act  of  Assembly 
in  Philadelphia,  Pittsburgh,  and,  I  think,  Harrisburg,  on 
real  estate,  why  shouldn't  the  real  estate  in  Erie  and  other 
parts  of  the  State  pay  the  same  kind  of  a  tax?  Why  don't 
the  railroads  pay  a  tax  on  real  estate  in  Pennsylvania? 
Can  you  find  any  statute  exempting  them?  No.  My 
recollection  of  reading  the  decision  of  the  authorities  is 
that  it  comes  through  judicial  interpretation.  Now,  I 


876 

don't  believe  that  decision  was  made  in  any  State  in 
the  Union  outside  of  Pennsylvania.  This  has  been  handed 
down  and  for  that  reason  we  give  them  the  distinction 
of  exemption  on  their  property.  I  think  I  am  right  in 
saying  that  it  is  not  a  statute,  but  that  it  comes  through 
judicial  interpretation.  I  think  the  time  has  come  when 
this  should  be  changed;  that  the  railroads  should  pay 
taxes  on  their  property  in  an  equitable  way ;  not  to  make 
it  partisanism,  but  let  them  pay  the  same  as  you  and  I 
pay;  because  taxation  should  be  equal  on  all  property. 
It  is  wrong  to  tax  one  man's  property  and  not  another's. 
Other  States  tax  railroads.  Out  in  Nebraska  they  tax 
them  there.  About  five  years  ago  they  increased  the  tax, 
taxing  all  property  at  a  certain  rate.  They  increased  the 
tax  on  the  Union  Pacific  Railroad  between  ninety-eight 
and  one  hundred  thousand  dollars.  They  are  all  satisfied 
and  everything  works  harmoniously.  So  it  is  right  to 
tax  them.  Other  States  tax  them.  I  am  not  an  enemy 
of  railroads.  I  am  no  Populist — never  adopted  that 
theory;  but  I  do  believe  that  taxation  should  be  equal 
on  all  property,  corporate  or  personal;  that  we  would 
secure  better  taxation  throughout  the  State;  it  would  be 
equalized,  as  it  should  be.  The  parties  who  are  making 
the  money  and  increasing  their  wealth — the  corporations 
that  are  increasing  their  wealth  are  better  able  to  pay 
taxes  than  you  or  I.  They  get  the  benefits,  as  suggested 
by  our  Acting  Mayor — they  are  protected  by  the  city  in 
the  police  service,  fire  department ;  but  what  do  they  pay 
to  the  City  of  Erie  ?  Of  course,  this  is  all  right  and  proper 
and  we  should  be  commended  for  it ;  but  it  should  not  stop 
there.  If  their  tax  is  not  equal  to  the  burden  you  and 
I  pay,  then  it  should  be  made  equal  by  law,  if  necessary, 
so  as  to  bring  equal  taxation  to  every  taxpayer.  What 
would  we  do  without  railroads?  They  are  necessary  to 
the  State.  "We  could  not  live  without  railroads;  they 
are  a  blessing  to  the  State,  but  in  certain  ways  they  can 
be  an  injury.  If  they  are  allowed  to  escape  taxation  while 


877 

unjust  taxes  are  imposed  upon  you  or  me,  it  is  a  wrong 
to  the  citizens  of  our  State.  I  would  ask  Mr.  Brown,  on 
the  left,  if  I  am  correct  as  to  railroads  in  the  State  of  Penn- 
sylvania ? 

Mr.  Brown:  "We  tax  all  except  roadbeds  and  water 
tanks. 

Judge  Cessna,  continuing:  I  think  that  is  a  thought 
that  is  worthy  of  investigation.  I  did  not  know  your 
Commission  would  be  here  until  last  night.  I  sincerely 
hope  the  investigations  of  your  Commission  will  result 
in  great  benefit  along  these  lines.  We  have  come  into  a 
period  where  we  cannot  do  without  these  corporations, 
and  if  they  are  properly  encouraged,  that  is  all  that  should 
be  done.  They  should  not  be  encouraged  at  the  sacrifice 
of  our  citizens. 

By  Mr.  Brown : 

Q.  You  don't  agree  with  some  of  the  single  taxers  that 
land  should  bear  all  the  taxation? 

A.  No,  sir ;  I  do  not. 


878 


MAJOR  BROWN,  called :  It  was  not  my  intention  to 
come  here  to  address  this  assembly ;  but  I  happened  to  meet 
some  of  my  old  friends  on  the  train  who  invited  me  to 
come  to  this  hearing  to-day.  I  have  made  something  of 
a  study  in  the  long  years  gone  by  of  the  question  of 
State  taxation.  I  have  no  criticism  to  make  upon  the 
policy  that  underlies  taxation  for  State  revenue.  I  be- 
lieve it  is  the  best  that  exists  in  any  State  in  the  Union. 
And  just  here  let  me  refer  to  a  statement  of  the  gentle- 
man who  has  just  taken  his  seat.  He  says  that  railroads 
pay  a  five-mills  tax  on  their  capital  stock.  They  pay 
a  five-mills  tax  upon  the  assessed  valuation  of  their 
capital  stock.  Take,  for  instance,  the  Pennsylvania  Rail- 
road Company  that  has  a  capitalization  of,  I  think,  about 
four  hundred  millions  of  dollars.  That  stock  may  be 
worth  twice  its  par,  and,  if  so — and  the  markets  show 
that  sales  of  stock  have  been  twice  its  par — then  the  re- 
turn to  the  Auditor  General  would  necessitate  the  fixing 
of  the  valuation  of  that  stock  for  the  purpose  of  taxa- 
tion according  to  its  last  sale.  In  other  words,  it  is  not 
five  mills  on  the  par,  but  on  the  assessed  valuation.  Then 
in  addition  to  that,  the  public  utility  corporation  pays  a 
four-mills  tax  on  its  bonded  indebtedness.  Take,  for  in- 
stance, the  Philadelphia  and  Reading  Railroad — it  has 
forty  millions  of  capital  stock  and,  I  think,  one  hundred 
and  fifty  millions,  or  upwards,  on  bonds.  So,  you  see,  it  is 
paying  a  good  deal  more  than  five  mills  on  its  assessed 
valuation  of  capital  stock.  Then,  in  addition  to  that,  the 
law  requires  it  to  pay  eight  mills  tax  on  its  gross  receipts. 
So,  the  statement  of  the  gentleman  is  hardly  fair  to  pub- 
lic utility  corporations.  There  may  be  a  disparity  and 
discrimination  between  them,  but  bear  in  mind  that  the 
farms  and  houses  in  the  State  are  assessed  according  to 
the  enterprise,  the  honesty  and  the  prejudice,  very  largely, 
of  the  assessor.  In  no  county  of  the  Commonwealth  is 


879 

real  estate  assessed  within  75  per  cent,  of  its  actual  value 
(there  may  be  exceptions),  and  in  some  counties  of  the 
Commonwealth  it  is  not  assessed  more  than  22  per  cent, 
of  its  actual  value.  That  is  because  the  laws  are  not  prop- 
erly executed — the  law  requiring  that  it  should  be  assessed 
at  its  actual  valuation  or  as  nearly  so  as  possible. 

Now,  as  to  taxing  manufacturing  corporations.  I  hap- 
pened to  be  a  member  of  the  Legislature  in  1885  when  the 
law  was  passed  repealing  the  tax  on  manufacturing  cor- 
porations— the  capital  stock  of  manufacturing  corpora- 
tions. I  voted  against  it.  It  was  passed  ostensibly  for 
the  purpose  of  encouraging  manufacturing  interests  in 
Pennsylvania,  which  was  most  laudable ;  but  I  argued 
that  the  manufacturing  corporation  of  Pennsylvania  was 
greatly  benefited  by  the  tariff,  and  that  it  should  not 
escape  its  share  of  the  burden  of  public  tax.  I  did  not 
think  it  should  be  assessed  as  high  on  the  capital  stock 
as  a  public  utility  corporation,  because  public  utility  cor- 
porations are  generally  exempted  from  local  taxation, 
while  a  manufacturing  corporation  is  not.  But  when  you 
consider  that  the  hospitals  are  largely  filled  as  a  result 
of  injuries  that  occur  in  manufacturing  interests  of  Penn- 
sylvania, it  would  seem  fair — there  is  some  justification, 
rather — in  the  proposition  that  a  small  millage  should 
be  put  upon  the  manufacturing  corporation  of  Pennsyl- 
vania. Probably  one  mill  would  be  justifiable. 

By  Mr.  Brown,  counsel: 

Q.  What  was  it  before? 

A.  The  millage  on  the  capital  stock  of  corporations  was 
the  same  as  other  corporations.  The  Act  of  1885  simply 
did  away  with  the  millage  upon  the  assessed  valuation  of 
the  capital  stock  of  manufacturing  corporations. 

Q.  It  has  been  suggested  that  the  manufacturing  cor- 
porations should  be  exempted  because  they  are  producers. 
Someone  has  answered  that  the  Standard  Oil,  as  well  as  a 
manufacturing  corporation,  is  a  producer  which  is  largely 


880 

helped  by  nature,  the  same  as  the  farmer  and  other  in- 
terests.   Is  there  anything  in  that? 

A.  Your  suggestion  is  as  to  whether  on  account  of  their 
being  producers  and  adding  to  the  commerce  of  the  State, 
that  they  should  have  favoritism  with  reference  to  the 
millage  ? 

Q.  Yes. 

A.  I  say  yes,  most  decidedly;  but  even  putting  a  one- 
mill  tax  upon  them  for  the  purpose  of  helping  to  main- 
tain our  charities  would  still  be  a  discrimination  in  their 
favor,  because  other  corporations  pay  a  five-mill  tax  upon 
the  assessed  valuation. 

The  gentleman  has  referred  to  the  fact  that  in  the 
City  of  Philadelphia  and  in  the  City  of  Pittsburgh 
the  railroad  corporations  pay  a  local  tax  upon  the  prop- 
erty which  they  own  outside  of  the  road-bed.  This  is  a 
special  law;  but  it  must  be  remembered  in  considering 
this  question  as  to  the  justness  of  putting  more  tax  upon 
public  utility  corporations  that  they  are  especially  re- 
served by  the  Commonwealth  of  Pennsylvania  as  a  sub- 
ject of  taxation.  That  seems  to  have  been  a  fixed  policy 
of  the  Legislature  of  this  Commonwealth  to  reserve  pub- 
lic utility  corporations — all  classes  of  public  utility  cor- 
porations. Now,  where  does  your  money  come  from  by 
which  your  charities  are  supported?  By  which  your  hos- 
pitals are  maintained?  By  which  your  roads  are  built? 
By  which  your  local  taxation  is  realized,  in  that  the  State 
appropriates  at  least  one-third  of  the  expense  of  main- 
taining the  public  school  system  of  Pennsylvania?  It 
comes  out  of  the  public  utility  corporation  almost  in  its 
entirety.  That  should  be  considered.  I  don't  think  it 
would  be  fair  to  increase  the  millage  upon  the  assessed 
valuation  of  the  capital  stock  of  these  corporations,  be- 
cause it  is  only  a  few  years  ago  that  it  was  three  mills; 
then  it  was  increased  to  four  mills  and  now  it  stands  at 
five.  When  you  come  to  consider  the  other  taxes  they  have 
to  pay — the  eight  mills  tax  upon  the  gross  receipts,  the 


881 

four  mills  tax  upon  bonds,  they  are  not  escaping  taxa- 
tion by  any  means. 

There  is  one  thing,  however,  that  ought  to  be  considered 
by  you  gentlemen  who  represent  the  State  of  Pennsylvania 
in  the  halls  of  the  Legislature,  and  that  is  the  question 
of  taxation  of  the  bonded  indebtedness  of  corporations. 
The  law,  as  I  stated,  provides  for  a  four  mill  tax.  But 
here  is  a  corporation  that  may  have  ten  millions  of  dollars 
of  capital  stock  and  ten  millions  of  dollars  of  bonded 
indebtedness.  If  these  bonds  are  owned  in  the  State  of 
New  York,  which  is  the  great  financial  center  of  the 
country,  why,  these  bonds  escape  taxation  under  the 
Interstate  Law.  Is  there  any  way,  in  fairness  to  other 
corporations  whose  bonds  are  owned  in  the  State  -of 
Pennsylvania  and  who  have  to  pay  a  four  mills  tax  upon 
the  value  of  these  bonds,  that  you  can  get  at  in  some 
system,  some  scheme  of  legislation,  to  secure  to  the  State 
of  Pennsylvania  some  revenue  from  the  bonds  of  cor- 
porations that  are  owned  outside  of  the  State  of  Penn- 
sylvania ?  To  me,  that  is  the  greatest  problem  that  exists 
in  the  taxation  question  today. 

Q.  You  would  add  the  bonded  indebtedness  to  the 
capital  stock  and  consider  it  all  assets? 

A.  That  would  be  all  right  provided  the  Federal  Courts 
did  not  say  it  was  beating  the  devil  around  the  stump. 
I  think  the  suggestion  is  a  good  one — whether  it  would 
stand  the  test  is  another  question. 

Another  thing.  I  think  the  Legislature  made  a  mistake 
when  it  passed  a  law  by  which  the  corporations  can  re- 
duce their  capital  stock  to  the  minimum  or  increase  it,  or 
reduce  their  bonded  indebtedness  or  increase;  that  is, 
you  can  make  your  bonded  indebtedness  as  much  as  you 
please  without  reference  to  the  capital  stock.  I  think 
there  is  a  means  of  the  corporation  escaping  taxation. 

Q.  By  bonds  owned  outside  of  the  State? 
A.  Yes. 


882 

Q.  What  is  your  thought  about  appropriations  of  money 
to  institutions  not  under  State  control? 

A.  I  am  one  of  those  who  believe  there  is  more  good 
derived  from  a  thousand  dollars  appropriated  to  private 
charities  than  there  is  to  public  charities. 

Q.  As  far  as  you  know,  this  is  the  general  sentiment 
among  people  to  whom  you  have  talked? 

A.  I  think  it  would  be  a  great  mistake  to  do  anything 
that  would  impair  the  usefulness  of  private  charities.  In 
making  appropriations  to  private  charities,  the  State 
ought  to  take  a  mortgage  the  same  as  they  do  on  a  normal 
school  property,  so  the  State  will  be  protected.  The  State 
should  be  protected  and  the  way  to  protect  it  is  by 
taking  a  mortgage  for  the  money  appropriated. 


883 


MR.  J.  J.  DESMOND,  Erie,  Pa.,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission: 
About  the  only  thing  I  can  say  is  that  I  don't  believe, 
as  a  manufacturer,  that  there  are  any  manufacturers  in 
the  State  (if  there  are  it  is  a  very  small  percentage)  who 
find  any  fault  with  the  present  taxation,  or  even  with  a 
one  mill  tax;  I  know  we  should  not.  But  what  they  do 
strongly  object  to  is  the  Federal  tax  and  having  the  de- 
tails of  our  business  made  public — the  system  of  giving 
out  a  statement  that  gives  our  competitors  practically 
a  complete  knowledge  of  our  business  operations.  So 
far  as  the  one  mill  tax  is  concerned,  I  think  it  should  be 
larger.  For  our  part,  from  our  standpoint,  the  manufac- 
turer should  pay  it,  and  would  willingly  do  so. 

By  the  Chairman : 

Q.  On  the  capital  stock. 

A.  So  far  as  the  capital  stock  is  concerned,  it  has  been 
brought  out  by  Mr.  Brown  that  it  is  very  easy  to  evade 
that  tax,  if  they  make  it  strictly  on  the  capital  stock. 
Take  our  own  case.  Our  capital  is  two  hundred  thousand 
dollars ;  our  surplus  and  undivided  profits  are  six  hundred 
and  twenty-five  thousand  more ;  well,  the  tax  would  only 
be  one-third  of  one  mill  in  that  case. 

By  Mr.  Brown: 

Q.  On  the  value  of  your  assets? 

A.  Yes.  I  believe  very  strongly  in  the  income  tax. 
That  is  a  thing  that  would  tend  to  prevent  the  spread  of 
Socialism. 

Q.  Gross  or  net  income. 

A.  I  mean  net  income.  The  man  who  has  an  income 
is  the  man  who  can  afford  and  ought  to  pay  his  share  of 
protection.  The  more  he  has  the  more  protection  he  gets. 


884 

Q.  Does  that  follow. 

A.  I  say  the  greater  his  income  the  more  he  has 
to  protect ;  and  if  the  Government  is  simply  an  institution 
to  protect  property,  preserve  property  and  law  and  order, 
every  man  can  help  support  it  according  to  his  ability  to 
pay.  The  man  who  is  getting  one  dollar  and  fifty  cents 
to  two  dollars  a  day  is  paying  perhaps  proportionately 
one  hundred  times  more  than  the  man  who  has  an  income 
of  fifty  to  one  hundred  thousand  dollars  a  year.  I  be- 
lieve it  is  that  inequality  that  is  propagating  Socialism. 

Q.  How  would  you  work  out  this  problem?  What  is 
your  thought  on  public  utility  corporations? 

A.  The  income  tax  idea  is  that  the  man  getting  a  big 
income  or  a  small  income  should  be  taxed  according  to 
the  income  in  proportion.  The  Senator  from  Philadel- 
phia brought  up  the  question  coming  up  on  the  train  of 
the  impossibility  of  collecting  that  or  getting  a  return 
for  it.  If  there  is  a  penalty  put  on  it,  it  is  just  as  easy 
to  get  that  information  as  it  is  to  prevent  burglary.  The 
man  who  dodges  his  tax  is  stealing  and  dodging  his  share 
of  Government  expense. 

Q.  Do  you  find  in  your  experience  that  many  do  evade 
it,  or  is  the  disposition  generally  to  respect  the  law  and 
make  a  fair  return? 

A.  I  believe  generally  it  is  intended  to  respect  the  law 
among  what  you  might  call  the  little  people  or  little 
class.  After  a  man  gets  control  of  a  good  deal  of  money 
he  becomes  money  mad  and  will  do  anything  to  dodge 
the  expenditure  of  it,  just  to  pile  it  up ;  he  would  do  any- 
thing within  the  law. 

Q.  Have  you  ever  given  any  thought  on  the  subject  of 
inheritance  tax,  direct  inheritances  to  reach  that  class 
of  men  of  which  you  are  speaking  now? 

A.  I  strongly  believe  in  that.  I  know  of  the  case — 
when  we  bought  the  property  from  the  heirs  of  the  man 
who  established  our  business  the  inheritance  tax  was  5 
per  cent. 


885 

Q.  That  is  a  collateral  tax? 

A.  Yes — the  heirs  were  well  able  to  pay  it;  they  had 
done  nothing  to  accumulate  the  money. 

Q.  I  assume  they  would  be  equally  as  well  able  to  pay 
the  direct  inheritance  tax? 

A.  Yes,  just  as  well.  The  money  in  four  cases  out  of 
five — the  money  that  goes  to  the  children — goes  very  rap- 
idly after  they  get  it. 

Q.  What  is  your  thought  about  roads — building  of 
highways  ? 

A.  I  am  a  crank  on  roads. 

Q.  Do  you  think  they  should  be  built? 

A.  Yes. 

Q.  Do  you  think  the  State  should  build  them? 

A.  I  think  the  present  law  is  an  excellent  one — that  the 
State  puts  a  portion  of  the  money  up  as  against  the 
counties  or  districts  that  are  willing  to  show  their  in- 
terest in  it  by  putting  up  a  portion.  I  have  this  to  say, 
that  I  think  the  Macadam  roads  are  a  failure ;  but  this  is 
a  detail. 

Q.  "What  about  the  public  schools?  It  has  been  ad- 
vanced that  the  State  of  Pennsylvania  should  contribute 
to  each  county  the  minimum  salary  for  the  minimum  term 
of  the  school  teacher. 

A.  Nothing   should  be  cut  off  from  the  public  schools. 

Q.  How  about  charitable  institutions? 

A.  I  think  the  State  should  be  very  liberal  with  these 
institutions  in  the  extreme,  but  should  have  a  string  to 
it  so  it  does  not  get  into  the  hands  of  private  individuals 
or  cliques.  I  have  a  case  in  mind  where  there  is  a  great 
deal  of  factional  feeling  and  the  control  of  the  institution 
is  practically  in  the  hands  of  one  man;  but  I  believe  this 
could  be  overcome. 

Q.  How  would  it  do  to  make  a  per  capita  appropriation, 
let  the  State  pay  to  each  institution  a  per  diem  amount; 
wouldn't  that  obviate  a  great  deal  of  this  trouble t 

A.  Yes. 


886 

Q.  We  have  been  told  that  upwards  of  ten  thousand 
beds  in  institutions  in  Pennsylvania  are  empty  every 
day.  I  presume  a  per  diem  would  obviate  a  great  deal 
of  that. 

A.  Yes,  it  would. 

By  the  Chairman: 

Q.  What  would  you  say  to  this  proposition :  That  each 
county  take  care  of  its  own  unfortunate  people,  the  same 
as  it  does  of  its  paupers? 

A.  It  would  not  be  a  broad  way  of  looking  at  it.  There 
are  some  counties  more  able  to  divide  the  responsibility 
up.  We  are  dependent  one  upon  the  other.  The  county 
that  may  not  be  able  to  take  care  of  its  own  insane  and 
its  paupers  would  have  an  infinite simally  small  percentage 
of  the  population,  and  I  believe  that  is  why  the  State 
divides  these  things  up  and  makes  them  equitable. 

In  speaking,  I  digress  a  great  deal  from  the  original 
point.  One  strong  point  I  wanted  to  make  was  the  ob- 
jection to  the  publicity,  which  is  the  odious  part  of  the 
Federal  tax. 

Q.  I  don't  think  Pennsylvania  has  been  offensive  in 
that  way. 

A.  I  would  say  so  with  the  Auditor  General.  The 
blanks  they  send  out  have  questions  that  we  don't  want 
to  answer. 

Q.  Our  intention  is  to  take  that  up  with  the  Auditor 
General  and  see  if  that  cannot  be  simplified.  Let  me  ask 
you  while  you  are  on  your  feet — about  the  time  of  return? 

A.  It  would  be  much  more  convenient  if  we  made  the 
return  the  first  of  February  instead  of  the  first  of  De- 
cember. Now  about  taxation.  I  believe  there  are  a  num- 
ber of  concerns  like  us.  We  have  one  tannery  in  Corry 
and  one  in  Spring  Lake;  we  have  it  because  it  makes  a 
different  grade  of  leather.  It  is  under  another  name. 
We  own  the  stock.  I  believe  so  long  as  it  is  a  manufac- 
turing concern  it  should  be  taxed  on  these  shares  of  stock 


887 

as  we  hold  them  as  part  of  our  assets  and  ought  to  be 
taxed  the  same  as  we  are  taxed. 

By  Mr.  Brown: 

Q.  As  one  of  your  assets  ? 

A.  Yes;  that  is  all  used  in  manufacture.  In  our  last 
report,  I  believe,  they  put  that  in  as  a  separate  item,  not 
as  used  in  manufacture,  and  it  actually  is. 

ADJOURNED  until  two  o'clock  P.  M. 


888 


The  Commission  reconvened  at  Erie,  April  15,  1910.  2 
P.  M.,  the  same  members  present,  and  Mr.  Moyer,  as 
previously,  presiding. 

Mr.  Moyer:  As  I  understand  it,  we  have  with  us  this 
afternoon  the  Clerk  of  the  County  Commissioners,  who  has 
kindly  consented  to  come  here  and  give  us  some  informa- 
tion which  we  are  seeking.  We  are  especially  concerned 
with  reference  to  the  returns  that  are  being  made  by 
people  who  have  money  at  interest.  Mr.  Robinson,  we  will 
be  very  glad  to  hear  from  you.  Step  forward,  please. 

MR.  J.  A.  ROBINSON,  Clerk  o<-  the  County  Commis- 
sioners. 

Q.  You  mean  the  money  at  interest  held  by  taxpayers  to 
be  returned  for  State  purposes  ? 
Mr.  Moyer:  Yes. 

By  Mr.  Brown : 

Q.  Mr.  Robinson,  what  is  done  with  the  blanks  which 
are  furnished  by  the  Auditor  General  for  the  purpose 
of  securing  returns  of  property  taxable  for  State  pur- 
poses? 

A.  They  are  sent  out  with  the  assessors. 

Q.  How  do  you  make  up  your  list? 

A.  We  give  them  mortgage  books  with  the  mortgages  and 
judgments  in  there  for  the  two  offices,  and  also  furnish 
them  with  a  blank  and  book  with  the  rest  of  their  para- 
phernalia. 

Q.  Do  you  furnish  them  with  a  list  so  as  to  get  at  those 
taxable  ? 

A.  We  instruct  them  to  give  a  paper  to  every  taxable. 

Q.  What  do  you  mean  by  "every  taxable"?  Everyone 
on  the  assessors*  lists? 

A.  Yes. 


889 

Q.  What  do  you  do  to  check  these  up? 

A.  In  what  way? 

Q.  Do  you  demand  a  return  of  these  blanks,  or  a  reason 
for  not  receiving  any  return? 

A.  Yes,  sir. 

Q.  Suppose  they  don't  return  them? 

A.  That  is  left  a  great  deal  with  the  assessor.  When  he 
knows  a  man  has  not  got  anything  he  don't  get  his  paper. 

Q.  Suppose  a  man  has  something  and  the  assessors  do 
not  make  a  return,  is  there  any  effort  on  the  part  of  the 
County  Commissioners  to  follow  that  up? 

A.  Yes,  sir. 

Q.  Do  you  scrutinize  the  return  ? 

A.  Yes. 

Q.  Do  you  think  all  taxables  are  gotten  ? 

A.  No. 

Q.  Where  is  the  leak  or  trouble? 

A.  I  think  it  is  in  the  assessors'  carelessness. 

Q.  Attributable  to  what — the  character  of  the  assessor  ? 

A.  Well,  yes.  The  first  thing,  I  think  the  assessors 
should  be  appointed  by  the  County  Commissioners.  They 
elect  people  that  are  not  capable,  poor  penmen.  When  a 
man  gets  past  doing  anything  else  they  elect  him  assessor. 
I  think  it  should  be  our  best  men. 

Q.  How  about  the  pay — do  you  think  it  is  sufficient? 
What  do  your  assessors  get? 

A.  Two  dollars  and  a  half  per  day. 

Q.  Do  you  think  that  is  sufficient  to  obtain  the  services 
of  competent  men? 

A.  No.  That  is  too  much  for  a  good  many  of  our  as- 
sessors, though. 

Q.  What  return  is  there  made  of  moneys  at  interest  by 
certificate  of  deposit  in  your  banks  and  trust  companies? 

A.  Well,  some  return  and  some  don't.  We  cannot  tell; 
we  have  no  way  of  knowing. 


890 

Q.  Can  you  tell  us  about  what  amount  in  Erie  the  last 
year? 

A.  On  certificates  of  deposit? 

Q.  Yes. 

A.  No;  I  cannot  tell  you. 

Q.  What  leads  you  to  believe  that  there  is  money  at  in- 
terest not  returned  by  the  assessors? 

A.  Well,  it  is  only  a  supposition. 

Q.  Have  you  ever  made  any  attempt  to  tax  anyone  that 
did  not  make  a  return — make  an  estimated  return? 

A.  We  have  had  the  assessors  estimate  them. 

Q.  With  what  result? 

A.  We  got  our  money. 

Q.  Did  you  ever  raise  the  estimate  the  next  year? 

A.  Yes.  It  is  this  way.  We  estimate  them  at  a  certain 
amount,  when  we  start,  and  then  we  add  50  per  cent.  The 
next  year  we  will  take  that  amount,  with  the  50  per  cent, 
added,  and  estimate  again. 

Q.  Then  you  get  near  to  what  the  real  sum  is? 

A.  Yes. 

Q.  To  what  extent  is  that  done  ? 

A.  Maybe  two  or  three  in  a  district. 

Q.  Have  you  any  suggestions  to  make  as  to  how  that 
difficulty  could  be  avoided? 

A.  No;  I  don't  know. 

Q.  Very  few  prosecutions,  I  guess,  for  failure  to  make 
proper  returns.  Have  you  any  in  this  county. 

A.  No,  I  think  not. 

Q.  Have  you  any  idea  as  to  moneys  at  interest  in  banks 
and  trust  companies1  which  is  evidenced  by  certificates  of 
deposit  not  returned  ? 

A.  No. 

Q.  How  would  it  do  to  have  returns  made  by  the  treas- 
urers of  trust  companies  and  banks?  Do  you  think  that 
would  obviate  the  trouble  ? 

A.  Possibly. 


891 

Q.  Is  there  any  objection  to  that  so  far  as  you  can  see  ? 
A.  No. 

By  Mr.  Moyer : 

Q.  Making  inquiry  as  to  the  tenure  of  office :  Do  you  be- 
lieve the  assessors,  if  under  the  elective  system,  should  be 
elected  to  succeed  themselves? 

A.  Well,  it  would  take  an  assessor  about  three  years  to 
learn  all  the  ropes. 

Q.  That  is  what  I  am  driving  at.  Isn't  it  a  fact  that 
for  instance,  an  influential  man  might  live  in  a  district 
or  township,  and  might  have  sufficient  influence  with  the 
assessor  to  have  him  defeated  if  he  didn't  make  what  he 
thought  was  a  proper  return  of  his  property — it  might 
have  an  effect  upon  the  assessor's  judgment? 

A.  Yes;  that  is  possible.  I  suppose  the  next  man  would 
be  just  as  liable,  perhaps. 

Q.  That  would  be  a  question  for  the  electors  of  the  dis- 
trict to  determine. 

A.  Yes. 

By  Mr.  Woodward : 

Q.  For  which  reason  you  think  they  should  be  appointed 
rather  than  elected? 

A.  Yes,  sir.  Then  the  Commissioners  have  some  au- 
thority. We  elect  our  collectors  in  townships;  that,  I 
think,  is  better  than  appointing.  In  cities  of  the  third 
class,  the  collectors  are  appointed;  but  the  assessors  should 
be  appointed  by  the  Commissioners.  I  think  it  would  be 
better  to  appoint  the  assessors  and  elect  the  collectors. 

By  Mr.  Hunter: 

Q.  Why  not  appoint  both? 

A.  It  would  be  all  right.     We  have  a  good  set  of  col- 
lectors in  the  city. 
Q.  You  appoint  them  ? 
A.  Yes. 


892 

Q.  Do  you  find  they  work  all  right? 
A.  Yes. 

Q.  They  work  on  a  commission? 

A.  Yes.    It  isn't  every  man  that  makes  a  good  collector. 
Q.  That  is  more  reason  why  they  should  be  appointed  ? 
A.  Well,  yes.    You  ought  to  do  the  same  way  with  the 
assessors? 

By  Mr.  Brown: 

Q.  Have  the  County  Commissioners  ever  made  any  ef- 
fort to  ascertain  from  the  trust  companies  and  banks  as 
to  the  probable  amount  of  money  at  interest  by  certifi- 
cates of  deposit? 

A.  I  think  not. 


PRESIDENT  DAVENPORT,  of  the  Manufacturers'  As- 
sociation, called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission: — I 
have  just  been  elected  president  of  the  Manufacturers' 
Association  about  fifteen  minutes  ago  and  I  have  hardly 
entered  upon  my  duties.  I  think  it  entirely  proper  to 
call  upon  our  secretary,  Mr.  Himrod,  to  be  our  spokes- 
man in  the  issue.  Others  here  may  offer  what  they  wish, 
in  addition  to  what  Mr.  Himrod  has  to  offer.  Mr.  Himrod 
will  give  some  points  here  which  we  wish  to  cover. 


SECRETARY  RAY  HIMROD,  of  the  Manufacturers' 
Association,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission:— 
Pennsylvania  is  now  a  good  manufacturing  State.  Now, 
everything  that  is  done  to  increase  the  expenses  of  the 
manufacturers  will  tend  to  decrease  their  enlargement,  and 
will  keep  others  from  coming  into  the  State.  Their  ad- 
vantage to  the  State  is  that  they  bring  more  money  from 
outside  into  Pennsylvania  than  any  other  business,  and 


893 

they  distribute  their  payrolls  among  a  large  number  of 
people. 

By  Mr.  Brown: 

Q.  You  don't  think  the  manufacturer  in  Pennsylvania 
would  add  the  tax  to  the  profit  and  the  people  would  have 
to  pay  it  anyhow? 

A.  No,  I  do  not;  because  they  would  drive  business  to 
other  places.  I  have  known  of  cases  where  the  fraction 
of  a  cent  was  enough  to  lose  business  for  us.  One  sug- 
gestion was  to  make  a  tax  on  the  business  of  manufac- 
turers of  a  fraction  of  one  mill.  I  think,  in  this  case  I 
had  in  mind,  it  was  something  like  -one-half  cent,  and  we 
lost  the  business.  Competition  is  very  close  in  a  great 
many  lines  of  manufacture.  One  very  large  plant  is  con- 
sidering enlarging  their  plant  here.  If  you  increase  the 
cost  of  manufacture  that  would  be  a  reason  for  forcing 
them  away  from  here. 

By  Mr.  Hunter : 

Q.  That  difference  in  the  success  or  failure  to  get  the 
•business  was  on  the  dollar  or  on  the  hundred  pounds? 

A.  On  the  100  pounds. 

Q.  That  would  represent  a  good  many  hundred  dollars. 

A.  I  don't  know.  At  that  time  it  was  on  the  average 
rate. 

By  Mr.  Moyer : 

Q.  The  point  was  made  this  morning  by  a  manufacturer 
engaged  in  the  tanning  business,  from  Corry — Mr.  Des- 
mond, I  think  it  was — No,  it  was  Major  Brown,  who  said, 
in  his  opinion,  because  of  the  fact  that  the  State  appropri- 
ates liberally  to  these  charitable  institutions  and  private 
hospitals  throughout  the  State,  the  manufacturers  get  the 
benefit  of  these,  inasmuch  as  these  private  charities  ac- 
cept injured  employees;  and  in  that  way  the  manufac- 
turers should  contribute  a  share  toward  maintaining  them, 
so  that  the  State  might  continue  its  liberal  policy?  What 
do  you  think  about  that  ? 


894 

By  President  Davenport : 

A.  When  a  corporation  is  incorporated  in  this  State 
they  pay  a  tax  on  their  capitalization.  As  far  as  the 
matter  of  the  charitable  institutions  receiving  State  aid 
is  concerned,  I  think,  upon  investigation,  you  will  find 
that  the  corporations  of  this  State  contribute  more  as  in- 
dividuals— as  companies — to  the  support  of  these  insti- 
tutions in  the  various  parts  of  the  Commonwealth  than 
the  State  does  itself.  I  don't  see  any  argument,  so  far 
as  that  goes.  It  is  a  great  good  to  the  public  to  have  these 
corporations.  They  cannot  exist  without  the  corpora- 
tions; and  anything  we  can  do  to  invite  corporations  to 
come  into  the  State  seems  of  material  benefit  to  the  State 
in  every  way,  instead  of  taking  any  measures  that  would 
prevent  them  from  establishing  themselves  within  our 
Commonwealth.  It  seems  to  me  we  ought  to  go  very  slow- 
ly in  regard  to  further  taxation,  especially  in  view  of  the 
fact  that  the  national  corporation  law  has  just  gone  into 
effect. 

Mr.  Himrod:  I  would  like  to  read  a  letter  I  have  re- 
ceived from  Mr.  P.  D.  Wright,  President  of  the  Reed  Man- 
ufacturing Company,  of  Erie,  which  is  addressed  to  the 
Manufacturers'  Association,  touching  upon  the  matter  of 
corporation  tax  in  the  matter  of  making  reports. 
(Reads:) 

"The  writer  would  like  to  see  the  laws  with  respect 
to  corporations  so  altered  that  the  yearly  report  which 
they  require  gives  only  such  information  as  is  neces- 
sary to  determine  the  amount  of  the  tax  due.  The 
corporation  and  loan  reports,  as  required  now,  neces- 
sitate giving  information  which  is  not  necessary  to 
determine  the  amount  of  tax  due,  and  we  would  like 
to  see  all  this  unnecessary  information,  which  is  re- 
quired by  the  present  form,  eliminated. 

Yours  very  truly, 
(Signed)     P.  D.  WRIGHT, 

President. 
February  14,  1910. 


895 


MR.  EDWARD   C.  MOORE,  Treasurer,  Erie  City  Iron 
Works,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission: — I 
would  like  a  little  information,  if  you  can  give  it  to  me. 
I  just  made  a  note  here  that  was  brought  up  just  before 
we  came  in.  Has  this  Commission  any  data  as  to  the  av- 
erage age  of  these  corporations  incorporated  under  the 
Act  of  '73? 

Mr.  Brown :  We  have  not. 

Mr.  Moore:  You  take  these  corporations  that  have  been 
incorporated  under  the  Act  of  '73  to  date.  A  number 
of  the  old  ones  have  been  increasing  their  capital.  I  was 
trying  to  arrive  at  an  average  of  the  original  charters 
and  increases.  I  suppose  it  would  be  safe  to  say  it  is  not 
over  ten  years.  If  you  figure  on  that  basis,  one-third  of 
1  per  cent,  over  a  business  of  ten  years,  it  would  probably 
be  a  pretty  fair  item. 

By  Mr.  Brown : 

Q.  Three  mills  on  the  capital  stock? 

A.  Yes. 

Q.  You  tax  manufacturing  corporation  stock  three  mills  ? 

A.  I  am  just  trying  to  figure  how  much  time  that  would 
cover.  Someone  estimated  it  was  ten  years.  My  idea  was 
to  see  how  heavily  we  are  taxed.  There  is  no  way  to  tell 
unless  you  could  strike  an  average,  how  much  we  are 
paying  per  annum  toward  the  support  of  the  State.. 

Q.  The  only  way  you  are  paying  toward  the  support  of 
the  State  is  you  are  paying  the  interest  on  your  loans 
and  not  paying  any  tax  on  capital  stock.  You  pay  the  tax 
on  your  loans  and  your  local  taxation. 

A.  I  understand  that,  but  I  mean  you  are  paying,  orig- 
inally, one-third  of  1  per  cent. 


896 

Q.  You  are  talking  about  a  bonus? 

A.  Yes;  I  am  trying  to  divide  it  up  into  annual  tax. 
There  is  another  matter.  You  haven't  given  us  much  time. 
It  was  only  yesterday  noon  that  we  heard  of  this  meeting 
in  Erie.  We  would  have  had  time  had  we  reported  at 
the  Philadelphia  meeting. 

Q.  Did  you  folks  get  letters  some  time  ago  from  us? 

A.  I  had  one  sometime  ago  saying  you  would  hold  a 
meeting  in  Philadelphia. 

Now  about  the  foreign  corporation  law.  You  gentle- 
men are  posted  on  that.  How  does  ours  compare  with 
other  States? 

By  Mr.  Brown: 

Practically  the  same  as  other  States  have.  Some  make 
them  make  a  better  show-down  than  we  do  here. 

Mr.  Moore: 

I  have  a  letter  here  in  which  I  have  some  suggestions 
that  I  wanted  to  bring  out.  I  have  often  wondered  just 
how  our  State  arrives  at  this  in  connection  with  foreign 
corporations  " doing  business"  here.  We  go  further  than 
some  States  in  claiming  what  constitutes  'Doing  business' 
in  Pennsylvania,  our  Courts  holding,  we  believe,  that  even 
selling  by  travelling  salesman  is  'doing  business'  in  this 
Commonwealth,  but  do  we  get  the  full  benefit  of  this  in 
our  tax  returns? 

Q.  They  must  have  an  office. 

A.  If  an  Ohio  corporation,  for  instance,  files  papers 
here  and  pays  in  one-third  of  1  per  cent,  on  capital  actual- 
ly employed  in  the  State,  what  provisions  have  we  for  a 
follow-up  system  of  securing  larger  returns  on  their  saa- 
ond  and  future  business?  Our  system  may  be  com- 
plete, but  it  does  seem  as  though  if  we  are  taxing  foreign 
corporations  for  capital  employed,  we  might,  to  work  to 
advantage  on  other  State 's  plan  of  taxing  them,  on  ' '  busi- 
ness done."  The  Pennsylvania  corporations  pay  heavily 


897 

for  any  little  privilege  in  our  sister  States,  and  a  little 
retaliation  might  hasten  the  day  when  we  could  all  in- 
corporate under  Federal  law,  pay  a  substantial  tax  to 
Washington  and  let  them  divide  a  portion  on  some  equit- 
able basis  with  the  several  States  and  keep  the  balance 
to  apply  on  an  automobile  for  Speaker  Cannon.  We  all 
have  a  lot  to  learn  about  Corporation  laws,  and  not  being 
an  attorney,  I  may  be  away  behind  in  the  procession;  I 
may  be  very  narrow  and  very  prejudiced  in  my  views; 
but,  after  twenty-five  years  in  the  manufacturing  business 
I  am  prepared  to  state  that  I  consider  that  the  man,  or 
set  of  men,  who  rake  up  enough  funds  to  start  a  real  live 
manufacturing  corporation,  are  public  benefactors. 

By  Mr.  Brown: 

We  are  not  as  strict  as  we  should  be.  There  is  no 
question  but  that  we  should  follow  the  foreign  corpora- 
tion. Have  you  made  any  investigation  as  to  the  foreign 
corporations  around  here? 

A.  I  know  what  the  other  States  are.  We  are  paying 
in  Texas,  as  close  to  a  thousand  dollars  a  year  for  doing 
the  same  as  we  do  in  Illinois  for  three  a  year.  We  are 
paying  in  New  York  three  to  four  hundred  dollars  a  year 
for  doing  the  same  as  we  do  in  Ohio  and  pay  five  to  ten 
dollars. 

Q.  You  think  Pennsylvania  should  be  more  strict  as  to 
foreign  corporations? 

A.  Yes,  sir.  I  have  no  doubt  you  could  get  an  enor- 
mous amount  out  of  that.  People  are  coming  in  here  and 
doing  a  million  dollars  worth  of  business,  and  because 
you  can 't  say  '  *  Mr.  Man,  you  have  some  property  here, ' ' 
they  escape  taxation.  Now  Texas,  of  course,  we  wouldn't 
want  to  follow.  If  a  director  in  a  Pennsylvania  corpor- 
ation looks  out  of  the  window  in  a  Pullman  running 
through  Texas,  the  State  officials  immediately  wire  for  a 
sworn  statement  of  his  company 's  capital  and  surplus  and 
soak  them  a  tax  all  the  way  to  one-fifth  of  1  per  cent. 
45 


898 

They  are  too  radical.  We  all  feel  the  same  about  Texas 
as  Sherman,  and  we  all  know  what  Sherman  said  about 
Texas.  He  said  if  he  owned  Hell  and  Texas,  he  would 
rent  Texas  and  live  in  Hell;  and  Texas  has  been  trying 
to  get  even  with  us  ever  since.  They  say,  ' '  if  you  cannot 
live  in  Texas,  you  have  to  pay  your  taxes  just  the  same," 
so  they  let  us  live  up  here  in  "Hell"  and  tax  us  just  the 
same,  even  though  we  cann  it  live  in  Texas. 

Q.  Do  you  think  it  is  wise  for  Pennsylvania  to  follow 
the  same  policy? 

A.  No,  but  we  can  learn  from  Texas.  They  have  a 
tax  that  runs  from  one-seventieth  to  one-fifth  of  1  per 
cent,  on  capital  and  surplus.  New  York  arrives  at  the 
amount  of  capital  invested  and  business  done  in  their 
State,  and  putting  this  against  the  total  investment  and 
business  done  elsewhere,  calls  this  the  pro  rata  share  of 
foreign  corporations  stock  on  which  they  may  be  entitled 
to  a  tax.  Taking  the  corporation's  net  worth,  they  then 
assess  you  1J  mills  on  the  dollar  of  such  part  as  the  above 
plan  shows  to  be  taxable.  Both  New  York  and  Texas, 
taxes  are  annual,  and  based  on  sworn  statements  fur- 
nished March  1st  of  each  year. 

I  am  thoroughly  convinced  that  this  same  plan  would 
net  a  big  income  to  Pennsylvania.  If  we  are  still  short 
and  still  have  that  "itchy"  feeling  for  the  corporation 
scalp,  we  should  then  investigate  the  proposition  of  taxing 
surplus  of  our  home  corporations.  One  concern  has 
1,000,000  capital  and  1,000,000  surplus ;  it  derives  all  the 
benefits  of  our  corporation  laws  and  pays  to  the  State 
$3333.34  for  its  charter.  Another  corporation  capitalizes 
its  surplus  and  pays  the  State  just  double  this  amount. 
I  believe  we  could  license  the  surplus  at  one-third  of  1  per 
cent,  and  then  if  the  capital  is  ever  increased,  see  that  the 
corporation  is  not  charged  a  second  time  with  this  portion 
of  the  tax.  Are  you  familiar  with  New  York  affairs 
along  this  line? 


899 

Q.  They  get  quite  a  good  deal  out  of  Pennsylvania  cor- 
porations. There  is  no  doubt  there  will  have  to  be  a  reg- 
ulation of  the  subject  of  foreign  corporations. 

By  Mr.  Hunter: 

About  that  surplus,  it  might  be  found  in  manufacturing 
concerns  in  certain  lines,  and  you  might  fail  to  find  it  in 
similar  concerns  in  identically  the  same  lines  but  not  as 
efficient  management  as  the  others? 

A.  The  State  is  giving  them  the  same  advantages  to 
pay  the  lower  tax.  You  have  the  records.  You  will  find 
a  whole  lot  of  concerns  with  as  much  surplus  as  they  have 
capital.  If  you  have  a  right  to  demand  something  of 
them  on  that  capital  you  certainly  have  a  right  to  reach 
that  surplus.  I  am  speaking  now  of  the  surplus  in- 
vested— I  mean  money  right  in  the  business — money  in- 
vested right  in  the  business.  Take  my  own  concern,  for 
instance ;  we  have  a  two  million  capital  and  a  half  million 
surplus.  If  I  thought  you  were  going  to  tax  that  surplus, 
I  would  go  back  to  the  office  and  make  a  dividend,  maybe. 
At  the  same  time,  if  we  should  ever  increase  our  capital 
to  three  millions,  you  would  get  a  whack  at  that  surplus. 
Why  not  get  it  now? 

Q.  You  don't  think  there  would  be  any  attempt  to 
evade  the  surplus,  do  you? 

A.  No,  our  books  would  show  that  we  were  bankrupt 
if  we  did.  In  order  to  carry  on  business,  we  have  to  have 
a  surplus.  If  we  would  wipe  out  the  surplus  the  state- 
ment would  look  like  thirty  cents.  I  think  the  manufac- 
turing corporations  are  public  benefactors.  They  furnish 
a  market  for  the  farmer  and  furnish  a  market  for  labor, 
and  are  not  getting  the  credit  that  is  due  them.  I  think 
that  when  a  few  men  rake  up  enough  money  to  start  a 
manufacturing  concern  they  are  benefitting  the  whole 
community. 
By  Mr.  Brown: 

Q.  How  do  you  differentiate  between  a  manufacturer 


900 

employing  a  thousand  men  and  a  department  store  across 
the  street  employing  a  thousand  men.  What  difference 
is  there? 

A.  I  don't  know  how  you  mean.  They  pay  a  mercan- 
tile tax  which  is  probably  as  heavy. 

Q.  They  both  pay  the  mercantile  tax.  "What  is  the 
difference  between  a  department  store  that  is  taxed,  and 
a  manufacturer  across  the  street  who  does  not  pay  a  tax 
on  the  capital  stock? 

A.  The  department  store  is  doing  a  local  business  and 
competing  only  with  the  department  store  across  the 
street,  but  the  manufacturer  is  competing  with  manufac- 
turers in  other  States,  and  if  you  soak  him  too  hard  he 
has  to  get  this  back  out  of  his  customers.  You  have  to 
treat  the  manufacturers  different  from  the  stores,  the 
competition  is  so  much  greater.  But  I  think  you  should 
investigate  that  corporation — foreign  corporation. 

Q.  We  are  investigating  it  in  every  State. 

A.  I  have  looked  over  the  Pennsylvania  laws  at  dif- 
ferent times.  Other  States  just  laugh  at  us.  If  we  step 
into  New  York  and  take  a  fifty  thousand  dollar  contract 
we  have  got  to  pay  something  for  doing  that  business. 
They  stick  you  on  that ;  they  stick  you  on  bank  accounts. 
They  do  everything  in  New  York  to  arrive  at  the  extent 
of  your  business  inside  that  State  line.  If  a  concern's 
agent  happens  to  be  in  New  York,  they  come  back  at 
you 

Q.  You  do  not  think  the  adoption  of  such  a  policy 
would  tend  to  keep  out  corporations  which  may  be  bene- 
ficial? 

A.  No,  I  think  Pennsylvania  is  such  a  market  that  these 
fellows  have  got  to  come  here  to  sell,  and  they  wonder 
why  they  are  not  charged  a  little  for  that  privilege.  Take 
a  building  and  construction  company  that  gets  a  five  hun- 
dred thousand  dollar  contract  in  Pennsylvania.  What 
is  it  going  to  cost  them  ?  They  are  going  to  make  returns 


901 

and  say  they  haven't  any  investment  in  Pennsylvania, 
and  you  won't  get  a  cent  out  of  that  foreign  construction 
company.  If  a  Pennsylvania  construction  company  goes 
over  to  New  York,  they  make  that  company  pay  a  tax 
on  their  contract. 

Q.  "What,  in  your  opinion,  is  the  fairest  State  in  the 
treatment  of  foreign  corporations? 

A.  I  haven't  had  time  to  look  into  that. 

Q.  I  mean  from  your  experience? 

A.  I  couldn't  answer  that  now.  I  have  been  up  against 
it  in  a  dozen  different  States  and  there  are  some  of  them 
that  don't  get  enough.  I  might  say  that  Illinois  charges 
you  three  dollars  for  filing  papers  and  Ohio  charges  ten 
dollars? 

Q.  Are  you  deterred  from  going  into  New  York  to  do 
business  because  of  the  method  of  taxation? 

A.  No;  we  haven't  thought  that  thing  out.  The  busi- 
ness has  increased  there  and  the  question  is  up  as  to 
whether  or  not  it  pays  us. 

Q.  It  isn't  a  prohibitive  tax. 

A.  No;  other  folks  have  to  pay  the  same  tax. 

Q.  From  outside  the  State? 

A.  Yes. 

Q.  Are  you  able  to  compete  with  people  in  New  York 
paying  this  tax? 
A.  Yes. 

Q.  You  don't  think  if  Pennsylvania  would  adopt  such 
a  system  that  our  people  would  lose  the  benefit  of  com- 
petition she  would  get? 

A.  I  think  it  should  be  followed  up  very  closely;  and 
even  if  we  got  the  smallest  tax  it  would  be  a  big  thing 
for  the  State  when  you  come  to  consider  the  amount  of 
business  done  here  by  outside  corporations. 

And  then,  the  last  point  I  made  about  the  surplus.  I 
think  we  are  paying  enough,  but  if  we  are  not,  it  seems 
that  is  the  fairest  way. 


902 

Q.  Get  after  the  companies  able  to  have  a  surplus? 
A.  Yes.      If  I  am  doing  business  here,  there  is  no  rea- 
son why  I  should  pay  twice  as  much  as  you  in  the  State. 

Q.  If  the  State  wanted  to  collect  sufficient  revenue  to 
meet  her  ordinary  needs  and  make  appropriations  to  the 
philanthropic  institutions,  have  you  any  suggestions  to 
make  as  to  where  she  should  get  it? 

A.  Well  I  have  given  you  the  foreign  corporations. 
They  would  amount  to  an  enormous  sum. 

Q.  It  wouldn't  be  injurious  to  our  people  here  in  the 
matter  of  competition? 
A.  I  don't  believe  so. 

Q.  I  wish  you  would  write  us  as  to  your  personal  ex- 
perience along  the  lines  you  have  indicated  in  the  various 
States,  etc. 

A.  I  shall  be  glad  to. 

Q.  Of  course,  what  you  write  will  be  considered  confi- 
dential. 

By   Mr.   Moyer: 

Q.  If  the  State  should  adopt  a  policy  such  as  you  sug- 
gest, of  following  up  the  foreign  corporations,  do  you  see 
any  reason  why  the  foreign  corporations  should  not  be 
permitted  to  hold  real  estate  in  Pennsylvania? 

A.  No,  I  don't  know  why.  There  is  no  reason  why  they 
should  not  be  allowed  to  hold  real  estate.  It  is  something 
you  can  get  at.  If  they  hold  real  estate  you  can  say, 
"You  certainly  have  got  something  here." 

Q.  You  think  it  would  be  well  to  encourage  them  to 
do  it,  so  we  could  get  at  it  ? 

A.  Yes. 

Mr.  Van  Gleet: 

"We  had  an  experience  where  three-twentieths  of  one 
a  cent  per  pound  spoiled  the  business  for  us  on  a  whole 
batch  of  100  tons.  That  three-twentieths  of  one  cent  per 


903 

pound  was  the  entire  profit  on  the  whole  batch.  The 
point  I  want  to  bring  out  is  that  a  small  tax  might  tend 
to  drive  the  manufacturing  corporations  out  of  the  State. 
I  believe  it  would  drive  business  out  of  the  State. 

By  Mr.  Brown : 

Some  say  in  Philadelphia  that  the  additional  taxation 
would  drive  manufacturers  out  of  Pennsylvania,  while 
others  seem  to  think  that  this  is  of  small  importance — that 
the  natural  advantages,  closeness  of  raw  material,  market, 
and  one  hundred  and  one  other  elements  are  a  good  deal 
more  considerable  than  that  of  taxation. 

By  Mr.  Brown: 

Mr.  Himrod,  what  is  your  thought  as  to  the  time  of 
return  ? 

A.  At  present  it  is  the  first  Monday  of  November.  The 
new  United  States  law  is  January  1.  It  would  simplify 
matters  for  all  manufacturers  if  the  time  could  be  made 
the  same  as  the  United  States  law.  It  would  give  more 
figures  and  less  estimates. 

By  Mr.  Van  Gleet : 

May  I  take  issue  with  the  gentleman?  We  could  not 
make  honest  returns  on  January  1.  We  don't  have  every- 
thing ready.  There  are  a  large  number  of  manufacturers 
who  could  not  make  an  honest  return  on  January  1,  ex- 
cept very  wealthy  concerns. 


904 


J.  C.  THOMAS,  County  Solicitor,  Erie,  Pa.,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission :  As  I 
understand  it,  this  Commission  is  here  to  inquire  into 
taxation  in  general. 

By  Mr.  Brown: 
For  the  State  of  Pennsylvania. 

Mr.  Thomas : 

Oftentimes  our  work  has  suggested  the  thought  to  me 
that  it  is  very  foolish  that  we  have  to  cart  all  the  money 
collected  in  Erie  county  for  purposes  of  taxation  down 
to  Harrisburg  and  then  cart  back  three-fourths  of  it  to 
Erie  county.  It  comes  at  a  time  when  the  County  Treasury 
is  low.  We  go  down  there  with  four-quarters  and  leave 
one-quarter  there  and  bring  back  three-quarters. 

Q.  You  mean  simply  return  one-quarter  that  the  Com- 
monwealth is  entitled  to? 

A.  Yes.  Now,  as  to  the  taxation,  I  noticed  the  board 
here  asked  Mr.  Robinson  if  the  County  Commissioners 
performed  their  duty  in  following  up  the  assessors  to 
see  if  they  made  returns.  I  would  like  to  ask  the  Board 
if  the  Auditor  General's  office  carries  out  its  duties  in 
collecting  the  tax  on  corporations  in  Pennsylvania.  In 
other  words,  I  would  say  to  this  Board  that  in  the  City 
of  Erie  there  is  a  corporation  whose  returns,  according 
to  the  affidavit  on  file  in  the  Auditor  General's  office,  is 
less  than  four  thousand  dollars.  As  a  matter  of  fact  that 
corporation  owns  real  estate  at  least  six  hundred  thou- 
sand dollars  worth ;  and  yet  the  Auditor  General  has  not 
collected  the  tax. 

Q.  Has  anybody  been  informed  of  that? 

A.  The  Auditor  General  has  been  informed.  Now  as 
to  the  Commissioners  carrying  out  their  duties:  It  is  a 
fact,  I  believe,  that  there  are  many  men  in  Erie  county 


905 

that  are  sending  their  money  out  of  this  State  to  other 
States  and  are  not  paying  taxes  on  it,  and  I  believe  they 
are  liable  for  the  taxation.  I  don't  think  the  assessors 
get  him.  That  state  of  affairs  should  be  remedied. 

Q.  What  is  your  thought  about  it? 

A.  I  never  thought  about  it.  I  know  it  is  done  right 
along. 

Q.  Don't  they  make  any  return  at  all? 

A.  Well,  there  are  cases 

Q.  Why  can't  the  assessors  take  those  men  and  make 
returns  for  them?  You  say  there  are  a  large  number. 
They  could  estimate  them  and  then  add  50  per  cent.  How 
is  he  going  to  get  away  from  that?  The  assessors  has 
a  right  under  the  law  to  guess  at  it.  The  law  compels 
him  to  make  a  return  for  the  man  if  the  man  does  not 
make  a  return  himself. 

A.  The  trouble  is  to  get  them  to  do  it. 

Q.  There  is  law  enough  to  do  it.  If  he  makes  a  return 
and  you  put  the  penalty  on,  the  man  has  to  come  to  the 
front,  don't  he.  Then,  if  he  comes  to  the  front  you  have 
a  chance  to  examine  him  under  oath. 

A.  That  is  probably  true.  Our  assessors  are  elected 
and  they  cater  to  the  wishes  of  the  people  and  politics 
figure  in  it. 

Q.  The  law  should  be  made  a  little  more  drastic  in 
some  way  to  compel  them  to  do  it. 

A.  Yes.  As  a  matter  of  fact  the  assessors  should  be  ap- 
pointed by  the  County  Commissioners  and  the  collectors 
also  should  be  appointed.  It  seems  the  County  Commis- 
sioners would  be  the  proper  board  to  do  it.  If  they  didn't 
return  properly  then,  the  County  Commissioners  could  call 
the  assessor  up  and  say,  "you  are  not  performing  your 
duty;  if  you  don't  we  will  have  you  before  the  Court 
for  non-performance  of  duty."  The  way  it  is  now,  they 
are  elected  by  the  people  and  they  owe  nothing  to  the 
County  Commissioners.  They  say,  "I  am  elected  by  the 
people  of  Springfield  Township." 


906 

Q.  What  does  the  assessor  get  for  doing  the  work? 

A.  He  gets  a  percentage  of  the  taxes. 

Q.  Then  he  has  to  get  his  overtime  from  somebody? 

A.  The  County  Commissioners. 

Q.  Suppose  the  County  Commissioners  would  say  we 
will  not  pay  you  unless  you  have  done  the  work  as  the 
law  says  you  should  do  it.  Don't  you  think  that  would 
make  them  hump  themselves  a  little? 

A.  He  would  get  his  fee  if  he  had  served  the  time. 

Q.  Not  if  he  had  not  performed  his  duties  faithfully? 

A.  He  might  be  discharged  from  office,  but  he  would 
have  to  be  paid  for  twenty  days  at  two  dollars  a  day, 
and  I  am  inclined  to  think  he  could  recover  this  twenty 
days'  fee,  because  he  put  in  twenty  days'  actual  service. 

Q.  Wouldn't  the  discharge  have  its  effect  on  some  other 
assessor? 

A.  That  is  true;  but  we  cannot  reach  them  now. 

By  Mr.  Hunter : 

Q.  You  cannot  discharge  them  now? 

A.  Not  unless  we  could  show  non-performance  of  duty. 

Q.  Isn't  it  a  case  of  mere  laxity  of  duty? 

A.  I  do  not  think  you  can  enforce  the  system  as  long  as 
they  are  elected.  I  don't  believe  you  could  get  the  service 
under  the  elective  system  that  you  could  if  they  were  ap- 
pointed by  the  County  Commissioner. 

City  Treasurer  Pinney :  The  Commissioners  could  say, 
"I  will  get  you  appointed  for  a  hundred  dollars;  that's 
another  thing. 

By  Mr.  Brown: 

Q.  Some  state  the  judges  should  appoint  them? 

Mr.  Moyer:  The  judges  pass  upon  liquor  license  ap- 
plications, which  are  not  directly  within  their  other  func- 
tions, and  it  seems  a  safe  place  to  lodge  that  power. 
Others  suggest  that  the  County  Commissioners  should  have 
the  power  to  appoint  them.  The  Poor  Assessor  gets  too 


907 

much  money  for  his  work  and  the  good  assessor  does  not 
get  enough.  The  suggestion  has  been  thrown  at  several 
meetings  that  five  dollars  a  day  would  be  a  fair  compensa- 
tion for  a  first-class  man.  Do  they  work  more  than  twenty 
days? 
A.  No,  Mr.  Robinson  can  give  you  the  data. 

By  Mr.  Brown : 

Q.  What  do  any  of  them  do  when  not  working? 
A.  I  don't  know;  not  much,  I  guess. 

By  Mr.  Hunter : 

Q.  Wouldn't  it  be  much  better,  then,  to  employ  fewer 
men  and  give  them  permanent  employment  ? 

A.  Well,  that  would  probably  be  all  right  in  cities. 

Q.  Why  wouldn't  it  be  better  in  counties,  too? 

By  Mr.  Brown: 

Q.  Wouldn't  it  pay  the  county  to  pay  a  man  by  the 
year  to  do  the  work  properly? 

A.  I  think  it  would.  You  take  a  man  that  is  made 
assessor.  He  can  give  up  a  position  that  he  may  have 
and  then  go  back  again  to  it  when  he  gives  up  the  job  of 
assessor  which  has  taken  maybe  a  hundred  days.  The  city 
assessors,  it  takes  them  the  whole  year;  they  get  around, 
get  their  reports  in  and  then  it  is  time  to  run  for  the 
next  year. 

Q.  How  does  the  city  assessor  compare  with  the  county 
assessor's  work  ? 

A.  The  county  assessor  works  for  thirty  days ;  then  they 
make  their  report.  They  don't  get  very  good  pay.  I 
suppose  they  are  farmers  who  don't  do  very  much  during 
the  winter,  in  December  and  January. 

Q.  Someone  advocated  in  Philadelphia  that  the  State 
collect  all  these  taxes  from  all  the  counties  and  distribute 
them  around  among  the  counties  afterward. 

A.  There  are  a  great  many  people  in  Erie  that  would 
like  to  come  into  the  City  Treasurer's  office  and  pay 


908 

the  county,  school  and  State  tax  at  one  time,  and  then 
have  the  County  Treasurer  send  a  check  to  the  County 
Commissioners  for  the  amount  of  the  county  tax,  the 
School  Commissioners  for  the  school  tax,  etc. 

Q.  That  is  as  a  convenience  for  the  taxpayer  ? 

A.  Yes. 

Mr.  Moyer :  The  amount  of  money  that  it  would  take 
for  a  larger  salary,  that  is,  for  the  assessment,  would  be 
more  expensive  under  the  system  suggested,  for  instance, 
if  they  were  paid  a  fixed  salary  by  the  year;  and  yet,  it 
is  a  fact  also,  that  that  would  be  more  than  made  up 
by  the  return  because  of  more  faithful  service.  Don't  you 
think  so  ? 

A.  Yes,  it  might  be.  They  don't  pay  enough  so  a  man 
can  give  his  whole  time  to  it  for  that  work,  they  ought 
to  pay  a  man  so  he  could  live.  Take  in  the  City  Treasurer 's 
office.  The  City  Treasurer  has  to  pay  3  per  cent,  out 
of  his  own  pocket  for  collecting  delinquent  taxes.  I  don't 
know  why  it  should  not  be  right  for  the  city  to  pay 
that.  He  has  to  put  out  about  one  hundred  dollars  to 
collect  delinquent  taxes. 


909 


Acting-Mayor  Cochran :  When  the  Treasurer,  Controller 
and  myself  came  up  we  were  under  a  misapprehension 
and  we  came  over  with  facts  and  figures;  more  figures 
than  anything  else.  I  spoke  of  the  assessment  of  the 
property  of  public  utility  corporations  and  the  levying 
of  taxes  on  that  property  as  discussed  at  a  meeting  of  the 
third-class  cities  along  in  1909.  I  went  back  to  the  office 
and  found  I  had  a  report  of  that  session  and  I  am  going 
to  give  you  this  if  you  care  to  have  it. 

Mr.  Brown:    We  have  a  copy,  thank  you. 

Mr.  Barber :  You  have  gone  over  the  tax  question  thor- 
oughly. Now,  as  to  what  Mr.  Pinney  says  about  the  col- 
lecting of  the  State,  school  and  county  tax  at  one  time. 
It  is  not  so  many  years  ago  when  the  State  tried  to  collect 
the  school  tax.  That  was  taken  out  of  the  hands  of  the  col- 
lectors, and  I  want  to  call  your  attention  to  the  fact  that 
when  the  tax  was  taken  out  of  the  hands  of  collectors  and 
they  wanted  people  to  come  to  the  School  Board  office  to 
pay  the  tax,  they  were  shy  about  ten  thousand  dollars ;  and 
since  they  have  put  it  in  the  hands  of  collectors  to  collect 
it  from  year  to  year,  the  delinquent  taxes  has  been  very 
small.  If  they  all  had  to  come  to  City  Hall  to  pay  the 
tax  I  think  you  would  be  out  some  of  the  tax.  These 
collectors  go  to  a  house  sometimes  twelve  or  fiteeen  times 
before  they  get  the  money.  If  they  didn't  go,  they 
wouldn't  get  their  money.  They  have  an  occupation 
tax,  and  if  they  don't  pay  the  occupation  tax,  they  can 
arrest  them,  and  somebody  has  to  pay  their  board  while 
they  are  in  there.  They  don't  do  that  very  often,  because 
it  would  not  pay  to  do  that.  I  don't  think  you  could 
improve  the  Erie  system  by  making  any  change.  I  think 
it  is  good  the  way  it  is. 

Mr.  Brown:  I  am  satisfied  with  Erie  so  far  as  I  have 
seen  of  it.  An  interesting  fact  about  this  matter  is  that 


910 

a  great  many  people  have  the  idea  that  the  powers  of 
this  Commission  are  inquisitorial  and  they  are  afraid  of 
it.  The  Commissioners  who  collect  the  tax  are  always  will- 
ing to  be  heard,  as  they  like  to  complain  about  how  hard 
it  is  to  get  the  money  from  taxation;  so  we  never  have 
any  trouble  in  getting  the  commissioners  and  solicitors 
and  county  treasurers  and  city  treasurers  to  come  before 
us;  but  we  have  great  trouble  in  getting  the  people  here 
who  pay  the  taxes,  because  they  have  to  pay  it. 

We  are  very  thankful  to  you  gentlemen  for  your  kind- 
ness in  coming  here.  We  have  had  a  very  good  meeting. 

This  Commission  is  not  going  to  do  anything  rash.  We 
are  here  to  listen  to  advice  and  make  our  report  to  the 
Governor  the  first  of  July,  this  year. 

Adjourned. 


911 


Public  meeting  of  the  Commission  held  in  the  Lacka- 
wanna  County  Court  House,  Scranton,  Penna.,  April  16, 
1910,  being  called  to  order  by  the  Chairman  at  10  A.  M. 

Present:  Gabriel  H.  Moyer,  Vice-chairman  and  Secre- 
tary, presiding;  William  H.  Kayser,  James  F.  Woodward, 
David  Hunter,  of  the  Committee;  Francis  Shunk  Brown, 
Esq.,  Counsel. 

Senator  Edw.  F.  Blewitt  sat  with  the  Commission. 

By  the  Chairman : 

Gentlemen,  this  Commission  was  created  by  the  Legis- 
lature in  1909.  The  purposes  for  which  it  was  created 
have  been  clearly  set  forth  in  a  circular  letter,  which  I  pre- 
sume the  most  of  you  have  received  and  with  which  you  are 
familiar. 

I  may  say  here  that  it  is  not  the  business  of  this  Com- 
mission to  pry  into  the  private  affairs  of  any  corporation. 
We  are  simply  here  seeking  testimony  and  to  receive  such 
suggestions  and  recommendations  as  we  can  gather  from 
the  views  of  the  citizens  of  the  Commonwealth,  and  to  listen 
to  such  views  as  are  expressed  by  the  gentlemen  who  appear 
before  us.  It  is  our  duty  to  make  a  report  to  the  Governor 
of  the  Commonwealth  during  July  of  the  present  year,  and 
we  shall  make  such  recommendations  as  we  may  see  fit  and 
as  will  be  for  the  betterment  of  the  people  of  the  Common- 
wealth. 

I  understand  Mr.  Mark  K.  Edgar  is  present  representing 
the  Board  of  Trade,  and  desires  to  make  a  statement. 

By  Mr.  Mark  Edgar  : 

Gentlemen  of  the  Committee  of  the  Legislature: — The 
Scranton  Board  of  Trade  have  received  two  or  three  differ- 
ent communications  relative  to  the  formation  and  the  pur- 
poses of  this  Commission  of  the  Legislature,  and  have  been 


912 

very  much  interested  in  the  program  of  work  outlined  in 
that  connection. 

The  matter  has  been  referred  to  the  Committee  on  Legis- 
lature and  Taxes  of  the  Scranton  Board  of  Trade,  and  they 
have  already  had  two  meetings  for  the  purpose  of  going 
over  these  matters  and  laws  of  particular  interest  to  this 
community  for  the  purpose  of  making  recommendations  to 
this  Committee.  But,  owing  to  the  short  notice  of  this 
Committee  received  as  late  as  half  past  four  yesterday 
afternoon,  we  were  taken  unawares  in  the  matter,  and  are 
not  able  to  make  any  recommendations  here  this  morning. 
The  Chairman  of  the  Committee  is  in  New  York  City  at 
the  present  time,  and  it  is  doubtful,  even  if  he  were  l^ere, 
whether  or  not  he  would  be  in  a  position  to  make  any  rec- 
ommendations here  this  morning. 

However,  it  is  the  purpose  of  the  Scranton  Board  of 
Trade  to  submit  certain  recommendations  to  this  Commit- 
tee, which  they  will  have  to  do  later  on. 

I  thank  you,  Mr.  Chairman,  for  the  privilege  of  making 
these  remarks  this  morning. 

The  Chairman:  It  has  been  suggested  that  any  gentle- 
man in  the  audience  desiring  to  be  heard  will  please  send 
his  card  up,  as  we  have  no  means  of  becoming  acquainted 
with  you. 

MR.  S.  S.  JONES,  of  Carbondale,  Pa. 

Mr.  Chairman  and  Gentlemen  of  the  Committee: — I 
might  say,  first,  that  we  are  glad  you  took  the  pains  to  come 
into  this  locality  and  give  us  an  opportunity  to  be  heard. 

I  am  here  representing  one  of  the  first  hospitals  in  this 
part  of  Pennsylvania.  At  no  time  have  we  been  able  to 
pump  out  of  the  State  Treasury  as  much  money  as  we  have 
actually  needed.  We  have  made  one  or  two  trips  to  Har- 
risburg  to  meet  the  Committee  on  Public  Charities  to  en- 
deavor to  make  them  understand  just  the  difficulties  we 
were  laboring  under. 


913 

We  have  realty  and  property  that  represents  an  outlay 
of  more  than  eighty  thousand  dollars.  Of  that  entire  sum, 
about  one-quarter  has  been  contributed  by  the  State  from 
time  to  time.  We  are  receiving  at  the  present  time  ten 
thousand  dollars  a  year  for  maintenance.  Our  maintenance 
account  has  run  a  little  over  fourteen  thousand  dollars  for 
the  past  two  years ;  the  deficiency  we  have  made  up  by  such 
contributions  we  managed  to  get  out  of  the  people  and  out 
of  entertainment.  But  this  does  not  cover  the  caretaking 
of  the  realty.  During  the  last  three  months  we  have  been 
obliged  to  do  repairing  to  the  extent  of  about  three  thous- 
and dollars,  and  we  have  about  as  much  more  to  do.  We 
have  done  this  without  the  funds  in  sight,  and  we  have 
trusted  to  some  other  scheme  by  which  we  can  get  money 
enough  to  take  care  of  it. 

It  seems  along  the  line  of  taxation  I  have  nothing  to  say, 
unless  it  was  to  have  a  commission  to  take  care  of  assess- 
ments and  taxation  throughout  the  entire  State. 

By  Mr.  Moyer : 

Q.  The  title  of  this  realty  of  the  Hospital  is  vested  in 
whom? 

A.  Vested  in  the  Board  of  Directors. 

Q.  Dou  you  think  the  State  of  Pennsylvania  should  con- 
tinue its  liberal  policy  of  making  appropriations  to  private 
charities  where  title  of  the  property  is  not  vested  in  the 
Commonwealth  ? 

A.  Under  some  conditions,  yes.  But  I  would  rather  be  in 
favor  of  having  the  State  take  over  the  property  or  take 
over  a  general  oversight  of  the  institution.  If  that  could 
not  be  done,  then  I  would  be  in  favor  of  having  a  local  com- 
mission ;  that  is,  a  commission  made  up  of  a  number  of  men 
who  could  familiarize  themselves  with  the  work,  but  also 
inform  themselves  as  to  the  difficulties  we  have  in  raising 
funds  among  our  people. 

Q.  What  is  your  hospital  ? 

A.  The  Emergency  Hospital. 


914 

Q.  What  would  you  say  as  to  a  consolidation  of  some  of 
your  hospitals? 

A.  I  believe  that  would  be  a  practical  plan.  We  have 
managed  our  hospitals  along  the  most  economical  lines. 

Q.  Where  would  you  consolidate  your  hospital? 

A.  I  don't  know  that  I  could  exactly  answer  your 
question.  We  take  care  of  a  district  that  extends  forty 
miles  east  and  thirty  miles  west.  We  are  the  center  of 
a  very  large  district.  There  are  four  railroads  and  we 
have  to  take  care  of  the  accident  cases  of  these  railroads. 
There  are  forty  or  more  collieries  where  accidents  are  oc- 
curring weekly ;  and  we  take  care  of  these.  Last  year  we 
had  four  hundred  and  eighty-two  people  at  our  little 
hospital. 

By  Mr.  Hunter : 

Q.  Do  the  local  collieries  contribute  to  the  support  of 
the  institution? 

A.  The  Delaware  and  Hudson  have  contributed  three 
hundred  dollars  a  year. 

Q.  About  how  much  would  you  spend  on  their  cases? 

A.  I  cannot  give  you  that  definitely — about  thirty  or 
forty  dollars  a  week. 

By  Mr.  Brown: 

Q.  On  that  one  company? 

A.  Yes,  sir. 

Q.  How  many  other  companies  are  there? 

A.  Three  others. 

Q.  Do  the   others  contribute  at  all? 

A.  They  are  not  contributors. 

Q.  How  much  are  you  doing  for  them? 

A.  Well,  perhaps  one-third  for  each  of  the  other  com- 
panies. 

Q.  Suppose  you  would  put  them  on  a  per  capita  basis, 
the  State  paying  you  so  much  a  day  for  each  indigent 
patient,  instead  of  paying  you  a  lump  sum? 


915 

A.  That  is  the  basis  now.  They  pay  at  the  rate  per 
week. 

Q.  Suppose  they  paid  for  each  patient  by  the  day ;  would 
that  make  any  substantial  difference? 

A.  I  suppose  it  would. 

Q.  How  are  your  beds?  Practically  filled  the  year 
round  ? 

A.  Some  part  of  every  month  they  are  filled. 

Q.  Does  the  State  appropriations  eliminate  private  con- 
tributions in  any  way? 

A.  I  cannot  say  it  does,  but  it  is  a  rule  that  any  emerg- 
ency case  is  cared  for  without  charge. 

Q.  Do  you  think  the  State 's  giving  money  to  the  institu- 
tion is  an  incentive  for  others  to  help  ? 

A.  Not  always.  The  institution  is  looked  upon  as  pub- 
lic property — it  is  ours  and  we  have  a  right  to  go  there. 

Q.  Do  you  think  you  would  get  as  efficient  management 
under  the  State  as  you  are  getting  under  your  local  in- 
terests and  local  help? 

A.  I  think  we  would  get  along  very  much  better  if  the 
hospital  would  do  the  work  it  is  intended  to  do. 

Q.  You  don't  think  the  supervision  under  a  Board  of 
Charities  is  sufficient  to  produce  the  efficiency  that  should 
be 

A.  Well,  for  the  reason  that  these  gentlemen  come 
around  once  a  year  and  spend  an  hour  with  us  and  we 
don't  have  a  chance  to  become  acquainted  with  them. 

By  Senator  Blewitt : 

Q.  Does  your  institution  publish  an  annual  report  ? 
A.  Yes. 

Q.  Would  you  mind  seeing  that  the  Commissioners  get 
a  copy  of  it? 
A.  I  will  see  that  they  do. 

By  Mr.  Moyer: 

Q.  I  understand  you  are  a  former  member  of  the  Legis- 
lature ? 


916 

A.  I  was  a  member  a  long  time  ago. 

Q.  Assuming  that  the  State  has  insufficient  revenue  for 
the  purpose  of  continuing  its  policy  to  care  for  the  building 
of  public  roads,  and  for  the  appropriation  of  moneys  to 
private  charities  and  for  the  purpose  of  taking  care  of  the 
poor  people  of  the  Commonwealth  and  the  unfortunate 
people,  and  that  more  revenue  is  required,  what  would 
you  say  as  to  the  advisability  of  taxing  the  natural  re- 
sources of  the  Commonwealth?  For  instance,  levying  a 
tax  upon  coal? 

A.  Well,  I  am  governed  in  making  answer  to  that  ques- 
tion by  a  selfish  reason,  by  the  interest  I  have  in  main- 
taining our  local  institutions.  Inasmuch  as  land  owners, 
corporations  and  individuals  are  expected  to  contribute  a 
large  share  of  the  State 's  revenue,  I  should  say  that  every- 
thing that  is  taxable  should  bear  a  reasonable  amount  of 
taxation. 

Q.  What  would  you  say,  for  instance,  of  a  small  millage 
form  of  taxation  being  placed  on  manufacturing  cor- 
porations on  their  capital  stock? 

A.  I  cannot  answer  that  question  because  I  am  not 
familiar  with  profits  along  that  line. 

Q.  Under  the  Exemption  Act  of  Pennsylvania,  they  are 
exempted  from  paying  any  capital  stock  tax.  You  are  a 
member  of  the  Board  of  Trustees  ? 

A.  Yes. 

Q.  As  a  manager  of  that  hospital,  you  take  in  injured 
persons.  If  an  employee  of  a  manufacturing  corporation 
were  injured,  you  certainly  would  not  close  the  doors  upon 
that  employee? 

A.  No. 

Q.  Assuming  that  the  manufacturing  corporations, 
through  their  employees,  receive  treatment  at  such  hos- 
pitals, isn't  it  a  fact  that  they  should  bear  their  just  share 
of  raising  revenue  of  the  Commonwealth  so  that  the  State 
may  continue  its  policy  of  giving  appropriations  to  these 
private  charities? 


917 

A.  I  believe  that  is  correct,  if  it  can  be  equalized  in 
some  way,  so  that  each  would  pay  their  share.  As  it  is 
now,  we  receive  occasional  contributions  from  some  of 
the  small  manufacturing  concerns ;  but  the  amount  is  not 
in  any  way  adequate  to  the  services  we  give. 

Q.  Very  small  in  comparison? 

A.  Yes.  Another  thing  that  is  peculiar.  We  take  care 
of  everybody  or  every  accident  case.  If  a  stranger  is 
taken  sick  in  the  State,  we  take  care  of  them,  without 
charge.  I  have  often  said  to  a  patient  about  the  time  he 
was  discharged,  "  While  you  are  here*  as  an  emergency 
case  at  the  expense  of  the  State  of  Pennsylvania,  or  an 
institution  of  Pennsylvania,  there  is  no  reason  why  you 
should  not  contribute  what  you  feel  you  are  able  to  con- 
tribute. Well,  I  have  done  that  hundreds  of  times,  and  I 
never  received  but  two  contributions — one  was  ten  dollars 
and  the  other  was  five.  People  expect  to  be  taken  care  of 
without  charge  in  institutions  of  this  kind.  They  are 
things  we  have  to  work  against.  We  take  care  of  wealthy 
people  who  are  able  to  contribute,  but  they  don't  feel 
called  upon  to  do  so.  We  are  supposed  to  take  care  of  all 
accident  cases.  We  take  up  a  collection  (at  least  we  try 
to)  asking  the  men  to  contribute  a  day's  wages.  Aside 
from  the  first  two,  we  have  not  been  able  to  collect  8 
per  cent,  of  the  approximate  amount  earned. 

By  Mr.  Brown:  * 

Q.  I  suppose  if  the  State  did  not  appropriate  money, 
these  people  would  feel  bound  to  pay.  They  would  assume 
that  there  would  be  no  other  means  of  support  of  the 
institution  f 

A.  Well,  that  would  be  pretty  hard,  I  suppose.  I  don't 
know  what  would  become  of  the  institution  if  the  State 
did  not  contribute  as  liberally  as  it  is  appropriating  now. 
It  is  contributing  perhaps  70  per  cent,  of  the  cost  of  the 
care-taking  of  the  patients. 


918 

By  Mr.  Hunter: 

Q.  You  state  the  State  contributes  ten  thousand  dollars 
per  annum  towards  the  maintenance  of  your  institution? 

A.  Yes,  sir. 

Q.  How  do  you  make  up  the  other  four  thousand? 

A.  The  Ladies'  Auxiliary  gives  entertainments  oc- 
casionally. 

Q.  Do  you  have  any  pay  patients? 

A.  Yes,  our  pay  patients  last  year  brought  us  ap- 
proximately twelve  hundred  dollars. 

Q.  Leaving  twenty-five  hundred  dollars  to  make  up? 

A.  Yes,  or  thereabouts. 

Q.  Your  institution  is  practically  a  free  institution? 

A.  Yes,  it  certainly  is.  We  take  care  of  the  deserving 
and  the  undeserving. 

Q.  If  you  continue  to  receive  ten  thousand  dollars  from 
the  State,  don't  you  think  you  would  be  able  to  collect 
a  considerable  amount  from  your  patients  ? 

A.  "We  have  not  been  able  to.  We  have  had  a  deficiency 
every  year  that  has  accumulated,  now  reaching  ap- 
proximately fifteen  thousand  dollars. 

By  Mr.  Moyer: 

Q.  How  many  free  beds  do  you  have  ? 

A.  Forty-three  or  four. 

Q.  Always  filled? 

A.  Of  course,  we  cannot  say  they  are  always  filled  be- 
cause they  are  divided  into  surgical  and  medical  wards, 
and  sometimes  there  are  two  or  three  empty  beds  in  those 
wards. 

By  Mr.  Hunter : 

Q.  At  times  they  are  all  filled? 

A.  Yes.  More  than  that,  we  have  had  as  high  as  fiftyr 
three  beds  and  had  to  use  the  sitting  room  to  put  up  cots. 


919 


JUDGE  H.  A.  KNAPP,  Scranton,  Pa.,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission : — I 
certainly  appreciate  the  privilege  of  being  permitted  to  ad- 
dress the  gentlemen  of  the  Committee  on  the  visit  of  the 
Commission  to  Scranton,  although  I  was  not  aware  of  the 
coming  of  the  gentlemen  until  yesterday. 

I  suppose  one  of  the  questions  to  be  considered  by  this 
Commission  is  that  of  State  appropriations  which  are  made 
to  charitable  institutions  in  this  vicinity.  In  addressing 
myself  to  you,  I  wish  to  be  very  brief,  indeed,  and  do  not 
desire  to  take  up  too  much  of  your  time. 

I,  perhaps  unfortunate  for  myself,  have  been  to  a  certain 
extent,  associated  and  connected  with  two  or  three  of  the 
charitable  institutions  here,  and  have,  from  time  to  time, 
appeared  before  committees  of  the  Legislature  which  have 
come  to  Scranton,  and,  also,  at  their  sittings  in  Harrisburg. 
I  have  formed  a  very  definite  opinion  in  regard  to  the  con- 
ducting of  the  charitable  institutions  in  this  vicinity. 

As  to  the  charitable  institutions  in  this  section,  I  think 
we  have  much  wiser,  and  economical,  and  careful,  and  effi- 
cient management  by  the  directors  and  officers  that  are 
chosen  to  manage  them. 

In  regard  to  the  question  as  to  whether  or  not  it  is  ad- 
visable to  continue  to  appropriate  money  to  charitable  in- 
stitutions that  are  not  under  State  control,  I  don't  know 
that  my  opinion  would  have  much  weight;  but  I  should 
say  that  if  there  is  any  question  on  the  part  of  the  State 
as  to  that,  there  would  be  no  objection  so  far  as  these  in- 
stitutions here  are  concerned  to  have  the  State  assume  con- 
trol. I  mean  by  that  by  the  appointment  of  such  officers 
and  directors  as  they  do  in  other  institutions.  The  State 
appoints  members  of  the  Board  of  Directors  of  the  State 
Hospital  here  which  is  under  State  control ;  they  are  local 


920 

men;  and  there  would  not  be  the  slightest  objection  so  far 
as  charitable  organizations  are  concerned,  to  the  appoint- 
ment of  a  local  board  here  to  conduct  these  organizations. 
I  think  I  can  speak  for  almost  all  of  the  officers  and  direc- 
tors of  the  organizations  here  in  this  matter.  I  know  I 
would  be  immensely  relieved  if  someone  could  be  ap- 
pointed to  take  my  place  as  President  of  the  Board  of  As- 
sociated Charities,  Director  of  the  Consumptive  Hospital 
upon  the  Hill,  and  as  a  member  of  the  Board  of  the  Home 
for  the  Friendless.  If  the  State  would  fill  these  three  offices 
it  would  remove  a  great  load  from  my  mind. 

By  Mr.  Woodward: 

Q.  That  is,  obligate  the  State  to  support  these  institu- 
tions in  their  entirety? 

A.  I  don't  know  as  to  that.  I  can  only  speak  for  the 
three  I  have  mentioned.  None  of  these  three  have  ever  re- 
ceived one-half  of  their  revenues  from  the  State,  although 
the  Home  for  the  Friendless  has  been  more  liberally  helped 
by  the  State  in  the  two  past  years  of  the  Legislature ;  but, 
yet,  it  has  spent  as  much  derived  from  private  sources  as 
it  has  reveived  from  the  State.  That  is  in  this  latter  time. 
In  previous  time,  it  received  nothing  from  the  State.  So 
that  by  careful  and  economical  management  and  by  the 
charitable  inclination  of  the  people  it  has  created  a  fund 
out  of  which  it  has  built  a  large,  fine  and  handsome  build- 
ing worth  I  don 't  know  how  much — several  hundred  thous- 
and dollars.  It  is  true,  during  the  last  two  sessions  of  the 
Legislature  they  have  been  quite  liberal,  because  they  had 
to  build  an  extension  and  had  to  make  extensive  repairs 
to  the  old  building,  and  so  they  received,  I  think,  at  the 
last  Legislature,  eighteen  thousand  dollars  for  two  years; 
and  the  Legislature  before,  I  think  sixteen  thousand  dol- 
lars ;  prior  to  that  they  never  received  anything  more  than 
about  three  thousand  dollars  for  two  years.  Now  these 
three  institutions  I  speak  of  have  always  put  as  much  from 
their  private  sources  toward  their  expenses  as  they  have 


921 

received  from  the  State ;  and  I  can  say  of  these  institutions 
that  they  are  carefully,  economically  and  efficiently  man- 
aged; and  I  believe  the  State  would  be  at  liberty  to  appoint 
a  member  or  members  of  the  Boards  of  Directors,  and  they 
would  be  welcomed  on  the  part  of  those  who  are  now  in 
charge. 

Now,  I  think  it  would  be  an  unwise  move  if  the  State 
were  to  discontinue  appropriating  money  to  these  chari- 
table institutions.  They  have  been  allowed  to  grow  up  here 
fostered  by  the  State ;  they  have  served  a  useful  purpose ; 
and  to  withdraw  suddenly  and  entirely  the  support  of  the 
State  from  these  institutions  would  certainly  break  them 
up,  destroy  them.  The  people  here  are  supporting  them 
liberally  and  to  the  utmost  of  their  resources.  If  the  need 
for  that  was  doubled,  I  think  the  Committee  can  readily 
see  it  would  be  too  much.  Most  of  these  charities  would  go 
by  the  Board.  They  would  have  to  be  closed  up  and  they 
would  be  withdrawn  from  their  useful  work.  The  senti- 
ment that  seems  to  be  springing  up  and  seems  to  be  grow- 
ing in  some  quarters  of  the  State  do  no  longer  appropriate 
sums  of  money  to  charitable  institutions  not  under  State 
control,  I  hope  will  not  become  the  prevailing  sentiment, 
because  I  think  it  would  be,  as  far  as  this  particular  city 
is  concerned,  a  public  calamity. 

By  Mr.  Brown : 

Q.  Your  thought  is  that  if  there  is  not  sufficient  revenue 
collected  for  the  purpose  of  maintaining  these  institutions 
as  they  are  maintained,  and  also  for  the  normal  increase 
annually,  that  additional  revenue  should  be  collected  by 
the  State? 

A.  Well,  now,  in  regard  to  that,  I  think  the  very  great- 
est care  should  be  exercised  in  extending  this  to  new  insti- 
tutions. I  can  see  that  the  encouragement  given  by  the 
State  by  appropriating  a  sum  of  money  to  an  institution, 
will  induce  somebody  else  to  say,  'Let  us  start  a  new  hos- 
pital; the  State  will  sooner  or  later  contribute  to  the  sup- 


922 

port  of  it.'  Now,  perhaps  the  startling  rapid  growth  of 
these  things  should  bo  checked.  We  ought  to  be  very  care- 
ful in  taking  on  new  objects,  so  people  would  not  be  encour- 
aged to  start  these  new  charities.  Then  I  think  that  very 
great  care  should  be  taken  that  the  appropriations  are  not 
larger  than  are  actually  needed.  I  don't  think  they  should 
be  allowed  to  grow.  I  think  ten  or  fifteen  years  ago  the 
State  of  Pennsylvania  was  exceedingly  liberal  to  its  chari- 
table organizations. 

Q.  Isn't  there  a  normal  increase  in  the  needs? 

A.  Yes,  I  think  so. 

Q.  Would  a  per  capita  basis  do?  Let  the  State  pay  so 
much  a  day  for  the  maintenance,  care  and  support  of  its 
patients  ? 

A.  I  think  the  State  would  be  paying  even  more  money 
than  now  if  they  did. 

By  Mr.  Moyer : 

Q.  Wouldn't  it  be  more  equitable? 

A.  Yes,  possibly  so. 

Q.  That  would  be  the  result  sought  by  the  per  capita 
basis.  The  camplaint  seems  to  be  in  certain  sections  that 
more  money  is  being  appropriated  than  in  others,  some  of 
the  counties  getting  more  than  they  really  should. 

By  Mr.  Brown : 

Q.  Would  it  be  possible  to  consolidate  the  hospitals  in 
the  city  of  Scranton.  Jt  has  been  suggested  that  there  are 
too  many  hospitals,  and  that  one  hospital  could  be  better 
qualified  to  do  the  work,  better  appliances,  better  facilities, 
etc.,  than  by  distributing  the  money  between  three  or  four 
hospitals. 

A.  I  am  not  intimately  connected  with  the  hospitals  to 
make  my  opinion  very  heavy.  The  Lackawanna  Hospital 
is  an  institution  of  the  State,  and  the  Hahnnemann  Hospital 
has  a  different  school  of  medicine.  I  am  not  connected  with 
either  one.  No  doubt  the  Committee  will  hear  representa- 


923 

tives  from  these  institutions.  The  West  Side  Consump- 
tive Sanitarium  I  am  a  director  of,  but  that  you  see  is  a 
consumptive  hospital,  and  the  only  objection  we  have  had 
was  that  none  of  the  other  institutions,  or  hospitals  I  should 
say,  would  take  consumptive  patients  at  all. 

Q.  Why  shouldn't  they  take  them?  Why  shouldn't  there 
be  a  consumptive  ward  in  the  hospitals? 

A.  That  is  a  question  of  hospital  matters  on  which  my 
judgment  would  not  be  good.  As  the  Committee  knows 
that  in  the  first  instance  the  treatment  of  consumption  re- 
quires some  altitude.  It  requires  the  patient  to  get  out  of 
the  city;  it  requires  pure  air — purer  than  you  get  in  the 
cities;  it  requires  special  treatment  in  the  way  of  diet,  etc. 
Whether  it  is  possible  or  whether  it  is  not,  the  fact  remains 
that  it  was  impossible  to  get  consumptive  patients  admitted 
into  any  hospital  in  Scranton,  and  the  consequence  was  that 
these  consumptive  people  were  obliged  to  stay  home  and  the 
disease  was  spreading  rapidly  until  some  of  the  people  here 
decided  it  was  about  time  there  was  a  place  where  consump- 
tives could  be  sent  for  treatment,  so  they  purchased  a  piece 
of  land  on  the  top  of  the  West  Mountain  about  four  or  five 
miles  from  where  this  Committee  is  now  seated.  The  air  is 
fine;  it  has  a  grand  altitude;  it  is  several  hundred  feet 
higher  than  the  city  and  the  air  is  absolutely  pure;  and 
there  we  have  maintained  it  from  that  time,  year  after 
year,  for  the  good  and  benefit  of  our  city,  asking  State  aid 
every  time  but  not  receiving  it  until  the  last  Legislature, 
when  they  were  given  the  sum  of  five  thousand  dollars  for 
two  years.  That  is  not  more  than  one-third  of  what  is  ex- 
pended there.  The  people  admitted  are  poor  almost  al- 
together, none  paying  the  amount  it  costs  to  keep  them 
there,  because  the  diet  of  milk  and  eggs  is  an  expensive 
diet.  They  keep  there  on  an  average  of  twenty-five  pa- 
tients, and  they  have  cured  many  and  have  improved  many. 
Some  have  gone  there  so  low  that  there  was  absolutely  no 
chance  for  them.  The  result,  on  the  whole,  has  been  good. 
It  has  been  demonstrated  that  it  is  a  beautiful  and  magnifi- 
cent charity,  but  it  needs  the  State  aid.  It  needs  more. 


924 

By  Mr.  Brown : 

Q.  Assuming  there  is  an  absolute  need  on  the  part  of 
these  meritorious  institutions  for  more  money  than  the 
State  is  now  collecting ;  do  you  think  the  list  of  taxables 
should  be  increased  for  that  purpose  ? 

A.  That  is  a  subject  that  I  have  not  considered. 

Q.  You  have  to  look  at  both  sides  of  the  matter. 

A.  This  is  a  matter  I  have  given  so  little  thought  that  my 
opinion  would  not  be  worth  anything. 

By  Mr.  Hunter: 

Q.  Each  one  of  these  institutions  you  have  mentioned, 
I  assume,  has  its  individual  superintendent,  its  own  clerical 
force,  engineer,  etc.  Why  can't  they  be  under  the  control 
of  one  man,  these  several  institutions,  one  superintendent 
to  care  for  all  of  them,  with  a  slightly  increased  salary? 

A.  You  see  you  get  back  into  the  hospitals  again ;  I  don 't 
know  anything  about  the  hospitals  with  the  exception  of 
the  consumptive  hospital;  they  pay  one  lady  there  who  is 
a  trained  nurse.  She  is  engineer,  bookkeeper,  superinten- 
dent and  everything.  She  stays  there  the  year  round  and 
takes  care  of  the  place.  There  could  not  be  any  more  eco- 
nomical management  than  there  is  there.  The  Home  for 
the  Friendless  is  different ;  they  have  a  matron  and  a  hun- 
dred people  under  her ;  old  ladies  and  children ;  that  is  the 
kind  of  people  they  take  there — old  ladies  without  homes 
and  children  without  homes,  from  Scranton  and  various 
parts  of  Lackawanna  county.  She  is  absolutely  necessary 
there;  nobody  could  take  her  place  there.  There  is  no  ex- 
pense there  that  is  not  absolutely  necessary.  The  only  other 
institution  I  am  familiar  with  is  the  Board  of  Associated 
Charities,  and  that  is  quite  a  different  thing  altogether.  It 
could  not  be  in  any  way  consolidated  with  or  come  under 
the  same  management  or  connected  with  the  Home  for  the 
Friendless  or  one  of  these  other  hospitals.  It  has  its  office 
here  in  the  city.  It  is  a  Board  of  Associated  Charities,  and 
Dr.  Israel  is  here,  who  is  secretary  of  the  Board;  and  I 
hope  the  Committee  will  hear  him. 


925 

By  Mr.  Woodward : 

Q.  It  is  made  up  of  the  various  charities  throughout  the 
city? 

A.  Yes,  a  sort  of  a  clearing  house  for  the  Associated 
Charities.  It  has  a  wide-awake  officer  who  is  always  on  the 
job ;  she  is  an  officer  appointed  a  police  officer  by  the  city, 
and  she  is  out  on  the  streets  of  the  city  from  early  in  the 
morning  until  late  at  night.  When  she  sees  poor  children 
on  the  streets,  and  when  she  sees  anything  out  of  the  way 
on  the  streets,  or  neglected  girls,  it  has  her  most  constant 
attention.  Wherever  these  are  observed  they  are  helped  by 
being  sent  to  these  various  charities.  It  is  a  sort  of  a  clear- 
ing house.  I  think  most  any  man  in  Scranton  would  tell  the 
Committee  that  this  has  been  the  source  of  an  immense 
amount  of  good. 


926 


DR.   ISRAEL,   Secretary  Board  of  Associated  Charities, 
Scranton,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Committee: — I 
hardly  think  it  necessary  for  me  to  take  up  your  time.  I 
may  say  that  the  Board  of  Associated  Charities  was  es- 
tablished seventeen  years  ago.  It  is  a  sort  of  a  clearing 
house  such  as  can  be  effective  in  ministering  to  the  miserable 
condition  of  the  submerged  people  of  the  city.  Our  asso- 
ciation ministers  to  all  those  who  are  seeking  to  reclaim 
their  lives,  whether  men,  women  or  children.  She  investi- 
gates parents  whose  daughters  are  brought  here  from  the 
country  and  she  keeps  her  hands  on  all  those  things  through 
the  advice  of  counsel,  a  board  composed  of  fifteen  men 
made  up  of  the  representative  Christian  bodies  of  the  city. 
In  this  way  we  try  to  keep,  and  I  think  we  have  succeeded 
in  keeping,  a  very  large  part  of  the  misery  of  the  city  under 
control,  at  least  to  a  certain  extent.  We  are  now  progress- 
ing in  the  development  of  a  home  for  boys.  We  have  five 
or  six  that  we  are  now  taking  care  of  by  boarding  them; 
there  are  forty  to  fifty  that  we  have  now  arranged  for,  and 
we  have  rented  an  institution  in  which  we  hope  to  open  a 
boarding  house  for  boys  to  tend  toward  the  salvation  of 
what  we  might  call  the  submerged  ones  of  our  community. 

I  am  a  representative  of  another  institution  which,  I 
think,  demands  a  great  deal  of  attention  from  the  Legisla- 
ture ;  that  is  in  connection  with  the  Oral  School,  of  which  I 
wish  to  speak.  This  teaches  the  deaf  mutes  how  to  speak. 
The  school  is  under  the  control  of  the  State  insofar  as  they 
appoint  the  representatives  of  the  directorship.  But  we 
have  received  so  little  that  we  have  not  been  able,  except  in 
occasional  years,  to  meet  the  running  expenses  of  the  insti- 
tution. I  think  this  institution  that  is  directly  interested 
in  the  educational  part  of  the  work  of  the  State  should  be 
receiving  a  certain  sum,  considerably  beyond  what  it  is  re- 
ceiving to-day. 


By  Mr.  Hunter: 

Q.  I  am  of  the  opinion  that  this  associated  charity  is 
a  most  excellent  work.  I  don't  think  they  have  gone  far 
enough  with  their  work.  Why  couldn't  they,  instead  of 
stopping  at  the  aid  of  those  who  require  it,  go  further, 
and  see  that  the  State,  who  is  a  large  contributor  to  these 
institutions,  and  other  individuals  who  contribute,  are 
protected  also?  It  seems  to  me,  if  they  would  have  repre- 
sentatives to  this  Board  of  Associated  Charities — a  mem- 
ber of  two  from  each  of  these  several  institutions,  they 
could  get  together  and  jointly  determine  the  amount  of 
help  required  from  the  State,  and  have  it  properly  dis- 
tributed. 

A.  "We  would  be  delighted  to  do  that,  if  the  scope  of 
the  Associated  Charities  could  be  made  as  broad  as  that. 

By  Mr.  Woodward: 

Q.  Do  you  think  you  could  get  the  Associated  Chari- 
ties to  do  this? 

A.  That  is  a  question;  there  is  no  objection  on  our  part. 

By  Mr.  Brown : 

Q.  Why  shouldn't  these  people  get  together  and  deter- 
mine the  best  distribution  of  the  State's  money? 

A.  That  is  something  I  have  not  brought  up.  It  seems 
ideal  if  it  can  be  done.  Would  your  appropriations  then 
be  so  much,  to  be  divided  among  these  institutions  in 
accordance  with  the  judgment  of  the  representatives  of  the 
institutions  ? 

By  Mr.  Hunter : 

Q.  That  would  be  in  line  with  my  idea.  I  mean  to  have 
representative  citizens  of  a  community  to  determine  jointly 
what  was  required  in  their  community  for  the  several  in- 
stitutions, and  go  before  the  State  authorities  at  the  proper 
time.  I  think  that  would  be  much  stronger  than  a  repre- 
sentative committee  from  the  individual  institutions,  be- 
cause they  have  their  own  ends  to  answer,  or  their  axe 
to  grind,  and  are  trying  to  get  as  much  for  their  own  insti- 
tution as  they  can. 


928 

A.  Might  I  ask  if  it  would  make  any  difference  in  the 
main.  The  Boards  of  the  institutions  that  are  represented 
here  today  are  representative  men  of  this  community.  You 
have  the  leading  business  and  traveling  men,  in  every  re- 
spect, in  the  community.  If  these  men  would  get  together, 
wouldn't  it  result  in  each  institution  being  represented  by 
these  men,  putting  in  the  same  claim,  feeling  the  needs 
of  the  case,  as  they  do.  They  could  simply  combine  the 
amounts  in  presenting  them  to  you  in  combination,  rather 
than  for  the  individual  institution. 

Q.  Not  all.  Some  of  them;  in  the  case  of  an  institution 
asking  too  much.  In  other  words,  I  think  the  effect  would 
be  a  more  equitable  distribution  of  the  funds. 

A.  I  believe  that  could  be  met  without  the  slightest 
trouble. 

By  Mr.  Brown : 

Q.  Have  you  given  any  thought  to  the  comparative  cost 
of  these  different  institutions  ? 

A.  As  a  whole? 

Q.  I  mean  severally,  as  to  the  cost  of  supplies.  Some 
one  has  suggested  that  considerable  money  could  be  saved 
by  having  a  State  department  to  buy  the  supplies  for  all 
the  institutions  throughout  the  State  and  to  furnish  them 
to  institutions  on  requisition.  It  has  been  suggested  that 
the  State  could  buy  25  per  cent,  cheaper  than  the  insti- 
tutions ? 

A.  I  don't  suppose  where  things  are  bought  they  are 
bought  as  low  as  they  might  be  in  much  larger  quantities 
at  wholesale.  One-half  of  the  things  that  are  used  are 
given  them  by  the  merchants.  They  stop  there  and  just 
leave  the  things  and  don't  ask  any  pay.  The  home  has 
been  established  so  long  that  it  just  lives  in  the  eyes  of 
all  the  people. 

Q.  If  you  bought  your  supplies  outside  you  would  prob- 
ably drive  these  people  from  doing  this? 

A.  That  is  what  I  think. 


929 


JUDGE  EDWARDS  called. 

Mr.  Chairman  and  Gentlemen  of  the  Commission: — I 
wish  to  bid  you  good  morning,  as  I  am  very  glad  to  see 
you  here.  I  didn't  know  you  were  in  session  until  this 
morning.  I  was  under  the  impression  that  you  were  to 
be  here  at  1  o'clock  this  afternoon,  and  it  was  only  by 
the  merest  accident  that  I  heard  you  were  in  Court  No. 
2.  A  gentleman  called  at  the  office  a  while  ago  and  said: 
"What  is  going  on  in  Court  No.  2?  The  room  is  full 
of  people  and  there  are  five  very  good  looking  men  on  the 
bench."  I  came  here  and  found  the  Commission.  I 
am  very  glad  to  see  you  here,  and  glad  to  see  you  going 
around  the  State  to  see  if  you  can  devise  some  reason- 
able way,  some  satisfactory  way,  to  solve  the  problem  you 
have  before  you.  I  think  you  have  the  heartiest  sympathy 
of  all  the  thoughtful  people  in  this  State  in  the  effort 
you  are  making. 

I  don't  know  what  line  your  investigation  will  take  up 
here,  but  the  first  thing  I  want  to  impress  upon  you  is 
(and  my  knowledge  is  confined  to  Lackawanna  county,  as 
to  the  charitable  institutions  of  this  county)  that  your 
efforts  should  be  not  to  diminish  in  any  way  the  appropria- 
tions made  for  charitable  institutions  in  this  county,  but 
to  devise  some  means  by  which  you  can  have  more  money 
from  this  State  in  order  to  increase  the  appropriations 
for  the  hospitals  and  other  charitable  institutions  of  this 
city. 

By  Mr.  Brown: 

Q.  To  which,  I  suppose,  you  would  add  the  public  schools 
and  building  of  roads  ? 

A.  Well,  the  public  schools,  by  all  means;  but  not  the 

building  of  roads.     The  roads  will  be  for  the  future;  the 

charitable   institutions   are    for   the   present,    as   are    the 

public  schools.    I  am  in  favor  of  good  roads  and  all  that 

46 


930 

How  will  you  get  more  money  ?  I  don 't  know.  If  I  was 
a  member  of  this  Commission,  that  would  be  my  great 
ambition — to  devise  some  satisfactory  way  by  which  the 
revenue  of  this  rich  State  could  be  increased.  Very  likely 
you  gentlemen  have  some  plan,  some  suggestion  along 
that  line.  Shall  we  put  a  tax  on  coal,  for  instance?  Well, 
I  don't  know.  I  thought  maybe  my  friend  Judge  Knapp, 
who  represents  most  of  the  coal  interests  in  this  county, 
would  say  something  about  that.  I  see  no  objection  what- 
ever in  taxing  the  coal  and  riches  that  come  out  of  the 
land  of  this  county  and  using  that  money  for  the  support 
of  the  community  and  charitable  associations  and  insti- 
tutions of  this  county.  I  know  of  no  reason.  There  is  no 
constitutional  objection.  It  would  be  a  tax  that  would 
be  easily  devised  and  the  least  felt  tax  of  any  I  know  of. 
I  have  always  thought  there  should  be  a  tax  of  so  much, 
if  only  one  cent  a  ton  or  two  cents  a  ton,  and  that  money 
should  be  appropriated,  not  for  roads  and  public  schools, 
if  you  please,  but  should  be  appropriated  to  the  needs 
of  these  charitable  institutions  which  have  been  made  neces- 
sary on  account  of  the  taking  out  of  these  riches  from  the 
very  earth.  There  is  where  a  part  of  this  money  should 
come  from. 

Q.  What  is  the  general  sentiment  in  this  community  in 
this  respect? 

A.  About  the  same,  as  I  make  it.  Everybody,  except 
the  owner  of  the  coal  beds.  They  are  pretty  reasonable, 
too.  I  think  they  would  come  along.  The  coal  corpora- 
tions in  this  county  I  know  as  well  as  I  do  anybody  in 
the  county,  and  they  are  charitable  men,  liberal  men,  and 
I  think  they  would  come  along. 

Q.  Why  shouldn't  these  interests  get  together  and  sug- 
gest to  this  Committee  what  they  think  would  be  a  fair 
tax  for  this  purpose — not  leave  it  to  the  Committee  to 
guess;  we  should  then  have  the  benefit  of  every  thought 
on  that  subject? 

A.  The  difficulty  would  be  that  it  is  pretty  hard  to  get 


931 

a  body  of  men  together  to  get  them  to  agree  as  to  a  sys- 
tem by  which  you  can  take  money  out  of  their  pockets. 

Q.  The  Manufacturers'  Association  of  Philadelphia  sent 
a  representative  before  us,  who  said:  " Assuming  that 
there  is  not  sufficient  revenue,  that  there  should  be  more 
for  this  purpose,  and  there  should  be  a  tax  of  one  mill  on 
the  capital  stock  and  that  this  tax  would  be  satisfactory 
to  them.  Why  don't  some  of  these  other  interests  come 
forward  and  offer  to  pay  their  share  of  the  burden  ? ' ' 

A.  I  think  the  suggestion  is  a  very  good  one.  Of  course, 
my  suggestion  is  not  of  a  general  character ;  it  is  in  regard 
to  the  money  received  from  such  a  tax;  I  want  the  money 
that  would  be  received  from  a  tax  on  the  tonnage  of  coal 
in  the  anthracite  and  bituminous  regions  appropriated  for 
charitable  purposes,  because  it  is  that  character  of  industry 
that  has  made  these  institutions  necessary  in  this  county. 

I  am  president  of  the  West  Side  Hospital,  Association, 
and  I  am  now  going  to  the  other  side  of  that.    I  only  use 
this  as  typical  of  the  hospitals  in  this  city  and  county. 
They  are  all  alike.  I  don 't  want  you  to  run  away  with  the 
idea  that  the  people  of  Scranton  are  not  taxed  to  the  ut- 
most in   support   of   charities  in   this   city.     They  have 
their  hands  in  their  pockets  all  the  time.    There  is  hardly 
a  day,  and  I  know  not  a  week,  that  the  best  people  of  the 
city  are  not  called  upon  in  one  direction  or  another.     Let 
me  give  you  an  illustration,  and  the  reason  I  mention  it 
is  the  condition  of  the  West  Side  Hospital.     It  is  on  the 
west  side  of  the  river.    Four  years  ago,  the  State  of  Penn- 
sylvania,  seeing  the  character  of  the  old  building  that 
was  there,  appropriated  eight  thousand  for  the  purpose  of 
starting  a  new  building.    We  built  it,  and  it  cost  us  forty 
thousand,  and  we  still  have  the  building  up  there,  and  it 
is  one  of  the  best  hospitals  according  to  its  size  in  the 
State  of  Pennsylvania.     We  never  would  have  put  that 
forty  thousand  dollar  building  up  there  unless,  four  years 
ago,  the  Legislature  had  given  us  eight  thousand  dollars 
to  start  a  new  building.    We  would  not  have  assumed  the 


932 

responsibility,  but  we  thought  it  safe  to  assume  it,  because, 
when  the  Legislature  met  they  gave  us  twenty  to  twenty- 
five  thousand  dollars  to  pay  upon  that  building;  but  the 
Governor  had  to  use  his  blue  pencil  and  strike  it  out.  We 
never  would  have  put  up  that  building  unless  it  was  that 
the  eight  thousand  had  been  appropriated.  There  is  a 
population  there  of  forty  thousand,  almost  one-third  the 
population  of  this  entire  city.  Ninety-five  per  cent,  of  the 
people  over  there  are  wage-earners  and  widows  and  or- 
phans. Whatever  money  we  get  we  get  from  private  pa- 
tients. We  only  got  about  fifteen  thousand  for  two  years, 
and  still,  we  have  had  as  high  as  forty-seven,  forty-eight 
and  fifty  patients  there  at  a  time.  According  to  my  re- 
cords, we  got  about  five  hundred  dollars  a  quarter  from 
private  patients,  and  used  all  of  it  to  maintain  the  others. 
Ninety-five  per  cent,  of  the  patients  in  the  West  Side  Hos- 
pital are  charity  patients;  they  haven't  a  cent  of  money, 
and,  therefore,  there  is  no  use  in  talking  about  their  being 
able  to  pay. 

Q.  Why  wouldn't  a  county  like  Lackawanna  take  care 
of  its  own? 

A.  You  give  us  the  revenue  from  this  county  and  we 
will  take  care  of  the  charities  of  this  county — yes,  and  of 
Luzerne  with  it.  Give  us  the  money  we  pay  the  State 
and  we  will  take  care  of  five  counties,  of  five  aggregations 
of  charitable  institutions,  such  as  we  have  in  Lackawanna 
county. 

Q.  A  poor  county  that  has  not  such  revenue  cannot  take 
care  of  its  own.  The  State  ought  to  take  care  of  its  own  ? 

A.  Undoubtedly.  Let  me  make  one  suggestion,  which 
I  like  very  much.  It  would  be  a  good  idea  to  have  some 
Board  put  here  in  Lackananna  county  consisting  of  seven, 
or  nine,  or  eleven  men — some  odd  number  that  shall  be  a 
kind  of  a  clearing  house  as  to  how  the  appropriations  for 
the  charitable  institutions  in  Lackawanna  county  shall 
be  distributed.  The  only  way  I  can  see  in  which  you  can 
do  that  is,  just  as  soon  as  the  Legislature  meets  next 


933 

winter,  have  a  bill  offered  in  the  House  and  Senate  and 
passed  to  appoint  such  men,  who  shall  sit  permanently. 

Q.  That  would  be  more  effective  that  the  Board  of  Chari- 
ties? 

A.  The  State  Board  of  Charities  is  no  use  to  us  up  here. 

Q.  Have  you  given  any  thought  to  this  subject?  Sup- 
pose the  State  of  Pennsylvania  has  not  enough  revenue 
to  finish  her  State  institutions;  should  she  do  that  first, 
or  should  she  appropriate  to  institutions  not  under  State 
control? 

A.  Well,  you  certainly  cannot  cut  off  the  appropria- 
tions to  these  hospitals  that  have  been  living  on  State  aid. 

Q.  What  is  your  thought — is  Pennsylvania  practically 
the  only  State  in  the  Union  that  appropriates  money  to 
institutions  not  under  her  control  ? 

A.  I  think  so.  It  is  one  of  the  proudest  tiaras  in  the 
crown  of  Pennsylvania  that  she  does  take  care  of  her 
charity  patients  and  poor  people.  It  is  a  great  honor  to 
the  State  of  Pennsylvania,  and  I  don't  want  them  to  fall 
down  upon  it. 

By  Mr.  Moyer : 

Q.  What  do  you  think  about  the  question  of  the  con- 
solidation of  hospitals? 

A.  Well,  if  it  is  under  control  of  the  State  it  would 
not  be  as  convenient.  You  talk  about  the  State  buying 
the  supplies  for  the  various  institutions  and  the  institu- 
tions being  furnished  with  the  supplies  upon  requisition. 
I  never  heard  of  the  State  buying  anything  cheap,  or 
putting  up  a  cheap  building.  The  management  of  the 
West  Side  Hospital  makes  requisition  quarterly  and  gets 
bids  from  wholesale  houses,  and  I  imagine  we  can  buy 
as  cheap  as  the  State — cheaper.  I  don't  see  how  consolida- 
tion is  going  to  help  them.  The  expenses  of  these  different 
hospitals  are  very  small,  comparatively,  the  moment  you 
get  outside  of  Philadelphia.  I  know  in  our  own  county 
everything  is  run  on  a  very  economical  schedule,  and  we 


934 

are  putting  our  time  and  money  and  best  judgment  into 
these  institutions  in  order  to  produce  the  best  results.  You 
wouldn't  think  of  consolidating  all  the  management  of 
the  hospitals  in  Scranton  ? 

Q.  Isn't  it  a  fact  that  there  are  too  many  hospitals  in 
Pennsylvania  to-day? 

A.  Yes,  sir. 

Q.  The  complaint  seems  to  be  general  where  there  are 
two  or  three  or  four  doctors  not  getting  along  very  well, 
they  meet  and  form  a  medical  organization  and  call  on 
their  influential  friends  to  have  an  appropriation  given 
them  to  start  a  hospital  ? 

A.  Yes,  that  is  right. 

Q.  That  is  the  complaint  that  is  coming  to  this  Com- 
mittee. 

A.  Isn't  there  an  authoritative  body  that  has  a  right  to 
decide  whether  any  body  of  men  or  any  hospital  organiza- 
tion has  a  right  to  go  ahead  and  build  any  kind  of  a  build- 
ing without  permission? 

By  Mr.  Woodward: 

Q.  They  take  out  the  contract  and  go  ahead  without 
consulting  the  State  Charities  or  any  other  Board.  Some 
of  them  overlook  the  fact  that  they  should  make  appli- 
cation through  the  State  Board  of  Charities,  and  later  on 
to  the  Legislature  to  ask  its  members  to  appropriate 
money 

A.  It  should  be  that  nobody  could  start  a  new  build- 
ing of  any  kind  without  first  having  the  permission,  after 
investigation  of  an  authoritative  board  representing  the 
State. 

By  Mr.  Moyer : 

Q.  If  the  State  appropriates  money  for  the  purpose  of 
erecting  buildings  where  the  title  is  not  vested  in  the  Com- 
monwealth, shouldn't  the  State  have  prior  lien? 

A.  It  has  under  the  Act. 


935 

By  Mr.  Woodward: 

Q.  Wouldn't  it  be  a  good  idea  if  each  community  would 
erect  its  own  building,  and  then  the  State  assist  in  the 
support  of  the  work  after  the  building  had  been  erected 
by  the  people  of  the  various  local  communities?  It  would 
tend  to  eliminate  the  criticism  you  make. 

A.  Under  power  of  some  board 

By  Mr.  Brown : 

Q.  If  they  didn't  get  the  preliminary  authority  they 
couldn  't  erect  the  building  ? 

A.  Yes,  that  would  be  a  good  idea. 

Q.  Have  you  given  any  thought  to  the  taxing  of  manu- 
facturing corporations?  What  is  the  consensus  of  opinion 
in  this  community  as  to  taxing  the  manufacturing  corpora- 
tions ? 

A.  I  have  no  knowledge  at  all.  I  think  it  would  be 
proper  to  levy  a  particular  per  ton  tax  on  all  coal  mined 
for  the  support  of  the  charitable  institutions.  You  will 
have  to  depend  upon  men  who  have  devoted  their  time  to 
the  science  of  taxation.  It  is  not  a  thing  that  can  be 
considered  off-hand.  It  stands  to  reason  that  every  coal 
land  owner  and  miner  should  at  least  provide  for  the  con- 
sequences of  mining  it.  I  have  always  been  in  favor  of 
the  English  Act  by  which  all  corporations  are  obliged 
to  care  for  their  own  employees  and  pay  for  all  damages 
arising  from  accident,  so  long  as  the  negligence  on  the 
part  of  the  person  hurt  is  not  of  a  gross  character. 

Mr.  Moyer:  Before  Judge  Knapp  leaves  the  room  I 
would  like  to  have  an  expression  of  opinion  from  him  re- 
garding his  views  of  the  taxation  on  edal,  or  the  natural 
resources  of  the  Commonwealth — on  coal  and  oil? 

Judge  Knapp:  You  can  readily  understand  my  situa- 
tion in  regard  to  that.  I  am  a  practicing  attorney  here 
and  have  all  kinds  of  clients.  I  would  have  to  be  excused 
on  that  account. 


936 

Judge  Edwards:  I  would  make  a  suggestion  that  if 
there  is  any  way  you  can  get  the  heads  of  the  coal  com- 
panies together  that  they  will,  no  doubt,  fall  into  the  re- 
quirements of  the  Legislature. 

Mr.  Brown:  This  Commission  has  got  the  power  of  the 
Legislature  to  subpoena,  produce  books  and  papers  and 
go  to  the  outermost  limit.  We  have  yet  to  issue  the  first 
subpoena.  It  seems  to  me  they  should  all  come  forward 
and  say  what  should  be  done  for  the  common  good. 

A.  I  don't  suppose  they  have  had  an  opportunity. 

Q.  We  send  out  nearly  forty  thousand  letters  to  every 
interest  in  Pennsylvania,  every  one;  we  asked  them  to 
give  suggestions  so  as  to  give  all  interests  an  opportunity 
to  present  their  views.  We  have  probably  received  four 
or  five  thousand  replies. 

A.  They  might  have  such  a  letter  drafted  before  the 
Committee  in  Harrisburg.  I  have  no  doubt  they  will  be 
there. 


937 


SENATOR  EDW.  F.   BLEWITT. 

Mr.  Chairman  and  Gentlemen  of  the  Commission :  Judge 
Edwards  talked  on  the  very  lines  I  wished  to  speak  about ; 
that  is,  the  taxation  of  coal. 

As  you  are  aware,  in  the  anthracite  regions  that  begins 
down  in  Dauphin  county  very  close  to  the  capital  and 
runs  a  distance  of  twenty  miles  from  here — they  mine 
during  the  year  sixty  millions  of  tons  of  coal.  Most  of 
that  coal  is  taken  out  of  this  State ;  it  is  sold  in  New  York, 
in  the  East,  a  little  in  the  South,  some  in  the  Northwest ; 
but  it  is  a  product  that  leaves  here  and  goes  outside  of 
the  State. 

To  my  mind,  a  tax  of  two,  three,  four  or  five  cents  a 
ton  would  not  be  an  improper  one.  In  the  first  place,  the 
people  of  the  Commonwealth  would  not  have  to  pay  for 
it;  it  would  be  the  persons  on  the  outside.  All  this  is 
familiar  to  residents  of  the  anthracite  regions. 

Now,  there  are  a  great  many  things  about  our  hospitals 
that  might  be  explained. 

In  the  mining  of  this  sixty-six  million  tons  of  anthracite 
coal  in  this  district,  there  are  killed  during  the  year  in 
the  neighborhood  of  six  hundred  people  who  leave  many 
wives  and  hundreds  of  orphans.  These  widows  and  or- 
phans are  in  most  instances  helpless.  There  is  no  remedy 
for  them;  the  State  does  not  provide  anything  for  them 
and  the  result  is  the  little  boys  and  little  girls  you  find 
in  the  mills  and  the  factories,  and  who  are  under  age,  and 
in  many  instances,  where  their  mothers  swear  they  are, 
are  there  as  a  consequence  of  this  condition. 

If  we  could  arrange  to  tax  five  cents  a  ton,  that  would 
be  in  the  neighborhood  of  three  millions  of  dollars  for  the 
State. 

Every  day,  night  and  Sunday  they  are  taking  the  coal 
from  this  Lackawanna  Valley,  and  the  county  of  Lacka- 


938 

wanna;  this  is  going  on  for  twenty-four  hours  in  th« 
day  with  the  result  that  within  the  lifetime  of  the  young- 
est man  in  this  room,  we  will  be  denuded  of  coal  in  this 
county  and  we  will  have  nothing  left  here  except  a  few 
little  manufacturing  plants  here  and  there;  and  because 
they  cannot  get  coal,  even  they  will  go  away,  too.  I  urge 
this  Committee  strongly  to  put  a  tax  on  coal,  not  only  an- 
thracite, but  bituminous.  We  can  go  further  than  the 
coal ;  we  go  to  the  oil.  In  the  State  of  Pennsylvania,  the 
oil  derricked  runs  away  up  into  the  hundreds  of  millions 
of  dollars  and  Pennsylvania  doesn't  get  a  benefit  of  a  cent 
of  it. 

I  owe  money  myself  on  property,  about  six  thousand 
dollars.  I  am  paying  four  mills  on  that  six  thousand 
dollars  to  the  State  of  Pennsylvania  and  there  is  no 
reason  why  a  poor  man  should  have  to  pay  that  four  mills. 
Why  don't  those  other  interests  pay  that  that  are  taking 
all  their  money  away  from  us  ?  Why  don 't  you  tax  them 
and  relieve  the  poor  man  who  buys  a  home?  Instead 
of  my  paying  6  per  cent,  on  my  loan,  why  shouldn't  I 
pay  only  5  6-10  per  cent.?  Let  the  one  who  is  reaping 
the  benefit  of  our  valleys  here  pay  for  it.  I  think  the 
sentiment  of  this  valley  from  one  end  to  the  other  is  that 
a  tax  on  coal  would  be  just.  Besides,  it  would  not  be  a 
tax  on  the  corporation ;  it  would  be  too  small.  Going  out- 
side of  these  valleys  are  one  hundred  and  sixty-six 
millions  of  bituminous  coal  and  sixty-six  millions  of  an- 
thracite coal.  Now,  suppose  we  have  a  tax  on  that  of  two 
cents  a  ton ;  there  is  an  income  of  four  millions  of  dollars. 
The  State  of  Pennsylvania  is  not  in  debt ;  it  does  not  owe 
a  dollar.  It  is  the  only  State  in  the  Dnion  that  is  not 
in  debt.  At  the  last  Legislature,  we  provided  for  every- 
thing. It  is  a  fact  that  our  hospitals  do  not  receive  what 
they  really  should.  I  am  speaking  of  my  own  district  in 
comparison  with  the  other  sections  of  the  State.  Talk 
about  amalgamation  of  hospitals.  That  is  out  of  the 
question  in  this  section  of  the  State.  Hospitals  are  to  be 


939 

considered  local  in  the  sense  that  Judge  Edwards  was 
talking  about  the  West  Side  Hospital  removed  from  here 
about  a  mile.  Over  there  they  have  a  population  of  about 
forty  thousand;  the  mines  are  back  of  it.  Now,  when  a 
man  is  injured  in  the  mines  you  cannot  rush  him  over 
these  hills  and  cross  this  hill  here  to  get  his  wounds  taken 
care  of,  because  it  means  his  death ;  but  you  have  to  send 
him  to  the  hospital  close  by  the  very  breakers  or  mines 
in  which  the  accidents  occur.  You  must  have  one  in  the 
industrial  section.  It  is  this  way  in  Philadelphia ;  almost 
every  two  or  three  blocks  there  is  a  hospital  in  the  indus- 
trial section.  It  is  different  entirely  in  the  Schuylkill  dis- 
trict in  Lacka wanna  county.  I  don't  know  every  hospital 
in  the  State,  but  I  know  this :  that  it  is  a  fact  that,  in  my 
opinion  and  in  the  opinion  of  others  that  is  well  founded, 
that  a  great  deal  of  this  money  is  misapplied.  But  it  is 
not  in  this  section  of  the  State.  We  have  an  institution 
record  here  in  our  hospitals  that  is  not  followed  by  the 
other  parts  of  the  State. 

I  went  to  the  Governor  a  few  years  ago  and  had  ap- 
pointed twenty-five  leading  citizens  of  Lackawanna  coun- 
ty on  the  Hospital  Board,  of  which  Dr.  Israel  is  a  member ; 
it  is  composed  of  ladies  and  gentlemen.  We  have  met 
and  organized  and  have  some  notes  on  each  hospital  in 
this  district.  In  their  capacity  they  are  going  around, 
and  they  take  one  hospital  one  month  and  one  the  next 
and  so  on,  and  it  is  a  continuous  performance  until  they 
visit  every  hospital  in  this  district.  I  hope  at  the  meeting 
of  the  next  session,  when  our  members  of  the  Legislature 
are  asked  to  present  bills  to  the  Legislature,  they  will 
have  their  report  ready.  I  know  they  will.  The  person- 
nel of  the  members  is  sufficient  guarantee.  They  will 
tell  us  what  they  should  be  given  for  these  hospitals.  The 
appropriations  to  hospitals  as  given  by  the  Legislature  are 
wrong.  There  is  something  wrong  with  the  principle. 
Some  of  them  get  larger  appropriations  by  political  stam- 
ina ;  others  from  some  other  source.  There  is  no  uniform- 


940 

ity.  Then  again,  I  am  deadly  opposed  to  giving  any  ap- 
propriation to  any  hospital  except  under  this  special  stip- 
ulation. For  instance,  if  the  State  gave  the  Hahne- 
mann  Hospital,  one  of  the  institutions  of  our  city,  fifty 
thousand  dollars  for  maintenance  for  two  years,  I  would 
make  a  lien  against  the  property ;  and  if,  after  the  Auditor 
General  had  gone  over  the  books  and  satisfied  himself 
that  the  money  was  judiciously  expended  and  for  the  pur- 
poses for  which  it  was  given,  I  would  remove  that  lien; 
that  would  cut  off  any  misapplication  of  funds. 

Now,  as  to  the  mercantile  tax.  The  mercantile  tax  is, 
in  a  way,  a  fair  one.  In  the  first  place,  let  me  give  you 
an  instance.  A  man  came  to  me  the  other  day  and  said : 
"I  am  worth  five  hundred  thousand  dollars  all  in  real  es- 
tate ;  John  Smith  has  five  hundred  thousand  dollars  in  his 
store.  All  he  has  to  pay  is  a  two  hundred  dollar  mercan- 
tile tax.  Do  you  think  that  is  square  ? "  I  put  this  same 
proposition  up  to  this  Committee.  Now,  I  believe  a  great 
wrong  is  done  in  the  application  of  the  mercantile  tax  on 
the  small  merchant.  We  have  in  this  valley  men  who  are 
bereft  of  their  limbs,  or  widows,  or  some  persons  who  are 
unable  to  go  out  and  earn  a  livelihood,  who  start  a  little 
store,  maybe,  for  their  little  orphans,  but  they  are  put 
on  the  mercantile  list  and  have  to  pay  their  tax.  I  think 
that  is  entirely  unjust  and  improper.  I  think  the  law 
should  be  changed  so  as  to  eradicate  such  a  system. 

As  to  the  propriety  of  taxing  the  larger  corporations 
that  have  all  their  money  invested  in  them,  I  think  it 
would  be  a  good  idea  to  make  the  tax  larger.  The  tax 
should  be  equalized.  The  burden  should  not  be  all  on 
real  estate. 

By  Mr.  Woodward : 

Q.  How  about  manufacturing  corporations? 

A.  I  think  the  manufacturing  corporations  should  pay 
their  tax.  Now  we  have  a  way  in  Scranton,  and  in  some  of 
our  borough  towns,  that  when  a  manufacturing  company 


941 

comes  into  our  midst,  we  give  them  relief  for  ten  years 
from  the  payment  of  taxes.  I  think  when  any  manufac- 
turing company  exceeds  this  it  is  making  money  for  its 
stockholders  and  should  bear  its  burden  of  the  tax — its 
full  proportion.  I  feel  that  we  should  equalize  the  taxa- 
tion, no  matter  which  way  it  runs. 

In  the  matter  of  taxation,  I  don't  know  whether  it 
would  come  within  the  scope  of  this  Committee  or  not,  but 
I  want  to  speak  in  the  matter  of  the  election  of  assessors. 
We  have  examples  here  in  Scranton.  Certain  people  of 
influence  take  more  pains  over  the  election  of  a  tax  as- 
sessor than  they  do  a  President  of  the  United  States.  If 
we  had  the  whole  seven  assessors  of  Lackawanna  county 
elected  by  the  people,  it  would  be  the  best  way. 

By  Mr.  Brown : 

Q.  You  mean  by  the  people  at  large  ? 

A.  Yes,  I  think  they  should  elect  our  assessors ;  let  them 
be  responsible  to  the  people  and  not  to  any  board  or  any- 
thing else. 

Q.  You  would  not  favor  appointing  them  by  the  County 
Commissioners  ? 

A.  I  would  not,  no. 

Q.  That  has  been  suggested  in  several  counties — to  have 
them  work  directly  under  the  County  Commissioners. 

Judge  Edwards: 

I  hope  the  present  gentlemen  who  will  be  in  the  next 
Legislature  will  support  Senator  James'  bill  on  that  ques- 
tion of  assessing. 


942 


JOHN  J.  DUEKIN,  County  Commissioner,  called. 

Gentlemen  of  the  Commission : — As  far  as  the  hospitals 
are  concerned,  I  don't  know  a  thing  about  that.  Upon 
the  taxes  and  that  sort  of  thing  I  have  had  some  exper- 
ience. I  cannot  see  why  a  corporation  should  get  out  of 
paying  on  its  building.  Take  the  traction  company,  the 
telephone  company,  the  electric  light  company;  they  buy 
a  lot,  or  buy  a  building,  and  after  they  buy  it  is  exempted 
from  taxation.  I  cannot  see  why  they  should  not  pay  a 
just  amount.  The  same  way  with  railroad  companies, 
and  then,  again,  the  banks. 

By  Mr.  Brown : 

Q.  Is  that  the  sentiment  of  the  people  that  the  public 
service  corporations  should  pay  a  tax  for  local  purposes. 

A.  Yes.  The  banks  used  to  make  a  return  to  the  County 
Commissioners  of  the  money  on  loan.  We  don't  get  that 
any  more.  Of  course,  we  lose  that  amount  of  money. 
And  then,  these  other  institutions,  they  used  to  make  a 
return  of  the  money.  We  don't  know  anything  about 
that.  We  were  down  to  Harrisburg  one  time  and  asked 
for  the  State  books  of  this  section,  but  we  didn't  get 
them — we  wanted  to  get 

Q.  How  long  has  that  been? 

A.  About  four  years  ago.  And  then  the  express  com- 
panies: I  think  the  law  should  be  changed  on  that.  If 
they  have  twenty  or  thirty  head  of  cattle,  we  cannot 
assess  that  twenty  or  thirty  head  of  cattle;  they  are  ex- 
empted. I  think  that  is  a  very  queer  law. 

Q.  How  do  you  follow  up  your  assessors?  Do  you  give 
your  assessors  guide  books? 

A.  Yes,  what  we  call  a  blotter. 

Q.  You  give  them  the  blanks  that  the  Auditor  General 
furnishes  you? 

A.  That  is,  the  State  tax  blanks? 


943 

Q.  Yes.    How   do  you  know  how  many  to  give  them? 

A.  We  get  it  from  the  record  of  deeds  and  mortgages. 

Q.  How  do  you  check  them  up? 

A.  "When  they  come  in? 

Q.  Yes. 

A.  By  a  book. 

Q.  Suppose  you  find  many  of  them  are  not  returned, 
do  you  make  any  search  for  them? 

A.  Yes,  we  send  out  notices  for  them  to  make  their  re- 
turns or  we  will  estimate  them. 

Q.  What  is  your  thought  on  the  money  on  interest  as 
evidenced  by  certificates  of  deposit  in  the  trust  companies  • 
and  banks? 

A.  Don't  have  any. 

Q.  None  here? 

A.  No. 

Q.  Don't  your  individual  taxables  return  any  of  that? 

A.  Only  trust  companies. 

Q.  How  would  it  do  to  have  the  treasurer  of  the  trust 
company  make  a  return  of  that? 

A.  That  is  included  in  their  return  to  the  State. 

Q.  How  much  money  do  you  presume  there  is  in  Scran- 
ton  on  deposit  in  trust  companies  and  banks  evidenced 
by  certificates  of  deposit? 

A.  More  than  a  million  dollars. 

Q.  You  don't  get  any  of  that? 
A.  No. 

Q.  What  is  your  thought  about  the  appointing  or  elect- 
ing assessors? 

A.  I  think  it  should  be  done  by  the  County  Commis- 
sioners. I  think  in  the  body  of  seven  there  should  be 
three  of  one  party  and  four  of  another  party — a  majority 
and  minority  representation. 

Q.  What  is  your  thought? 

A.  I  think  we  would  get  better  results. 


944 

Q.  You  mean,  for  instance,  the  Democrats  to  assess 
the  Republicans  and  the  Republicans  to  assess  the  Demo- 
crats ? 

A.  Yes. 

Q.  "Wouldn't  you  get  the  same  results  if  you  sent  them 
from  different  localities  from  which  they  resided? 

A.  Possibly. 

Q.  How  about  the  compensation  ?  Are  they  paid  enough 
to  get  the  best  class  of  men  available? 

A.  Now? 

Q.  Yes. 

A.  No. 

Q.  What  do  you  pay? 

A.  Two  fifty  a  day. 

Q.  How  many  days  in  the  year  are  they  employed? 

A.  There  is  no  regular  time. 

Q.  About  how  many? 

A.  I  should  say  all  over  the  county  probably  100  days. 

Q.  Your  thought  is  to  have  seven  employed  the  year 
around  at  an  annual  salary? 

A.  Yes. 

Q.  You  would  get  a  better  class  of  men? 

A.  Yes. 

Q.  Do  you  find  much  favoritism  among  these  assessors  ? 

A.  Yes,  all  over  the  county.  Here  and  there  is  an 
honest  assessor.  Two-thirds  of  them  are  dishonest. 

Q.  Have  you  ever  done  anything  in  the  way  of  checking 
them  up  ? 

A.  Yes. 

Q.  Ever  have  any  prosecutions? 

A.  No,  we  never  went  that  far. 


945 


F.  W.  FLEITZ,  ESQ.,  called. 

I  cannot  say  anything  to  this  Commission  until  I  know 
what  your  purpose  is  and  what  you  are  investigating. 

Mr.  Moyer :  "We  are  revising  the  revenue  and  corpora- 
tion laws  where  they  may  prove  defective. 

General  Fleitz:  In  the  first  place,  this  entire  question 
of  taxation  in  the  State  of  Pennsylvania  is  a  very  large 
one. 

What  should  be  done  in  Pennsylvania? 

There  should  be  a  new,  complete,  Act  passed,  embodying 
the  entire  system  of  taxation,  both  for  State  and  for  local 
purposes;  or  two  Acts  passed,  one  for  the  State  and  one 
for  local  taxation. 

As  it  is  now,  we  have  on  the  statute  books  the  Act  of 
eighty-seven,  the  Act  of  eighty-nine,  the  Act  of  ninety-one, 
the  Act  of  ninety-three,  also  the  Act  of  eighty-five ;  these 
are  five  Acts  covering  the  corporation  tax  of  the  State.  The 
unfortunate  part  of  it  is  that  there  is  included  in  the  Act 
of  eighty-five  what  is  known  as  the  personal  property  tax, 
which  was  originally  a  State  tax  and  is  still  so-called,  a 
State  tax.  My  distinguished  friend,  Senator  Blewitt,  just 
alluded  to  the  amount  of  money  he  was  paying  to  the 
State.  A  great  many  talk  about  that  tax  as  they  would  a 
State  tax.  It  is  not  a  State  tax ;  it  is  a  local  tax.  In  other 
words,  75  per  cent,  of  it  is  returned  to  the  various  coun- 
ties from  which  it  emanates.  It  passes  through  a  lot  of 
hands,  and  any  considerable  amount  of  money  that  passes 
through  a  great  many  hands  is  apt  to  stick  more  or  less 
along  the  line.  So  this  leaves  the  State  only  about  16  per 
cent,  of  the  entire  amount  collected;  then  it  has  been 
demonstrated  that  about  80  per  cent,  escapes  taxation 
under  the  laws,  so  the  personal  property  tax  should  be 
eliminated  as  a  State  revenue  altogether. 

There  should  be  a  general  Act  passed  designating  the 
subjects  for  taxation.  There  should  be  a  tax  for  State 


946 

purposes  that  would  include  all  the  subjects  which  the 
Legislature  thinks  should  pay  tribute  to  the  State.  There 
should  be  no  direct  tax  levied  by  the  State.  Probably  an 
indirect  tax  falls  with  less  severity  than  any  other  tax 
we  can  levy.  Of  course,  it  should  include  the  most  notable 
illustrations  of  unfairness,  such  as  in  the  case  of  the  gas 
companies.  The  gas  companies  pay  no  tax.  The  electric 
light  companies  pay  a  tax  on  their  capital  stock  and  a 
gross  receipt  tax.  There  is  no  reason  why  a  gas  company 
should  not  pay  a  tax  upon  its  property  and  assets.  This 
has  just  been  left  out  either  unintentionally  or  designedly 
for  a  great  many  years. 

In  the  new  Revenue  Act,  which  should  be  framed  by 
this  Commission,  upon  its  recommendation  the  bonus  sub- 
ject should  be  entirely  changed.  The  courts  of  this  State, 
by  a  process  of  reasoning  that  I  have  never  been  fully 
able  to  understand,  have  held  that  a  bonus  is  not  a  tax, 
although  it  is  included  in  the  provisions  of  a  bill  entitled 
"An  Act  to  provide  revenue  by  taxation,"  and  it  has 
gone  through  for  the  last  twelve  years,  based  on  the  old 
decision  that  a  bonus  is  a  price  paid  for  a  privilege.  If  a 
bonus  is  not  a  tax,  what  is  it?  It  is  levied  and  collected 
under  the  soverign  power  of  the  State  to  derive  revenue 
for  its  own  expenses  and  to  assist  its  people. 

By  Mr.  Brown: 

Q.  The  bonus  is  primarily  supposed  to  be  an  evidence 
of  good  faith? 

A.  The  bonus  is  a  price  paid  for  a  privilege.  In  its 
inception,  the  idea  of  a  bonus  was  a  sum  required  to  be 
paid  by  foreign  people  coming  in,  as  contradistinguished 
from  a  tax  levied  upon  our  own  people.  They  were  called 
bonus  laws.  That  ought  to  be  included  in  the  general  scope 
of  taxation. 

Let  me  point  out  the  inequality  of  the  bonus  laws.  In 
1901,  the  Legislature  passed  an  Act.  Prior  to  that  time 
domestic  corporations  paid  a  bonus  as  of  J  or  1/3  of  one 
per  cent.  In  1901  I  assisted  in  drawing  up  a  bonus  tax 


947 

which  would  require  foreign  corporations  to  pay  the 
same  bonus  that  our  own  corporations  paid.  That  Act 
was  handled  until  its  language  was  so  ambiguous  that 
the  courts  held  that  the  bonus  did  not  apply  to  any  cor- 
poration which  had  come  into  the  State  prior  to  its  pass- 
age. It  went  further  in  the  case  of  the  American  Car 
and  Foundry  Company,  and  held  that  it  would  not  apply 
to  any  increase  of  capital  brought  into  the  State  by  cor- 
porations in  the  State  at  the  time  of  the  passage  of  the 
Act.  In  the  case  of  our  own  corporations,  under  the  Act 
of  eighty-seven,  every  increase  they  make  of  their  capital 
stock  they  pay  a  bonus.  Under  the  Act  of  ninety-one, 
these  other  corporations  can  bring  into  the  State  more 
than  a  million  dollars  and  pay  no  tribute  to  the  State. 

Q.  How  are  you  going  to  get  around  that? 

A.  By  passing  an  Act  requiring  a  bonus  on  ajay  ad- 
ditional capital  brought  into  the  State  by  foreign  cor- 
porations now  in  or  hereafter  coming  into  the  State. 

The  trouble  with  the  whole  taxation  is  this :  The  courts 
have  held  that  the  authority  of  the  Legislature  is  supreme 
and  is  the  expressed  will  of  the  people  in  regard  to  taxa- 
tion ;  but  that  authority  should  be  expressed  in  such  clear 
language  that  there  can  be  no  mistake  as  to  the  intention 
of  the  Legislature.  Every  decision  is  in  favor  of  the 
person  upon  whom  the  tax  is  levied.  The  courts  have 
adopted  the  idea  that  they  can  do  nothing  except  when 
they  are  expressly  warranted  by  the  letter  of  the  law. 
So  on  with  the  whole  subject  of  taxation  the  same  way. 

If  such  an  Act  were  passed  it  would  wipe  the  slates  of 
all  unconstitutional  laws,  eliminate  all  objectionable  and 
inconsistent  systems  and  reach  all  the  subjects  legitimately 
requiring  a  tax,  and  that  might  or  might  not  include  manu- 
facturing corporations.  Senator  Blewitt  has  said  it  would 
fall  with  severity  upon  small  corporations.  It  should  be 
borne  by  the  big  corporations. 

There  is  another  point  I  wish  to  speak  upon.  That  is 
this  tax  on  coal.  This  is  an  old  subject.  During  the 


948 

twenty-three  years  I  have  been  connected  with  the  Legis- 
lature that  has  come  up  time  and  time  out  of  mind.  We 
have  tried  to  find  some  way  of  putting  into  force  the 
creation  of  a  fund  to  take  care  of  the  disabled  miners 
and  the  widows  and  orphans  of  those  killed. in  the  mines. 
The  distribution  of  money  derived  in  this  way,  to  the 
relief  of  the  miners  and  their  widows  and  orphans,  would 
conflict  with  the  provisions  of  the  Constitution,  which 
directs  that  pensions  shall  only  be  granted  to  those  having 
been  in  the  military  service.  If  anyone  can  point  out  to 
me  how  this  can  be  done  without  amending  the  present 
Constitution,  I  would  like  to  have  him  put  his  finger  on 
it.  I  have  never  been  able  to  find  it. 

Q.  Don't  you  think  the  moral  obligation  for  such  an 
appropriation  would  cause  the  money  to  be  appropriated 
for  the  purposes  indicated  by  Senator  Blewitt? 

A.  We  have  tried  to  make  that  argument  in  the  Legisla- 
ture. We  have  tried  to  get  them  for  twenty  years  to 
take  into  consideration  the  peculiar  situation  in  these 
regions  with  reference  to  the  liability  of  men  being  killed 
or  injured  in  the  mines.  I  think  the  Legislature  has  pretty 
fairly  recognized  that — recognized  it  in  the  erection  of 
State  Hospitals.  There  are  three  hospitals  now  in  the 
anthracite  regions  for  the  express  purpose  of  taking  care 
of  the  miners,  but  they  cannot  do  it  all.  There  are  also 
hospitals  in  the  bituminous  regions  for  the  same  purpose. 
I  think  the  State  has  done  wonderful  work. 

I  think  there  should  be  some  changes  made  in  the 
corporation  statutes  of  the  State.  I  think  also  that  the 
personal  property  tax  should  be  given  by  the  Legislature 
to  the  local  authorities. 

By  Mr.  Woodward : 

Q.  In  other  words,  you  would  like  to  have  the  counties 
collect  the  four-fourths  instead  of  three-fourths? 

A.  Yes.  That  system  is  best  that  leaves  the  levying  and 
collection  of  the  tax  within  the  immediate  vicinity  of  the 


949 

taxpayers.    The  home  rule,  if  you  please,  in  taxation  is 
most  equitable  and  just. 

Q.  Do  you  think  the  counties  would  get  as  much  under 
the  present  system  if  left  to  themselves  than  if  left  to  the 
supervision  of  the  State? 

A.  Yes.  In  the  first  place  the  local  assessor  sends  out 
these  bulletins  under  the  direction  of  the  County  Com- 
missioners— these  pink  slips.  The  local  assessor  sends  out 
his  slips ;  some  are  filled  out — in  the  majority  of  cases  not. 
Then  he  makes  such  returns  as  he  thinks  are  fair.  The  city 
authorities  have  no  voice  in  levying  the  tax. 

Q.  What  could  be  done  that  would  serve  the  purpose 
more  effectually? 

A.  Put  that  tax  in  the  hands  of  the  County  Commis- 
sioners. Let  them  appoint  the  necessary  assessors.  There 
should  be  local  assessors.  These  local  assessors  should 
be  the  men  to  assist  in  collecting  the  tax  against  land  and 
the  tax  against  personal  property. 

Q.  You  think  they  would  take  more  interest  if  they 
knew  they  were  to  get  it  all  ? 

A.  Positively,  yes.  Ninety-five  per  cent,  of  the  people 
of  this  county  look  upon  that  as  a  State  tax  which  they 
pay  directly  to  the  State.  There  is  less  moral  obligation. 
The  people  look  upon  a  State  tax  just  as  they  do  upon  a 
corporation  tax,  a  good  thing  to  evade  if  they  get  a 
chance.  The  whole  idea  is  wrong,  but  it  is  true.  If  a 
fellow  can  beat  the  State  out  of  a  tax  he  will  do  it  every 
time,  but  he  looks  upon  his  local  tax  in  a  different  light. 
I  will  venture  to  say  that  in  this  county  of  Lackawanna, 
or  in  Philadelphia  county,  and,  in  fact,  every  county  of 
the  State,  at  least  60  per  cent,  of  the  personal  property 
escapes  taxation  entirely. 

Q.  Suppose  I  say  they  collect  two  billions  of  personal 
tax.  Wouldn't  you  say  it  reached  a  sufficiently  large 
amount  to  justify  the  collection  of  it  ? 

A.  It  should  be  collected  in  a  different  way.      In  the 


950 

first  place,  I  don't  believe  over  40  per  cent,  of  the  personal 
property  is  taxed.  These  local  assessors  report  from  the 
County  Commissioners  to  the  County  Treasurer,  and  the 
report  is  sent  on  to  Harrisburg.  There  is  no  way  of 
checking  it  up.  The  only  way  we  have  there  is  to  take 
it  and  compare  it  with  what  it  was  last  year.  Then  we 
take  into  consideration  whether  stocks  and  bonds  were 
higher  than  last  year.  If  the  report  is  too  low,  we  in- 
crease it  and  send  it  bacK  to  the  County  Commissioners. 
Now,  I  have  in  mind  the  case  of  a  certain  county  in  Penn- 
sylvania where  we  had  positive  knowledge  that  certain 
private  banks  were  not  returning  their  mortgages  and 
judgments.  I  heard  at  that  time  they  had  upwards  of 
three  millions,  so  we  abitrarily  put  three  millions  and  a 
half  of  additional  personal  property  tax  on  the  returns  of 
that  county,  and  we  went  into  court  and  sustained  it. 
We  arbitrarily  placed  it  on  them  without  an  assessment 
being  made.  "We  just  happened  to  know  that  fact.  So, 
the  whole  subject  of  personal  property  taxation  should  be 
turned  over  to  the  counties — the  assessment,  levying  and 
collecting;  and  should  not  be  under  State  control  at  all. 
Now,  as  to  the  taxes  of  corporations,  whether  too  high 
or  too  low,  that  is  a  question  that  should  be  determined 
by  the  necessity  for  revenue.  The  revenues  of  the  State 
have  been  increasing  constantly.  In  1889,  when  Governor 
Stone  took  office,  the  Treasury  of  the  State  was  depleted 
and  the  appropriations  made  and  due  amounted  to  a  con- 
siderable sum,  more  than  the  money  then  on  hand  in  the 
State  Treasury,  and  the  State  could  not  meet  its  current 
debts.  The  Treasurer  issued  two  and  a  half  millions  of 
bonds,  and  since  that  time  there  has  been  no  change  in 
the  revenue  laws  of  the  State — no  beneficial  changes,  yet 
the  revenues  have  increased.  We  have  increased  the  ap- 
propriation to  common  schools  from  ten  to  fifteen  mil- 
lions; the  appropriations  to  charitable  institutions  have 
crept  up  from  one  and  a  half  to  something  like  six 
millions ;  ten  millions  have  been  spent  on  good  roads ;  thir- 


951 

teen  millions  have  been  spent  on  the  new  Capitol;  two 
and  a  half  millions  of  bonds  paid  for,  and  we  have  got  in 
the  Treasury  upwards  of  eight  or  nine  millions  of  dollars. 
I  fail,  for  my  part,  to  see  any  occasion  for  changes  in 
the  State  revenue  at  all.  I  think  there  ought  to  be  a  new 
taxation  law  in  order  to  equalize  the  taxation. 

In  1890,  I  was  secretary  of  that  energetic  commission 
known  as  the  Grange  Tax  Commission  of  Pennsylvania, 
and  we  held  our  meetings  as  you  gentlemen  are  holding 
them  now.  Different  interests  in  Pennsylvania  came  for- 
ward and  gave  their  testimony  and  they  all  had  different 
ideas.  After  they  had  presented  their  points,  it  occurred 
to  us  that  the  whole  thing  was  a  fight  of  local  taxation 
for  local  purposes  of  corporate  property.  The  theory  was 
that  all  property  in  the  State,  the  corporate  as  well  as  the 
so-called  common  property,  should  be  subject  to  taxation 
for  local  purposes.  The  question  was  thoroughly  consid- 
ered. There  was  some  objection  raised  that  if  you  tax  a 
corporation  generally  for  local  purposes,  that  it  would  be 
unfair  to  tax  them  again  for  State  purposes.  We  found, 
upon  investigation,  that  the  counties  that  would  profit  by 
that  arrangement  were  the  big,  prosperous  counties  of  the 
Commonwealth.  Counties  like  Lackawanna  and  Phila- 
delphia would  have  a  large,  juicy  plum,  and  the  revenue 
of  the  State  would  be  diminished.  I  think  we  should 
be  a  little  careful.  It  is  a  good  suggestion  that  the  real 
estate  should  bear  a  proportionate  share  of  local  taxation. 
In  addition  to  that  there  must  be,  for  State  purposes,  a 
State  tax  upon  the  property  and  assets. 

By  Mr.  Brown: 

Q.  That  would  include  real  estate? 

A..  That  is  the  theory.  There  is  a  great  mistake  in  the 
minds  of  some  lawyers  that  these  corporations  have  a  tax 
on  capital  stock.  It  is  clear  to  the  gentlemen  of  the  Com- 
mission and  you,  and,  in  fact,  anyone  who  has  given  this 
subject  some  thought,  that  the  tax  upon  corporations  is 


952 

levied  upon  the  property  and  assets  of  the  corporations, 
and  we  only  take  the  capital  stock  as  a  fair  standard  of 
measurement  of  the  value  of  the  assets.  The  tax  is  levied 
on  the  property  and  assets  The  capital  stock  is  a  thing 
that  passes  from  hand  to  hand  and  we  use  that  as  a 
standard  of  measurement. 

Now,  about  the  subject  of  hospitals;  I  have  known  a 
great  deal  about  that,  particularly  for  the  past  few  years. 
I  am  connected  with  three  hospitals  and  have  a  general 
interest. 

Every  hospital  in  this  valley  is  doing  a  good  work,  and 
eyery  hospital  has  used  and  is  using  to  the  best  advantage 
every  dollar  it  is  getting  or  had  gotten  from  the  State. 

Some  member  of  the  Commission  spoke  about  too  many 
hospitals.  There  cannot  be  too  many  hospitals  if  well 
managed.  But,  in  the  main,  the  State  of  Pennsylvania 
should  not  put  money  into  building  hospitals  at  all  except 
those  under  the  State  control.  It  should,  however,  be 
more  liberal  in  appropriations  for  the  maintenance  of  the 
indigent.  The  charitable  people  of  this  vicinity  are  bur- 
dened to  death  trying  to  take  care  of  a  very  large  number 
of  absolutely  necessary  charities. 

By  Mr.  Woodward: 

Q.  Have  you  any  idea  what  proportion  of  the  money 
necessary  to  run  your  institutions  here  is  collected  by  sub- 
scription. 

A.  In  the  State  hospital,  very  little.  The  State  hos- 
pital, because  it  belongs  to  the  State,  is  looked  upon  as 
a  relief  from  local  charity.  I  know  that  has  been  the 
case  here.  The  people  who  go  there,  in  the  main,  are 
poor,  ignorant  foreigners,  without  money,  friends  or  rela- 
tives; therefore,  local  interest  does  not  attach  to  them 
as  it  does  to  the  local  charities. 

The  Hahnemann  Hospital  collects  about  65  to  70 
per  cent,  of  tiie  money  they  use  for  maintenance. 
The  reason  for  that  is  that  the  Hahnemann  happens  to 


953 

be  located  in  this  section  of  the  city  and  is  supported  very 
largely  by  a  wealthy  class  of  people.  They  are  interested 
in  it  and  are  doing  a  great  work  with  it.  The  same  thing 
is  true  of  the  Sanitarium  up  on  the  hill.  These  are  two 
things  that  appeal  to  the  charitable  people  of  this  city 
particularly.  Now,  the  Taylor  Hospital  down  in  the  min- 
ing section  has  a  very  hard  time  to  raise  money  for  the 
hospital,  but  they  hold  different  affairs  and  struggle  very 
bravely  to  raise  money.  It  is  only  fair  to  say  that  they 
are  doing  all  they  can.  But  I  wanted  to  suggest  one 
thing.  The  appropriations  to  the  various  hospitals  should 
be  based  on  maintenance  at  a  certain  fixed  rate  per  pa- 
tient, and  bear  some  relation  to  the  number  of  free  pa- 
tients treated  in  the  hospital  during  the  preceding  two 
years. 

Mr.  Woodward: 

Q.  Why  shouldn't  it  be  based  on  the  charity  patients 
alone  ? 

A.  I  mean  the  charity  patients.  If  the  State  would 
adopt  a  plan  of  paying  75  per  cent,  of  the  actual 
cost  of  the  indigent  treated  in  these  hospitals,  it  would  be  a 
good  thing.  Have  the  superintendent  of  the  hospital  make 
a  quarterly  return  as  to  how  many  free  patients  there  were 
treated  in  his  hospital;  have  the  Auditor  General  approve 
these  vouchers  and  pay  them  the  pro  rata.  However,  this 
would  be  the  difficulty:  A  little  hospital  in  an  isolated 
location  could  not  possibly,  no  matter  how  efficiently  man- 
aged, take  care  of  the  patients  at  the  same  per  capita  as  a 
large  hospital.  If  you  would  fix  a  certain  rate,  as  the  State 
does  with  its  indigent  insane,  to  apply  all  over  the  State, 
it  would  be  more  or  less  of  a  hardship  on  certain  small  hos- 
pitals where  the  cost  is  greater. 

By  Senator  Blewitt : 

Q.  What  would  you  have  the  State  pay  annually  for  the 
indigent  ? 

A.  Seventy-five  per  cent,  of  the  actual  cost. 


954 

Q.  Why  not  all? 

A.  For  this  reason :  Just  as  soon  as  the  State  takes  care 
of  these,  the  charitable  people  will  cease  to  have  an  in- 
terest in  them.  So  far  as  the  charitable  work  is  concerned, 
it  becomes  a  State  institution  and  not  a  local  institution. 
If  the  State  would  take  care  of  the  entire  amount,  I  think 
it  would  take  the  incentive  away  from  the  charitable  people 
to  contribute  toward  the  support  of  the  institution.  You 
know,  in  charitable  work,  the  man  who  gives  five  dollars 
will  have  a  keener  interest  than  the  fellow  who  gives  noth- 
ing. He  will  watch  that  hospital,  and  will  keep  in  touch 
witih  it. 

Q.  The  State  supplies  a  certain  percentage  of  the  total 
amount  now  ? 

A.  That  is  true,  but  some  institutions  get  80  per  cent,  of 
their  entire  cost  of  maintenance;  others  get  25  to  30  per 
cent.  The  one  getting  25  or  30  per  cent,  may  be  doing  a 
great  deal  more  charitabl  work  in  proportion  to  the  number 
of  people  in  its  wards  than  the  one  getting  80  per  cent. 

Q.  Is  your  idea  to  have  a  local  board  cover  these  insti- 
tutions ? 

A.  No,  it  would  lessen  the  interest.  The  people  back  of 
the  Hahnemann,  for  instance,  are  people  who  have  a  gen- 
eral interest  in  charitable  work.  They  are  people  of  con- 
siderable means  and  they  have  taken  hold  of  the  work  and 
have  made  a  great  success  of  it.  If  you  take  it  out  of  their 
control  and  put  it  on  a  common  basis  with  the  other  hos- 
pitals in  the  county,  it  would  lessen  their  interest. 

Q.  Talking  of  the  Hahnemann  Hospital,,  at  the  last  ses- 
sion the  House  appropriated,  I  think,  twenty-five  thousand 
to  be  used  for  the  building  which"  is  now  there — plastering 
it  and  doing  some  other  work.  But  the  Governor  vetoed 
it.  What  is  your  idea  as  to  the  State  giving  money  to 
build  hospitals  in  which  they  have  no  ownership? 

A.  My  idea  has  been  against  that  for  the  last  twenty 
years. 


955 

Q.  You  would  limit  the  appropriations  to  maintenance 
only? 

A.  I  would  do  this.  I  would  adopt  this  rule.  I  think 
there  should  be  some  notice,  some  time  given  these  insti- 
tutions. The  State  has  adopted  a  course  which  has 
amounted  to  a  custom,  and  to  stop  it  suddenly  would  work 
a  great  injustice ;  if  the  State  would  adopt  a  hard  and  fast 
rule  of  this  kind  now,  it  would  work  a  great  injustice  to 
this  class  of  people ;  it  would  perhaps  be  fatal  to  them.  I 
think  there  should  be  some  notice  given  that  the  next  Leg- 
islature, for  instance,  would  try  to  take  care  of  these 
things  incurred,  but  afterward  no  other  improvements 
would  be  paid  for  by  the  State,  but  that  75  or  80  per  cent, 
of  the  cost  of  maintenance  of  the  indigent  would  be  given 
them. 

Q.  How  would  you  bind  the  succeeding  sessions  of  the 
Legislature  to  a  proposition  of  that  kind  ? 

A.  You  couldn't  bind  them,  but  if  there  was  a  hard  and 
fast  rule  to  that  effect,  say  after  the  next  Legislature,  it 
would  then  be  comparatively  easy  -for  you  gentlemen  to 
say,  * '  That  is  against  the  rule ;  it  cannot  be  done. ' ' 

Q.  What  advantage  is  it  to  the  State  to  own  these  build- 
ings? 

A.  None.  Take  the  hospital  at  White  Haven  conducted 
by  Dr.  Flick.  I  was  one  of  the  earliest  advocates  for  that 
appropriation  to  the  "Free  Hospital  for  Poor  Consump- 
tives." (That  is  the  style  and  title  of  the  institution.) 
The  State  paid  one  hundred  and  twenty-five  thousand  dol- 
lars, not  for  maintenance,  but  for  building  and  making 
that  spot  a  sanitarium  and  hospital.  Finally  there  was  a 
conflict  between  Dr.  Flick  and  the  politicians,  and  the  re- 
sult was  that  at  the  last  session  he  refused  to  accept  State 
aid  and  said,  ''We'll  run  this  on  a  free  basis.  Here  is  one 
hundred  and  twenty-five  thousand  they  put  in  our  plant; 
it  is  true  they  paid  us  for  maintenance — in  all  about  four 
hundred  thousand  dollars.  We  will  just  appropriate  this 


956 

plant  with  its  one  hundred  and  twenty-five  thousand  dol- 
lars of  State  money  and  run  it  ourselves  and  give  out  the 
statement  that  the  politicians  have  been  so  objectionable  to 
Dr.  Flick  that  they  crippled  his  work."  Who  is  going  to 
stop  them? 

By  Mr.  Woodward: 

Q.  The  reason  Dr.  Flick  gave  me  for  withdrawing  his 
application  was  that  he  was  making  application  for  three 
hundred  thousand  and  two  hundred  thousand  dollars  of 
this  was  to  go  into  a  building,  and  the  Committee  on 
Charities  refused  to  recommend  that.  They  did,  however, 
recommend  the  amount  necessary  for  maintenance.  He 
said  he  would  decline  any  appropriation  unless  it  gave 
him  the  full  amount  asked  for. 

By  Mr.  Fleitz: 

A.  I  asked  him  to  admit  a  man,  and  he  wrote  back  that 
he  would  not  violate  his  rules  for  any  politician  in  the 
State.  I  think  it  would  work  out  best  on  the  equitable 
basis  of  distributing  the  appropriations  for  maintenance 
of  the  indigent  after  the  next  session  of  the  Legislature 
when  you  should  clean  up  the  hospital  question  completely. 


957 


MR.  C.  L.  S.  TINGLEY,  Secretary  and  Treasurer,  Scran- 
ton  Street  Railway  Company,  called. 

Mr.  Chairman  and  Gentlemen  of  the  Committee : — I  have 
alrady  written  the  Committee  giving  my  views  on  this  sub- 
ject of  taxation,  but  someone  telephoned  me  that  they  would 
like  to  have  me  up  here. 

By  Mr.  Brown : 

Q.  The  thought  was  that  even  though  you  had  written  the 
Committee  at  quite  some  length,  the  courtesy  was  due  you 
to  give  you  an  opportunity  to  appear  before  us  and  pre- 
sent whatever  views  you  might  have  to  give.  Your  criti- 
cism appears  principally  to  be  on  a  different  time  of  re- 
turn? 

A.  Yes,  that  is  owing  to  the  numerous  reports  that  are 
asked  for  by  the  State  bodies.  It  practically  demands  the 
time  of  one  or  two  men  in  a  corporation  such  as  ours  to  do 
nothing  but  make  out  State  returns.  Now,  if  all  the  reports 
could  be  based  upon  a  uniform  year  it  would  facilitate 
matters  very  much,  and,  I  think,  it  would  answer  the  same 
purpose. 

By  Mr.  Brown : 

Q.  What  time  would  you  suggest? 

A.  I  would  suggest  either  the  calendar  year  or  the  Gov- 
ernment fiscal  year,  which  is  June  30. 

Q.  What  is  your  folks'  thought  on  local  taxation? 

A.  That  it  would  be  a  good  thing  if  a  certain  amount  of 
taxation  on  corporations  could  be  levied  by  local  authori- 
ties. 

Q.  So  you  could  divide  the  tax  up  between  the  State  and 
the  county? 

A.  Yes.  It  is  the  public  impression  that  the  local  au- 
thorities get  no  benefit  from  the  tax  levied  on  corporations, 


958 

and  the  argument  always  is  that  we  get  all  these  valuable 
franchises  and  pay  nothing  for  them.  Now,  if  this  arrange- 
ment could  be  made  so  the  local  authorities  would  get 
directly,  instead  of  indirectly,  some  of  the  tax  we  are  com- 
pelled to  pay,  I  think  it  would  be  a  good  thing. 

There  was  one  subject  brought  up  this  morning  by  a 
gentleman  speaking  about  hospitals,  as  to  contributions 
from  the  corporations  to  support  hospitals.  I  would  say 
here,  in  speaking  for  our  own  corporation,  that  it  is  our 
practice  to  pay  for  every  patient  that  we  send  to  a  hospital ; 
so  that  our  emergency  cases  are  not  charity  cases. 

By  Mr.  Brown : 

Q.  Do  you  know  any  reason  why  all  corporations  should 
not  do  that? 

A.  I  don't. 

Q.  Do  you  think  it  would  be  an  unusual  burden  upon 
them? 

A.  Of  course,  I  cannot  speak  for  the  mining  corpora- 
tions, but  for  our  corporation  it  would  not  be  an  unusual 
burden.  In  addition  to  paying  for  our  cases,  we  give  a 
small  contribution  to  the  hospitals. 

By  Mr.  Woodward : 

Q.  Do  you  know  what  charge  they  make  for  the  care  of 
your  accident  cases? 

A.  I  cannot  answer  that  off  hand;  it  depends  largely 
upon  the  nature  of  the  accident — how  serious  a  character ; 
whether  an  operation  is  required  or  not. 

By  Mr.  Fleitz  (addressing  Mr.  Tingley) : 

Q.  Wouldn't  it  be  better  to  have  all  corporation  reports 
filed  on  the  thirty-first  of  December,  because  the  Govern- 
ment reports  are  now  required  to  be  filed  on  that  date  ?  I 
only  mention  that  because  at  a  recent  conference  of  the 
State  officials  the  question  was  taken  up.  Inasmuch  as  the 
Government  has  passed  this  corporation  tax  and  requires 
them  to  make  their  reports  on  the  thirty-first  of  December, 


959 

don't  you  think  it  would  be  better  for  the  State  to  change 
theirs  to  that  date? 

A.  I  would  answer  that  as  far  as  the  railway  company 
is  concerned  the  reports  are  too  voluminous. 

Q.  Let  me  tell  you  that  there  is  a  movement  to  have 
these  two  reports  co-extensive,  being  approved  by  the 
corporations  themselves,  from  the  standpoint  that  it  is  bet- 
ter to  have  the  tax  report  made  at  the  same  time  it  is  made 
to  the  Treasury  Department  for  the  simple  reason  that  you 
can  check  it  up.  The  fiscal  year  of  the  State  begins  the 
first  Monday  in  January.  The  corporation  reports  are 
required  on  the  first  of  November  for  the  tax  and  the  first 
of  January  for  the  bonds  and  evidence  of  indebtedness; 
and  on  June  30  for  the  Department  of  Internal  Affairs. 

A.  I  think  it  would  be  better  for  them  all  to  be  at  one 
time.  The  calendar  year  would  be  very  much  better  for 
the  reason  that  these  reports  to  the  Secretary  of  Internal 
Affairs  have  to  be  made  up  in  the  summer  time,  which  is 
the  busiest  season  of  the  year  for  us;  it  is  also  vacation 
period.  It  would  be  very  much  easier  for  us  and  more 
convenient  if  we  could  make  them  up  in  the  winter  time, 
when  business  is  more  or  less  slack  and  the  force  is  not  on 
vacation. 

By  Mr.  Fleitz  (addressing  the  Commission) : 

One  more  suggestion — with  reference  to  the  State  Board 

of  Charities ;  something  to  take  its  place. 
I  am  thoroughly  of  the  opinion  that  the  State  Board  of 

Charities  is  of  small  use  to  the  Commonwealth.    I  don't 

say,  of  course,  that  this  arises  out  of  the  inability  of  the 

men  composing  the  Board. 

By  Mr.  "Woodward : 

Q.  Would  you  be  in  favor  of  a  salaried  Board  that  would 
give  all  of  its  time  ? 

A.  Yes,  a  Commission,  with  one  man  to  be  known  as 
Superintendent  of  Charities,  to  be  elected  by  the  people  or 


960 

appointed.  I  believe  the  entire  charities  of  the  State,  such 
as  the  insane  asylums,  and  the  building  of  State  buildings 
in  various  places  should  be  put  into  a  Department  of  Char- 
ities, the  head  to  be  appointed  by  the  Governor  or  elected 
by  the  people,  who  will  exercise  and  assume  control  of 
these  matters,  as  the  Auditor  General  does  the  tax  gather- 
ing of  the  Commonwealth,  with  sufficient  force  of  men,  who 
would  have  the  purchasing  of  supplies,  letting  contracts, 
with  entire  supervision  and  control  of  the  money  in  the 
institution — that  is,  the  money  appropriated  to  the  institu- 
tion. Have  some  one  big  enough  to  have  supervision  and 
control  of  all  this  money  that  is  appropriated  in  enormous 
amounts  to  these  institutions.  I  think  that  certainly  de- 
serves the  closest  thought  of  your  Commission.  I  think 
this  Board  of  Charities  should  be  wiped  out.  There  should 
be  traveling  auditors  and  legislation  requiring  that  each 
institution  shall  be  visited  regularly  and  a  public  ac- 
countant employed  in  order  to  keep  perfect  track  of  it 
in  each  institution. 

By  Mr.  Brown : 

Q.  There  are  so  many  of  them  that  it  would  require  a 
good  deal  of  time  ? 

A.  As  it  is  now,  what  is  the  result?  The  Auditor  Gen- 
eral's office  has  to  check  them  up  with  an  insufficient  force 
of  men,  and  the  result  is  they  cannot  give  it  the  time. 

Adjourned  at  one-thirty  P.  M. 


961 


Public  Meeting,  May  13,  1910,  11  A.  M.,  496  City  Hall, 
Philadelphia,  Pa. 

Present:  James  P.  McNichol,  Esq.,  Chairman;  Gabriel 
H.  Moyer,  Esq.,  Vice  Chairman;  James  F.  Woodward, 
Esq.,  and  AVilliam  H.  Keyser,  Eq.,  of  the  Committee; 
Francis  Shunk  Brown,  Esq.,  Counsel. 

The  meeting  was  called  to  order  by  the  Chairman. 

MR.  HARRY  J.  SHOEMAKER,  representing  the  Penn- 
sylvania Manufacturers '  Association,  called : 

Mr.  Shoemaker :  Our  speaker  just  this  moment  stepped 
out,  and  in  his  absence  I  would  say  that  the  gentleman 
who  speaks  for  our  association  represents  the  Pennsyl- 
vania Manufacturers'  Association,  a  concern  consisting  of 
upwards  of  seventy-five  manufacturing  interests  in  our 
S'.;it^,  and  cjiuploysiig  upward  of  o();000  men,  and  it  is 
constantly  growing.  Mr.  Samuel  Roberts,  of  Norristown, 
president  of  the  Grater -Bodey  Lumber  Company,  has  been 
appointed  one  of  the  speakers  representing  our  associa- 
tion this  morning  before  your  Committee,  and  Mr.  Joseph 
S.  Rambo,  also  of  Norristown,  the  head  of  the  Hosiery 
Manufacturers'  Association  of  Pennsylvania,  will  ask  to 
say  a  few  w^ords  before  you. 

Our  association  appointed  a  committee  of  eight  mem- 
bers to  appear  before  you  today,  but  the  notice  was  so 
very  short,  unfortunately,  and  it  was  impossible  for  them 
to  come.  I  have  a  telegram  from  our  Erie  representative 
saying  that  the  Erie  association  was  heard  before  you 
while  you  were  at  Erie,  and  they  would  only  refer  to 
the  conference  held  at  that  place  as  to  what  their  senti- 
ments would  be  They  could  only  repeat  what  was  said 
at  that  time,  and  could  not  possibly  get  away. 
47 


962 


MB.  SAMUEL  ROBERTS,  of  the  Manufacturers'  Asso- 
ciation, called. 

Mr.  Roberts :  Mr.  Chairman  and  Gentlemen  of  tho  Com- 
mittee. At  a  meeting  of  the  Manufacturers'  Association, 
of  which  I  am  a  member,  last  night  there  were  two  of  us 
delegated  to  come  before  you  and  present  our  side  of  the 
case  as  we  see  it.  I  do  not  suppose  you  wan',  very  much 
time  taken  up,  and  I  do  not  propose  to  take  up  very  much 
of  your  time.  I  am  not  a  talker.  I  am  just  a  plain,  ordi- 
nary business  man,  more  given  to  work  than  to  talk. 

We  feel,  all  of  us,  and  we  represent  an  association  there 
that  comprises  practically  all  of  the  manufacturing  in- 
terests in  Montgomery  coauty  and  vicinity,  that  at  this 
time  in  our  history  it;  one  of  the  v/orst  times  to  talk  about 
putting  any  additional  tax  upon  the  manufacturing  in- 
terests. You  know  as  well  as  we  do  that  we  have  the 
National  tax  to  contend  with,  which  has  not  been  decided 
one  way  or  the  other,  whether  we  have  to  pay  it  or  not. 
We  have  had  an  additional  burden  put  upon  us  by  reason 
of  the  employers'  liability  legislation,  which  makes  each 
manufacturer  carry  a  heavy  liability  policy,  or  practically 
be  at  the  mercy  of  every  accident  that  may  happen.  We 
feel  that  now,  above  all  times,  would  be  the  worst  time 
possible  to  put  any  additional  tax  upon  corporations  or 
manufacturing  industries. 

It  seems  to  be  the  favorite  howl  and  talk  of  the  public 
today:  "Soak  the  corporations."  I  say  to  you  that  90 
per  cent,  of  th^  corporations  in  the  association  of  which 
I  am  a  member  have  formed  corporations,  not  for  any 
benefit  that  might  be  received  from  legislation,  but  simply 
for  the  benefit  of  maintaining  and  continuing  their  bus- 
iness, so  that  if  any  one  partner  died  his  business  might 
be  carried  on,  and  that  has  been  practically  the  only 


963 

reason  why  70  to  80  per  cent,  of  the  manufacturers 
have  incorporated.  We  do  not  receive  any  more  bene- 
fit than  a  partnership  does — really  less.  We  are  taxed 
and  they  are  exempt  under  the  National  tax,  and  we  feel 
that  a  tax  at  this  time  would  be  a  very  unjust  and  burden- 
some load  to  put  upon  us.  "We  have  practically  made  the 
country  what  it  is  today.  The  manufacturing  industries 
of  Pennsylvania  are  the  backbone  and  have  caused  the 
growth  and  the  stand  that  Pennsylvania  has  in  the 
country  today,  and  I  believe  that  if  you  unjustly  tax  the 
corporations — I  believe  first  that  they  are  taxed  practi- 
cally all  they  can  stand  or  bear — a;:d  if  you  put  any  more 
tax  on  them  you  will  not  only  keep  prospective  manufac- 
turing industries  from  coming  here,  but  eventually  may 
drive  some  of  the  present  ones  that  are  here  out  of  the 
State.  That  is  n  surmise,  of  course. 

By  Mr.  McNichol: 

Q.  What  would  you  suggest  in  lieu  of  a  tax  on  manu- 
facturers ? 

A.  As  to  increase  of  revenue,  do  you  mean? 

Q.  As  to  ways  and  iaeans  to  secure  more  revenue. 

A.  Well,  the  suggestion  that  you  have  brought  forth 
yourself  is  a  suggestion  that  one  of  our  members  brought 
up  in  our  association,  and  I  think  it  is  a  very  good  one, 
to  tax  the  man  that  runs  the  automobile.  We  all  have  au- 
tomobiles; every  ^ne  in  our  association  last  night  has  a 
machine,  and  every  man  in  it  would  be  perfectly  satisfied 
to  pay  a  fair  tax,  if  the  money  went  to  the  maintenance  of 
the  roads. 

Q.  That  is  only  getting  at  the  small  end  of  the  capabili- 
ties of  the  big  fellow,  who  is  able  to  pay  more  in  another 
direction.  He  takes  the  surplus  out  of  his  earnings  from 
his  manufacturing  industries  and  buys  an  automobile. 

A.  How  can  you  get  at  the  large  man  without  hitting 
the  small  man  ? 


964 

Q.  We  have  let  the  small  man  pay  about  95  or  98  per 
cent.  We  want  to  get  at  the  big  fellow  who  is  running 
off  to  Europe  every  year  and  spending  enormous  amounts 
in  Europe  and  Paris,  and  see  if  we  can't  get  some  of  it 
back  here. 

A.  Mr.  Chairman,  if  you  can  get  at  any  law  that  will 
tax  the  man  who  is  perfectly  able  to  pay  it  and  making 
undue  profits  in  some  cases,  then  it  would  be  just.  But 
you  cannot  get  at  the  big  fellows  without  hurting  the 
little  ones.  Maybe  you  will  get  at  two  or  three  who  have 
a  lot  by  singeing  and  hurting  the  little  fellows. 

By  Mr.  Brown : 

Q.  Assuming  that  we  have  sufficient  revenue  as  it  is, 
how  do  you  discriminate  between  the  corporation  not  a 
manufacturer,  and  the  corporation  that  is  a  manufac- 
turer? Why  should  a  manufacturing  corporation  be  ex- 
empt and  the  other  taxed?  For  instance,  each  employing 
the  same  number  of  men  and  located,  for  instance,  one 
across  the  street  from  the  other  ? 

A.  I  do  not  exempt  them.  You  mean  the  corpora- 
tion  

Q.  We  all  know  manufacturing  companies  pay  every 
tax  except  a  tax  on  capital  stock ;  they  do  not  pay  as  deal- 
ers ;  they  are  exempt  from  license  tax  and  on  capital  stock. 
Why  should  the  manufacturing  corporation  be  exempt 
from  these  two  taxes,  when  the  other  corporation  directly 
across  the  street,  employing  the  same  number  of  men  and 
having  the  same  amount  of  capital  invested  in  its  plant, 
is  not  exempt  ? 

A.  I  do  not  just  grasp  the  idea  that  you  are  getting  at. 
Do  you  mean  the  difference  between  a  partnership  and  a 
corporation? 

Q.  No,  not  at  all.  I  am  discriminating  between  a  cor- 
poration other  than  a  manufacturing  corporation,  and  a 
manufacturing  corporation.  All  other  corporations  pay  a 
tax  on  their  capital  stock ;  manufacturing  corporations  do 
not.  Why  should  they  not,  the  same  as  the  others  ? 


965 

A.  Both  employ  the  same  number  of  men  and  produce 
the  same  results. 

Q.  What  do  you  mean  by  "produce  the  same  results"? 
Of  course,  they  do  not  produce  the  same  result.  One  may 
manufacture  the  stock  and  the  other  sell  it. 

A.  Any  corporation  employing  the  same  amount  of 
capital  and  the  same  number  of  men  ought  to  be  on  the 
same  level. 

Q.  And  you  v'ould  make  no  difference  between  them? 
A.  No,  sir. 

Q.  Suppose  there  is  a  corporation  across  the  street  from 
Lit  Brothers,  a  manuf a  cturing  corporation.  Your  opinion 
is  that  the  manufacturing  corporation  should  be  taxed  the 
same  as  the  other? 

A.  No,  because  the  manufacturing  concern  is  producing, 
and  the  other  concern  is  simply  a  seller  of  some  one  else's 
production  made  all  over  the  country  and  brought  in  here. 

Q.  For  instance,  the  seller  doesn't  receive  one-half  of 
the  net  income  from  the  business  he  does,  as  compared 
with  the  manufacturer;  you  still  think  the  manufacturer 
should  be  exempt? 

A.  I  certainly  do. 

Q.  In  other  words,  o.ie  man  gets  10  per  cent,  as  a  result 
of  his  labor  and  investment  and  enterprise  and  pays  a 
tax  on  that,  you  think  that  the  manufacturer  who  gets  the 
same  as  a  result  of  his  enterprise  and  thrift  should  not 
pay  anything. 

A.  That  manufacturing  concern  across  the  street  from 
Lits  is  making  it  possible  for  Philadelphians  to  go  there 
and  buy  stuff  from  Lits,  and  because  he  is  giving  employ- 
ment to  hundreds  of  men.  If  there  is  any  one  concern  in 
the  country  that  ought  to  be  taken  care  of  and  not  loaded 
up  with  taxes,  it  is  the  manufacturing  industries  of  this 
State,  because  they  have  made  the  State  and  are  making 
\t  today. 


966 

By  Mr.  McNichol : 

Q.  Hasn't  the  State  made  the  manufacturer? 

A.  I  don't  think  so. 

Q.  You  don't  want  us  to  believe  you  people  are  respon- 
sible? Don't  you  think  the  State  Government  has  taken 
care  of  them  for  the  last  twenty-five  years? 

A.  I  think  they  have,  but  I  think  the  manufacturers 
have  taken  care  of  the  State  more  than  the  State  has 
taken  care  of  them.  The  manufacturing  industries  of  the 
country  have  made  the  government  of  the  State  possible. 

Q.  Very  few  manufacturers  of  the  State  have  gone  to 
the  wall  by  reason  of  not  getting  compensation  for  their 
work  ? 

A.  Possibly,  not  in  the  last  ten  years. 

Q.  Less  than  tmy  other  State  in  the  Union? 

A.  Yes.  I  don 't  think  the  manufacturers  have  any  rea- 
son to  complain  about  legislation  in  the  past.  They  are 
not  taking  that  view  of  it  here.  They  are  simply  trying 
to  take  care  of  their  interests  in  the  future. 

Q.  In  other  words,  they  have  got  a  good  thing  and  don't 
want  it  disturbed? 

A.  In  some  cases  they  have.  I  will  be  frank  and  say 
to  you  it  is  possible,  but  I  don't  believe  if  you  take  the 
manufacturing  industries  right  straight  through,  75  or  80 
per  cent,  of  them  have  just  got  a  bare  living  out  of  their 
industries,  and  the  other  20  per  cent,  may  be  making  enor- 
mous profits.  If  you  could  get  at  the  man  who  was  mak- 
ing abnormal  profits  without  hurting  the  other  fellow,  it 
would  be  a  good  thing  to  do. 

Q.  That  is  what  we  are  depending  on  you  gentlemen  to 
furnish  the  information  and  show  us  how  to  do  it. 

By  Mr.  Brown: 

Q.  Mr.  Brown,  representing  the  Manufacturers'  Asso- 
ciation, appeared  before  us  and  said  if  the  State  was  not 
collecting  sufficient  revenues  at  present,  he  thought  the 


967 

manufacturing  interests  of  the  State  would  be  willing  to 
be  subjected  to  a  tax  of  one  mill.  He  said  he  had  con- 
ferred with  the  interests  represented  there,  and  he  thought 
they  would  be  entirely  satisfied,  and  on  the  basis  of  three 
billions  of  stock  it  would  bring  a  revenue  of  three  millions 
to  the  Commonwealth.  Have  your  folks  given  that  any 
thought  ? 

A.  Yes. 

Q.  I  am  not  assuming  that  there  is  any  necessity  for 
additional  revenues,  but  assuming  that  there  is,  what 
would  be  your  thought? 

A.  That  very  question  was  talked  over,  because  we  had 
heard  rumors  about  there  being  a  one  mill  tax  put  on,  and 
it  was  discussed  among  us,  and  we  are  all  adverse  to  it. 
We  do  not  want  any  more  tax.  It  is  natural  and  we  are 
looking  at  it  from  our  view  of  the  case.  We  do  not  want 
any  more  tax,  and  we  feel  we  are  justified  in  asking  you 
not  to  put  any  more  tax  on  us.  We  feel  there  is  no  just 
reason  why  you  should  do  it.  There  is  a  law  in  Mont- 
gomery county  to  increase  the  valuation  of  property; 
every  manufacturing  concern  in  our  county  has  had  his 
property  pushed  up  from  20  to  25  per  cent,  local  tax.  We 
have  got  that  to  contend  with  and  the  National  tax, 
and  the  most  expensive  tax  of  all,  we  have  got  to  contend 
with  and  maintain,  I  believe,  it  is  the  liability  insurance 
we  have  to  carry  in  order  to  protect  ourselves.  It  is  not 
only  one,  but  it  is  the  culmination  of  all  these  taxes  that 
make  us  come  hore  and  protest. 

By  Mr.  McNichol : 

Q.  You  mean  the  liability  law  as  represented  by  the 
State  or  National  law? 

A.  The  State  and  the  National,  both. 

Q.  Where  do  you  get  any  hardship  from  that? 

A.  It  means  we  have  got  to  carry  the  insurance  to  pro- 
tect ourselves. 

Q.  You  naturally  would  carry  the  insurance  anyway? 


968 

A.  We  did  not,  a  great  many  of  us,  until  about  five 
years  ago. 

Q.  And  then,  in  the  last  five  or  six  years  the  protection 
to  labor  has  increased  for  the  benefit  of  the  working  man, 
and  rightfully  so. 

A.  I  grant  you  that,  but  it  is  a  tax  nevertheless.  I  do 
not  object  to  that  liability  law. 

Q.  It  is  only  a  tax  in  case  you  are  going  on  and  paying 
it,  but  suppose  something  happened  in  the  meantime  and 
you  didn't  have  that  insurance,  then  your  tax  would  be 
much  greater,  wouldn't  it? 

A.  In  former  years  the  laws  were  not  as  severe  on  the 
liability  as  they  are  today,  and  consequently  there  wasn't 
as  much  chance  for  a  man  to  recover. 

Q.  We  are  trying  to  do  for  the  little  taxpayer  what  we 
have  done  for  the  working  man  and  broaden  the  scope  of 
our  protection. 

A.  We  are  not  here  to  protest  against  the  liability  law, 
because  we  believe  in  it. 

Q.  I  believe  it  is  one  of  the  best  pieces  of  legislation 
that  has  ever  been  passed. 

By  Mr.  Brown: 

Q.  How  do  you  distinguish  between  the  manufacturer 
and  the  middle  man?  Is  the  middle  man  today  in  this 
State  in  any  better  condition  to  pay  tax  than  the  manu- 
facturer is? 

A.  I  couldn't  answer  that  question. 

Q.  Have  you  folks  made  no  investigation  along  that 
line? 

A.  I  don't  think  we  have.  I  couldn't  answer  that  in- 
telligently. 

Q.  Of  course,  the  middle  man  does  pay  a  mercantile 
tax? 

A.  Yes.  We  pay  ourselves  part  of  the  mercantile  tax, 
but  I  couldn't  answer  that  question  at  all,  because  I  am 
not  posted  on  that. 


969 

Q.  Have  you  ever  given  any  thought  as  to  other  tax- 
ables,  assuming  that  there  is  not  sufficient  revenue  for  the 
proper  needs  of  the  Commonwealth? 

A.  Well,  isn't  there  sufficient? 

Q.  I  am  assuming  now  that  there  is  not.  Have  you  ever 
talked  among  yourselves  as  to  the  right  or  propriety  of 
the  State  appropriating  to  State  institutions  not  under  her 
control? 

A.  Yes.  I  did  not  catch  your  idea.  That  was  dis- 
cussed also  last  night. 

Q.  What  is  the  consensus  of  opinion? 

A.  Against  that. 

Q.  Why. 

A.  Because  there  is  a  great  many  or  tnese  concerns  you 
are  carrying  on  and  building  up  and  up,  and  they  may 
take  that  thing  over  sometimes  after  while  and  run  it 
for  their  own  interests.  There  is  nothing  to  stop  them. 

Q.  You  think  the  State  isn't  getting  a  proper  return? 

A.  The  State  should  have  some  ownership  in  every 
building  they  appropriate  money  to. 

Q.  How  far  has  that  been  discussed  in  your  associa- 
tion? 

A.  Not  very  far.  We  just  took  that  up  on  the  side  last 
night.  That  was  one  of  the  chief  objections,  and  there 
was  about  ten  or  fifteen  minutes  discussion  on  that  verq 
question,  and  White  Haven  was  one  of  the  institutions 
mentioned  very  prominently  in  the  talk  as  being  an  insti- 
tution that  had  been  well  taken  care  of  by  the  State. 

Q.  Has  there  been  any  discussion  among  you  as  to  other 
directions  in  which  in  your  opinion  money  could  be  saved  ? 

A.  I  suppose  you  mean 

Q.  Without  imposing  any  tax  upon  you,  or  which  you 
would  not  think  it  proper  or  fair  should  come  out  of  you* 
pockets?  Have  you  given  any  thought  to  that? 

A.  Well,  no,  I  don't  think  we  have.  It  was  the  appro- 
priations to  State  institutions  that  we  talked  of  more  than 
anything  else. 


970 


MR.  JOSEPH  S   RAMBO,  representing  the  Montgomery 
County  and  State  Manufacturers    Associations,  called. 

Mr.  Rambo :  I  represent  the  Montgomery  County  Manu- 
facturers '  Association,  the  same  as  Mr.  Roberts,  and  inci- 
dentally the  State  Manufacturers'  Association.  I  am 
sorry  our  president,  Mr  Grundy,  is  not  here  today.  I 
think  he  could  represent  the  State  affairs  much  better 
than  myself. 

The  question  was  asked  a  while  ago  of  Mr.  Roberts  of 
the  difference  between  the  merchant  corporation  and  the 
manufacturing  corporation.  "Well,  the  manufacturing  cor- 
poration is  a  benefactor.  It  brings  money  from  a  dis- 
tance into  the  town,  and  the  merchant  corporation  takes  it 
out.  He  absorbs  it  and  puts  it  in  bank  and  puts  it  in  cir- 
culation outside  of  town.  That  is  the  principal  difference 
between  the  two  I  see.  Besides  that,  if  a  manufacturer's 
business  goes  bad,  his  plant  depreciates;  his  money  is 
all  tied  up  in  machinery,  and  his  plant  depreciates  from 
50  to  75  per  cent,  pretty  near  st  once,  If  a  mer- 
chant goes  bad,  his  stock  is  all  good  merchandise  usually, 
except  possibly  a  little  old  stock,  and  you  can  generally 
get  about  one  hundred  cents  on  the  dollar. 

By  Mr.  Brown: 

Q.  You  think  there  is  a  greater  risk  in  manufacturing? 

A.  Considerably  greater.  Besides  that,  I  think  the 
profits  are  very  much  less. 

Q.  The  questions  I  have  asked  have  been  indicated,  a 
great  many  of  them,  from  letters  received  by  the  Commit- 
tee. For  instance,  a  number  of  corporations  have  written 
to  this  Committee  that  they  thought  there  was  an  unfair 
discrimination  in  taxing  them  and  exempting  the  manu- 
facturer. That  is  the  reason  I  am  asking  the  manufac- 
turers why  they  should  be  exempt? 


971 

A.  I  heard  you  ask  the  question  and  thought  I  would 
answer  it.  There  are  very  few  of  us  manufacturers  who 
are  making  big  money.  There  is  a  few,  of  course,  who  do 
make  big  money,  and  you  would  be  taxing  90  per  cent., 
or  maybe  95  per  cent,  that  have  a  struggle  to  get  along 
in  order  to  get  the  other  10  per  cent.,  and  it  would  be 
unfair.  Besides  every  community  is  hunting  for  manu- 
facturers. Why?  Because  they  are  benefactors  to  any 
community. 

Q.  Have  your  folks  made  any  comparison  between  the 
relative  results  of  other  interests  and  yours? 

A.  No,  we  did  not  go  into  that  particularly. 

Q.  Because  from  the  letters  we  have  received  it  would 
seem  that  the  manufacturer  was  probably  considered  the 
most  prosperous  in  the  community? 

A.  We  do  not  have  to  go  far  to  change  your  views  on 
that.  There  are  very  few  manufacturers  become  very 
wealthy,  and  I  dare  say  25  per  cent.,  or  maybe  a  greater 
per  cent.,  fail  entirely  before  they  die.  We  can  look  all 
around  us  here  and  see  merchants  springing  up  like  mush- 
rooms, millionaires.  You  do  not  see  manufacturers  doing 
that.  There  are  very  few  of  them  ever  become  million- 
aires. 

By  Mr.  McNichol: 

Q.  Will  you  give  us  a  list  of  the  manufacturers  in  the 
last  ten  or  fifteen  years,  a  sort  of  a  synopsis  of  their 
financial  condition? 

A.  The  manufacturers  who  have  failed  ? 

Q.  Yes,  those  who  have  been  prosperous  and  those  who 
have  passed  out  by  reason  of  failure? 

A.  I  don't  know  as  I  want  to  point  out  all  those  who 
have  been  prosperous.  There  is  very  few,  it  seems  to  me. 
I  can  point  out  failures  in  my  own  town  there.  There  is 
only  two  left  of  wool  manufacturers  in  my  own  town,  out 
of  about  twelve  or  fifteen  which  started  there  since  I  did 
in  the  last  twenty  or  twenty-five  years. 


972 

By  Mr.  Brown : 

Q.  To  what  do  you  attribute  that?  They  have  had  this 
exemption  you  have  had,  and  the  same  facilities  you  have 
had;  why  is  that? 

A.  Yes.    Well,  it  is  hard  for  me  to  attribute  it — 

Q.  They  have  not  left  Pennsylvania  because  they  have 
been  too  heavily  taxed? 

A.  No,  they  haven't.  They  haven't  gotten  any  results, 
either  because  of  management,  or  something  or  other. 
Most  of  them  seemed  to  be  business  people,  but  there 
wasn't  enough  in  the  business  for  them  to  get  along  on. 
As  I  said,  only  about  10  per  cent,  of  the  manufacturers  do 
make  much  money;  a  few  of  them  get  wealthy  and  the 
rest  of  them  seem  to  hang  on. 

Q.  How  about  the  middle-man  to  whom  the  manu- 
facturer sells  and  who  handles  his  goods;  is  he  in  a 
better  condition? 

A.  The  jobber? 

Q.  Call  him  the  jobber? 

A.  He  doesn't  have  his  money  tied  up  in  machinery  and 
plant  like  that.  Of  course,  he  has  a  big  building  sometimes 
in  the  center  of  a  city,  which  usually  improves,  but  his 
merchandise  he  buys  and  sells  and  it  doesn't  depreciate 
like  machinery  in  a  manufacturing  plant.  He  gets  fair 
returns.  Perhaps  he  has  lots  of  competition.  I  don't 
think  the  jobber  or  the  middle-man  has  as  good  a  time 
of  it  as  the  retailer.  Just  taking  it  from  a  general  view- 
point, the  retailer  seems  to  be  more  prosperous  right 
along. 

Q.  Have  those  with  whom  you  associate  given  any 
thought  as  to  what  taxables  should  be  added  to  the  present 
list,  assuming  there  is  not  sufficient  revenue? 

A.  We  did  not  take  anything  up  except  automobiles. 
I  proposed  that  some  time  ago.  Mr.  Wilson  Brown,  of  the 
Manufacturers'  Club,  spoke  of  it  at  the  last  meeting  here, 
I  think,  some  time  in  April.  I  was  sick  at  the  time.  I 


973 

think  we  should  make  the  license  on  automobiles  about  a 
dollar  per  horse  power.  It  is  a  luxury  and  everybody 
that  runs  an  automobile  has  such  large  expenses  other- 
wise that  they  wouldn't  feel  that. 

Q.  I  presume  for  additional  revenue  that  would  be  a 
a  very  small  drop  in  a  very  large  bucket? 

A.  It  has  been  estimated  it  would  raise  a  million  dollars 
or  more.  That  would  go  a  good  way  towards  good  roads. 
It  ought  to  go  to  the  Road  Department,  I  think. 

Q.  One  of  the  principal  demands  has  been  from  the  State 
Grange  people,  who  think  larger  sums  should  be  given 
for  school  purposes? 

A.  Farmers  are  more  prosperous  than  the  manufac- 
turers. The  farmers  are  not  taxed  much,  and  they  are  more 
prosperous  to-day  than  the  manufacturers.  They  are  not 
as  large  producers.  The  manufacturers  are  producing 
more  to-day  than  the  farmers  in  dollars  and  cents. 

Q.  The  farmers  will  show  you  they  are  assessed  out  of 
proportion,  and  produce  statistics  to  show  that  the 
farmer  pays  a  higher  rate  than  any  other  interest.  They 
gave  us  those  figures,  and  I  would  be  pleased  to  give  you 
a  copy  of  it. 

A.  They  are  the  most  prosperous  of  any  class  of  people 
to-day,  I  think.  Now,  you  asked  a  while  ago  about  the 
class  of  manufacturers  who  might  be  taxed.  I  would  not 
want  to  suggest  that  there  is  particularly,  but  the  only 
manufacturer  who  is  sure  of  making  any  amount  of  money 
is  one  who  is  manufacturing  a  patented  article,  or  some- 
thing of  that  kind,  and  has  a  monopoly,  and  there  isn't 
so  many  of  those,  I  don't  suppose. 

Q.  They  work  under  patents? 
A.  Yes. 

Q.  They  have  exclusive  rights,  those  people? 
A.  Yes.     They  can  get  their  profits,  where  those  who 
have  plenty  of  competition  can't  get  them. 


974 

By  Mr.  Moyer : 

Q.  What  do  you  think  the  State's  attitude  should  be 
towards  its  private  charities  in  this  Commonwealth,  with 
reference  to  continuing  appropriations? 

A.  Well,  as  Mr.  Roberts  stated,  we  talked  over  that  mat- 
ter last  night,  and  we  were  all  of  one  opinion,  that 
the  State  should  not,  when  they  didn't  have  the  money 
to  spare,  appropriate  money  to  charitable  institutions  in 
which  they  did  not  have  some  control  or  some  ownership. 
If  they  had  plenty  of  funds,  it  would  be  a  different  thing. 

Q.  You  think,  therefore,  the  title  to  the  property  should 
be  vested  in  the  Commonwealth  ? 

A.  If  they  want  money  from  the  Commonwealth.  At 
least  they  ought  to  have  credit  to  the  extent  of  the  amount 
they  appropriate. 

Q.  That  seemed  to  be  the  opinion  of  the  gentlemen  who 
were  assembled  together  last  evening;  is  that  your 
thought  ? 

A.  Yes. 

By  Mr.  Brown : 

Q.  As  a  matter  of  information,  the  average  rate 
of  tax  on  real  estate  in  Pennsylvania  is  estimated  to  be 
eighteen  mills,  and  the  average  rate  of  tax  on  personal 
property  is  three  and  a  quarter  mills.  That  is,  six  times  as 
much? 

A.  There  are  lots  of  corporations  besides  the  manufac- 
turing corporations  that  are  not  as  good  to  the  State  as 
others.  Every  community  is  after  manufacturers.  They 
give  them  inducements  to  come  there,  and  after  they  get 
them  there  then  if  they  are  succssful  the  community  is  suc- 
cessful. I  think  as  the  State  has  made  these  inducements, 
which  I  think  other  States  do  to  get  manufacturers,  they 
ought  to  encourage  them  instead  of  trying  to  discourage 
them. 

Q.  The  thought  is  this,  that  they,  having  been  exempted 
since  1885,  are  in  a  position  to-day  to  help  the  State; 


975 

that  is  the  consensus  of  opinion  of  those  who  have  written 
us? 

A.  There  might  be  a  few,  a  small  percentage,  that  are 
in  shape  to  be  taxed,  but  I  do  not  see  how  you  can  dis- 
criminate. Besides  that,  all  these  are  propositions  to  tax 
manufacturers  or  manufacturing  corporations.  They 
leave  out  the  individual  and  the  partnerships,  who  are 
just  as  able  and  just  as  good  competitors  as  we  are.  They 
make  just  as  much  money  as  the  corporations,  and  per- 
haps more,  and  not  only  that,  but  in  taxing  the  corpora- 
tions you  tax  a  lot  of  small  stockholders,  and  in  leaving 
out  the  partnerships  or  individuals  who  are  competitors 
they  have  the  whole  concern  themselves,  and  they  are  left 
exempt  in  this  National  Tax  Bill,  and  it  has  been  talked 
the  same  way  in  proposed  bills  in  the  State.  It  is  a  dis- 
crimination against  the  fellow  who  incorporates  his  busi- 
ness; sometimes  they  incorporate  as  a  matter  of 
necessity;  they  don't  have  money  enough,  and  the  manu- 
facturer gets  several  people  together  with  small  means. 
There  is  no  reason  why  they  should  be  taxed,  and  the  other 
fellow  who  has  plenty  of  money  to  run  his  business  will 
be  exempt. 

Q.  You  would  distinguish  between  competitive  busi- 
nesses? 

A.  Yes.  You  dare  not  discriminate  against  them.  It 
is  unfair  and  unjust. 

Q.  I  mean  between  them,  and  not  against  them. 

By  Mr.  Woodward : 

Q.  You  said  you  believe  the  charitable  institutions  who 
receive  State  aid  should  not  receive  it  unless  the  State 
held  title  to  the  property? 

A.  Well,  held  title  to  it  to  the  extent  to  which  they 
receive  State  aid. 

Q.  Do  you  think  that  would  be  a  good  thing  for  the 
State  to  take  title  and  continue  to  support  these  institu- 
tions ? 


976 

A.  Well,  I  haven't  looked  into  that.  You  can  answer 
that  question.  I  think  this  is  a  matter  for  the  State  to 
look  into. 

By  Mr.  Brown : 

Q.  Why  can't  your  Pennsylvania  Manufacturers'  Asso- 
ciation look  at  this  subject  from  all  viewpoints  and  give 
us  the  benefit  of  their  judgment,  not  from  the  interest  of 
the  manufacturer  or  the  middle-man  or  from  any  other 
person  with  selfish  interests,  but  from  the  interest  of  what 
is  best  for  all  people  of  the  Commonwealth  ?  Why  should 
not  all  these  interests  do  that? 

A.  Well,  you  naturally  think  we  come  here  in  behalf 
of  our  own  interests,  but  at  our  meeting  last  night  and  the 
way  I  have  felt  right  straight  along  has  been  in  the  general 
interest  of  the  Commonwealth.  I  am  sincere  in  what  I  say. 
I  am  not  looking  at  the  matter  in  a  selfish  way  entirely. 

Q.  Your  thought  is  that  no  matter  what  money  may  be 
needed,  that  under  no  circumstances  should  manufactur- 
ers be  taxed ;  I  mean  the  capital  stock  ? 

A.  Yes,  I  think  it  would  be  a  great  mistake  to  tax  the 
manufacturers,  because,  as  I  said  before,  they  are  great 
benefactors  to  any  community,  and  you  want  to  encourage 
them  rather  than  discourage  them. 

By  Mr.  McNichol : 

Q.  On  that  score  you  don't  want  us  to  believe  the  manu- 
facturing corporation  is  invited  into  a  community  for 
the  benefit  which  is  going  to  accrue  to  that  community,  do 
you? 

A.  I  certainly  do. 

Q.  Isn't  it  a  fact  that  men  who  embrace  that  particular 
line  of  business  with  their  capital,  do  so  for  the  profits  that 
are  in  it  ? 

A.  I  admit  that. 

Q.  Isn't  that  true  in  every  business? 

A.  Yes,  the  men  who  embrace  that  business  now  are  not 
going  in  it  for  fun,  of  course. 


977 

Q.  You  don't  want  us  to  believe  a  man  puts  a  million 
and  a  half  in  a  manufacturing  plant  for  the  purpose  of  the 
benefits  largely  that  are  going  to  accrue  to  the  inhabitants 
of  Philadelphia  or  any  other  community? 

A.  I  don't  say  that. 

Q.  You  are  talking  about  what  benefits  accrue  to  the 
particular  community? 

A.  The  man  who  goes  in  a  business  goes  in  it  for  his 
own  gain  always,  but  when  he  does  that  he  benefits  the 
community  and  the  community  needs  him  as  much  as  he 
needs  the  community. 

Q.  And  the  community  recognizes  that  and  deals  with 
him  accordingly? 

A.  They  are  bidding  for  them  all  the  time.  We  hear 
of  them  doing  it. 

Q.  They  are  remote  spots  and  the  conditions  are  not 
favorable,  but  you  take  a  city  like  Philadelphia,  those 
men  are  seeking  Philadelphia,  and  not  Philadelphia  seek- 
ing them.  I  know  if  I  had  $500,000  to  invest  in  a  manu- 
facturing business,  we  would  get  the  most  desirable  spot 
productive  of  the  most  beneficial  results. 

A.  How  would  you  get  that  desirable  spot? 

Q.  By  having  competent  men  to  locate  us  in  a  spot  that 
would  have  all  the  facilities  that  would  be  necessary  to 
properly  conduct  that  business. 

A.  Isn't  it  a  fact  that  if  you  had  a  hundred  thousand 
dollars  to  put  into  a  large  manufacturing  plant,  and  you 
let  it  be  known,  that  different  sections  of  Philadelphia 
would  be  after  you  to  get  it? 

Q.  Yes,  but  I  would  locate  in  that  section  wherein  I 
\vould  be  told  by  a  man  who  would  be  competent  to  tell 
me,  where  I  could  produce  my  goods  for  the  least  cost  and 
sell  it  for  the  largest  profits.  The  manufacturer  does  not 
go  to  the  community  unless  he  finds  favorable  conditions  ? 

A.  Certainly,  he  is  looking  out  for  his  own  interest,  too. 
I  am  making  the  point  that  the  communities  are  seeking 


978 

manufacturers,  and  why?    Because  they  are  benefactors; 
they  bring  money  to  the  communities. 

Q.  Those  communities  are  seeking  them  because  they 
have  no  other  facility  by  which  they  can  develop  the 
growth  of  their  community,  but  the  manufacturer  seeks 
the  community  that  has  got  desirable  conditions. 

A.  When  you  come  to  a  city  like  Philadelphia  it  is 
quite  different  from  towns  like  Norristown  or  towns  a 
great  deal  larger  all  through  the  State. 

Q.  I  agree  with  you. 

A.  I  will  give  you  an  instance  right  in  my  own  town, 
and  I  dare  say  there  are  hundreds  of  towns  in  the  State 
doing  the  same  thing.  We  have  been  asked  to  bid  for 
different  manufactories  there,  I  suppose  a  half  dozen  times 
at  least  within  the  last  year,  and  we  have  always  made 
an  effort  to  get  them,  because  we  think  they  are  bene- 
factors. Not  only  the  business  men  are  seeking  them,  but 
the  manufacturers  themselves,  for  the  benefit  of  the  town 
and  the  community.  That  is  the  general  thing  every- 
where. 

By  Mr.  Brown : 

Q.  That  would  not  be  governed  by  any  State  tax;  that 
would  be  governed  by  the  local  tax? 

A.  That  is  not  considering  any  tax  at  all.  That  is  show- 
ing manufacturers  are  benefactors  to  any  community  and 
every  community  wants  them.  What  I  want  to  say  along 
that  line  is  that  we  should  not  discourage  them  by  trying 
to  tax  them  and  drive  them  out  of  the  State.  There  are 
not  such  big  profits  in  manufacturing  as  some  people 
try  to  make  the  public  believe  there  are. 

By  Mr.  Moyer : 

Q.  The  State's  resources  would  have  something  to  do 
with  locating  the  plant  ? 
A.  The  State 's  resources  ? 
Q.  Yes,  the  natural  resources  of  the  Commonwealth? 


979 

A.  Sometimes  in  certain  things,  if  a  man  is  using  any 
large  amount  of  fuel  he  would  want  to  get  near  a  coal 
mine,  providing  he  couldn't  get  a  freight  rate  as  cheap 
as  he  could  up  near  the  mine. 

Q.  Take  the  large  steel  corporations  in  the  "Western 
part  of  the  State,  the  statement  was  made  at  Pittsburgh 
that  they  Y^ould  likely  locate  in  the  State  of  West  Virginia 
or  some  other  nearby  State  if  they  were  taxed,  because 
of  the  accessibility  of  fuel. 

A.  Fuel  and  waterways  and  things  like  that,  where  they 
have  lots  of  freight  like  a  steel  plant,  but  there  are  different 
States  have  those  facilities. 

Q.  Would  you  rather  have  your  manufacturing  plant, 
for  instance,  in  Norristown,  than  you  would  in  Arizona 
or  New  Mexico? 

A.  I  haven't  given  that  any  consideration,  but  we  nat- 
urally think  so. 

Q.  You  get  better  returns? 

A.  Yes,  but  there  are  plenty  of  towns  in  Pennsylvania 
besides  Norristown. 

Q.  I  mean  anywhere  in  Pennsylvania? 

A.  Yes. 

By  Mr.  Brown: 

Q.  Norristown  is  all  right,  from  your  point  of  view? 

A.  Yes,  I  like  Norristown.     I  have  no  objection  to  it. 

Mr.  Shoemaker:  There  is  one  other  gentleman  on  this 
Committee  who  would  like  to  ask  for  your  consideration. 
You  have  been  exceedingly  kind. 


980 


MR.  ROBERT  A.  GARWAITE,  Treasurer  of  the  J.  Ell- 
wood  Lee  Manufacturing  Company,  of  Conshohocken, 
called. 

Mr.  Gartwaite:  I  would  just  like  to  supplement  Mr. 
Rambo's  remarks  in  regard  to  manufacturing  concerns 
leaving  the  State  and  going  into  other  towns  and  bor- 
oughs. I  have  an  instance  in  our  own  concern.  We  have 
just  had  an  offer  to  go  to  New  Brunswic*,  New  Jersey, 
and  to  go  to  Illinois  and  be  given  ground  free  if  we  would 
bring  our  plant  there,  and  although  there  are  only  about 
five  or  six  thousand  people  in  Conshohocken,  the  Borough 
Council  got  together  and  requested  us  to  remain  in  Con- 
shohocken. We  employ  about  five  hundred  people,  and  it 
would  undoubtedly  be  a  great  loss  to  the  town  if  we  were 
to  leave.  While  you  say  that  the  people  do  not  seek  the 
manufacturers,  I  think  we  can  take  exceptions  to  that,  in 
that  these  people  have  kept  right  after  us  to  stay  in  Con- 
shohocken, and  the  only  reason  we  stay  there  is  simply 
because  it  is  the  home  of  the  company,  and  we  do  not 
get  any  better  facilities  than  we  would  if  were  over  in 
New  Brunswick,  New  Jersey.  Of  course,  >ou  say  a  place 
like  Philadelphia  might  be  more  attractive,  but  in  a  large 
majority  of  cases  you  will  find  the  manufacturer  can  go  to 
any  place — he  doesn't  have  to  be  in  a  large  city  if  he  is 
on  a  good  railroad  and  can  get  a  good  siding  and  reason- 
able freight  rates;  it  doesn't  matter  whether  there  are 
twenty  thousand  or  a  hundred  thousand  people  in  the 
town  he  is  located  in,  because  the  manufacturer  produces 
and  he  has  to  ship  his  products  any  way  and  is  not  de- 
pendent upon  the  surrounding  people  and  the  city  in 
which  he  is  located  for  his  support. 
By  Mr.  McNichol : 

Q.  How  about  his  help?    Do  you  mean  to  say  you  could 


981 

retain  your  help  as  easily  in  a  town  of  five  thousand  in- 
habitants as  you  could  in  a  town  of  a  hundred  thousand? 

A.  I  mean  to  say  you  can  go  to  a  town  of  five  thousand 
people  with  such  a  plant  as  ours  and  get  plenty  of  help. 

Q.  And  retain  them  ? 

A.  Yes.  We  have  no  unions  out  there  and  everything 
goes  along  very  smoothly,  and.  in  iact,  people  are  coming 
all  the  time  from  other  places  wanting  to  locate  there. 
Also,  I  think  that  a  great  many  Senators  and  the  people 
at  Harrisburg  are  under  the  impression  that  manufac- 
turers are,  as  you  say,  bloated  bond-holders.  I  think  you 
will  find,  as  Mr.  Rambo  said,  that  75  to  80  per  cent,  are 
just  struggling  along  for  an  honest  profit.  Take  our  big 
corporations,  such  as  the  Steel  crowd  and  the  Standard 
Oil  bunch,  you  will  find  they  are  men  who  have  made 
money  out  of  the  manufacturing,  probably,  but  the  rest 
of  the  people  have  made  their  money  in  banking  and  have 
worked  until  they  have  become  very  wealthy.  The  story 
of  the  manufacturers  going  to  Europe  and  Paris  and 
spending  money  made  in  this  country,  I  think  is  greatly 
exaggerated. 

By  Mr.  Nichol: 

Q.  What  would  you  term  Carnegie — a  bloated  bond- 
holder or  banker?  What  category  would  you  put  him  in? 

A.  He  is  a  millionaire. 

Q.  And  Rockefeller? 

A.  He  is  a  millionaire. 

Q.  What  do  you  find  the  people  taking  passage  to  Eu- 
rope, such  as  Garey. 

A.  The  Steel  crowd,  I  admit,  and  the  Standard  Oil 
crowd  are  the  milliona'res  who  ha/e  been  manufacturers, 
but  the  majority  of  the  rest  of  them  have  made  their 
money  out  of  railroads  and  stocks  and  bonds,  such  as 
the  Vanderbilts  and  the  Goulds  and  Astors. 

Q.  I  think  you  should  furnish  a  list  of  statistics  as  to 
the  standing  of  the  manufacturers? 


982 

A.  I  say  the  people  in  general  throughout  the  State 
think  the  manufacturers  are  making  immense  profits, 
where  in  reality  they  are  only  making  a  legitimate  honest 
profit,  75  per  cent,  of  them. 

Q.  We  do  not  believe  that.  You  are  only  quoting  some 
of  the  Democratic  newspapers  here  in  the  city.  We 
would  like  for  you  to  give  us  th";  facts  to  disabuse  the 
minds  of  the  people  ? 

A.  You  must  admit  a  great  many  people  in  the  country 
have  made  their  money 

Q.  I  have  been  trying  to  figure  out  and  discover  how 
they  did  make  it.  I  haven't  been  able  to  make  it  out  how 
they  did  do  it. 

A.  If  you  make  a  tax  that  would  take  in  all  that  crowd 
you  will  be  doing  something. 

Q.  We  are  after  them. 

By  Mr.  Brown: 

Q.  How  do  you  distinguish  in  the  illustration  I  gave  to 
Mr.  Roberts,  between  taxing  a  man  on  one  corner,  having 
the  same  amount  of  capital  invested,  and  not  taxing  the 
manufacturer  across  the  street? 

A.  I  think  if  you  place  the  manufacturer  on  one  corner 
and  a  merchant  on  the  other  corner 

Q.  I  am  assuming  each  gets  the  same  result,  the  net 
earnings  at  the  end  of  the  year  and  the  net  result,  charg- 
ing off  everything  you  would  ordinarily  charge  off  to 
profit  and  loss  in  the  manfacturing  and  mercantile  busi- 
ness, and  each  man  has  made  exactly  the  same  from  his 
business.  Why  would  you  tax  one  and  not  the  other? 

A.  Because  the  merchant  was  probably  benefiting  from 
more  than  the  one  concern  across  the  street. 

Q.  The  net  result  is  the  same? 

A.  What  I  mean  is  that  he  is  selling  more  than  that  one 
company's  product,  and  therefore  he  is  benefiting  from 
more  than  one  manufacturing  concern,  and  if  the  manu- 


983 

facturer  closes  down  probably  that  concern  would  go  on, 
because  it  takes  many  more  people  to  manufacture  goods 
than  it  does  to  sell  it. 

Q.  You  don't  think  a  man  should  pay  tax  according  to 
his  ability  to  do  so  ? 

A.  I  think  the  manufacturers  of  this  State  are  taxed 
enough,  and  I  think  with  this  new  National  Government 
tax  going  into  effect  it  is  going  to  be  very  hard.  I  know 
it  is  going  to  be  hard  in  our  case,  and  we  sell  to  State  in- 
stitutions such  as  hospitals. 

Q.  "We  have  had  one  manufacturer  here  who  said  it 
didn  't  make  much  difference ;  he  would  simply  add  it  on 
to  the  price  of  his  product,  and  it  didn't  make  any  dif- 
ference to  him. 

A.  But  if  you  place  a  manufacturer  on  one  corner  and 
a  merchant  on  the  other,  both  employing  the  same  num- 
ber of  help,  and  both  making  the  same  percentage  01 
profit,  you  will  find  that  the  merchant  is  making  his  profit 
out  of  more  than  one  concern ;  therefore  he  is  benefiting 
probably  from  four  to  five  manufacturers  throughout  the 
United  States. 

Q.  What  is  the  net  result  to  the  Commonwealth? 

A.  Well,  of  course,  if  they  both  pay  taxes,  the  Common- 
wealth would  get  it  from  both  sources,  but  it  would  be 
harder  on  the  manufacturer. 

Q.  I  mean  outside  of  the  tax.  What  is  the  difference 
in  the  general  net  result  to  the  Commonwealth  outside 
of  the  question  that  one  pays  and  the  other  does  not  pay ; 
how  is  the  Commonwealth  benefited?  Isn't  the  man  on 
the  corner  with  the  store 

A.  Don't  you  think  there  should  be  some  distinction 
between  a  manufacturing  man  who  is  producing  and  the 
merchant  who  is  selling  the  product? 

Q.  That  is  what  I  am  trying  to  find  out  from  you? 

A.  I  certainly  do.  I  think  the  man  that  is  producing 
and  is  really  keeping  the  town  together  should  be  given 


984 

more  credit  and  should  be  exempt  from  certain  taxes, 
than  the  man  who  is  simply  a  merchant  and  buys  and 
sells  goods  from  probably  five  or  six  different  concerns 
throughout  other  different  States.  The  merchant  could 
go  out  of  business,  but  it  wouldn't  hurt  the  town.  If  the 
manufacturer  went  out  of  business  it  would  hurt  the  town 
materially. 

By  Mr.  McNichol : 

Q.  Very  few  manufacturers  who  went  out  of  business 
had  a  profitable  investment.  In  your  recollection  can  you 
give  us  any  idea  of  the  number  of  manufacturers  who 
went  out  of  business  and  who  had  a  profitable  investment? 

A.  He  would  be  foolish  if  he  did. 

Q.  Consequently  his  business  would  become  a  sort  of 
burden  upon  him  and  fail  to  produce  proper  revenue,  and 
that  would  be  the  cause  of  putting  him  out  of  business? 

A.  He  would  go  out  of  business  if  he  didn't  make  a 
profit. 

Q.  If  he  is  not  making  good  returns  for  the  amount 
of  money  invested,  very  few  of  them  neglect  to  change 
their  location. 

A.  I  don't  quite  agree  with  you  there.  As  I  said,  the 
community,  from  the  fact  that  it  is  a  community,  does  not 
benefit  the  manufacturer  to  any  great  extent,  because  his 
product  is  sold  probably  hundreds  of  miles  from  where 
he  is  located. 

Q.  The  cost  of  production  is  largely  taken  into  con- 
sideration in  locating  a  plant,  isn't  it? 

A.  You  can  go  to  any  town,  and  if  you  are  in  a  town 
of  5,000  for  instance,  where  we  are,  we  could  go  over  to 
New  Brunswick  and  get  the  same  labor  facilities  we  have 
now. 

By  Mr.  Brown : 

Q.  But  you  have  to  pay  a  tax  there,  just  the  same  as 
you  are  now  ? 


985 

f 

A.  Yes.  This  National  tax  which  is  going  into  effect 
doesn't  affect  partnership  concerns.  It  will  affiect  us  to 
a  great  extent,  and  if,  as  you  say,  you  can  pass  some 
law  which  will  take  in  concerns  such  as  the  Standard  Oil 
and  the  United  States  Steel  Trust,  you  will  be  doing  some- 
thing, but  the  poor  people  who  are  only  making  ten  or 
twelve  thousand  dollars  a  year  are  going  to  be  taxed,  so 
it  runs  up,  you  know. 

By  Mr.  Woodward: 

Q.  Do  you  think  the  State  ought  to  continue  the  policy 
of  appropriating  money  to  private  charities? 

A.  I  think  they  should  when  they  retain  an  interest  in 
the  property,  but  there  are  a  great  many  people  that  are 
living  off  the  State  who  are  connected  with  these  private 
charities,  no  doubt.  But  I  think  if  you  discontinue  your 
appropriations  to  the  State  organizations  I  think  we,  for 
one,  would  go  out  of  business,  because  our  business  is 
largely  selling  to  the  State  hospitals,  and  they  are  the 
only  hospitals  that  pay. 

By  Mr.  Brown : 

Q.  That  is  the  trouble.  Take  this  proposition  and  you 
go  on  and  talk  about  it,  and  you  get  right  back  where 
you  started  from.  You  try  to  leave  out  the  links  in  the 
chain  and  when  you  leave  out  one  the  thing  falls  apart. 

A.  If  you  retain  an  interest  in  every  public  charity  to 
which  you  appropriate  money,  of  course  you  are  not  los- 
ing anything. 

By  Mr.  McNichol : 

Q.  Would  it  be  necessary  for  our  State  hospitals  to  pur- 
chase the  articles  that  you  supply  from  you  people  alone  ? 
Are  there  no  other  persons  in  the  business  that  would 
be  able  to  furnish  them? 

A.  Yes. 

Q.  That  is  a  sort  of  an  inducement  why  you  don't  leave 
Pennsylvania  ? 


986 

A.  I  should  say  no.  They  buy  even  now  too  much  from 
out  of  the  State. 

Q.  You  are  trying  to  show  Pennsylvania  why  they 
should  buy  more  of  you? 

A.  No.  That  argument  we  used  about  ten  years  ago  to 
no  effect. 

By  Mr.  Woodward: 

Q.  If  we  would  continue  to  appropriate  these  moneys, 
your  concern  then  would  not  object  to  paying  one  mill 
tax? 

A.  The  money  we  would  get  from  the  State  hospitals, 
the  interest  on  it,  probably  wouldn't  pay  the  one  mill  tax. 

Q.  You  probably  would  charge  the  State  one  mill  extra? 

A.  Because  the  hospital  goods  we  sell  them  is  sold  at 
very  nearly  cost  in  the  first  place,  and  in  the  second  place 
it  goes  to  pay  a  few  salaries. 

By  Mr.  Brown: 

Q.  Let  me  ask  you  on  that  line :  You  sell  to  a  number  of 
hospitals? 

A.  We  sell  the  State  hospitals. 

Q.  Do  you  sell  a  number  of  them? 

A.  We  sell  quite  a  few  throughout  all  the  States. 

Q.  I  understand  that  they  buy  the  goods  at  a  very 
slight  profit  to  you? 

A.  A  very  slight  profit;  they  get  the  best  wholesale 
prices. 

By  Mr.  McNichol: 

Q.  You  also  sell  to  private  institutions? 

A.  Yes,  and  we  sell  to  dealers. 

Q.  And  I  understand  the  State  gets  the  best  price— 

A.  The  best  price  obtainable. 

Q.  Not  only  here,  but  other  States? 

A.  If    the    State    buys    $20    worth  of  cotton  a  year, 


987 

they  get  the  same  piece  of  cotton  as  the  man  who  buys 
$10,000  worth.  That  is  a  fact. 

Mr.  Rambo :  I  just  want  to  answer  a  question  in  re- 
gard to  the  eighteen  mills  and  the  three  and  a  quarter 
mills.  Mr.  Brown  asked  me  about  the  difference,  and  in 
looking  over  it  it  looks  to  me  as  though  we  pay  the 
eighteen  and  the  three  and  a  quarter. 

Mr.  Brown:  Providing  you  pay  on  the  real  estate  and 
at  the  same  time  pay  the  other. 

Mr.  Rambo:  We  pay  on  the  real  estate.  The  question 
has  been  asked  several  times  about  manufacturers  going 
out  of  business,  and  so  on,  and  to  name  some.  I  did  not 
name  any  particular  ones,  but  I  know  there  must  be 
eight  or  ten,  as  I  said,  in  my  own  line,  right  in  my  own 
town,  that  have  gone  out  of  business. 

Mr.  Brown :  That  is  a  case  of  drying  up,  as  it  were. 

Mr.  Rambo :  I  can  name  three  iron  masters  who  died 
poor  in  my  own  town. 

By  Mr.  McNichol: 

Q.  What  was  their  age  when  they  died;  how  old  were 
they  when  they  died? 

A.  That  doesn't  make  any  difference.  I  don't  know 
anything  about  that. 

Q.  Oh,  yes,  it  does. 


988 


Mr.  Brown:  We  have  the  representative  of  the  Phila- 
delphia Real  Estate  Brokers'  Association  here,  Mr.  D.  E. 
Dallam. 

Mr.  Dallam :  I  only  received  notice  of  the  meeting  yes- 
terday, so  I  am  not  prepared.  I  am  a  very  poor  speaker 
and  may  make  a  rambling  speech. 

Mr.  Brown:  You  gentlemen  may  not  have  had  but  a 
few  minutes'  notice,  but  you  have  been  thinking  over  the 
subject  for  months. 

Mr.  McNichol:  What  is  Mr.  Dallam  going  to  talk 
about  ? 

Mr.  Brown :  Mr.  Dallam  is  going  to  talk  on  the  subject 
of  adding  to  the  list  of  taxables. 

Mr.  McNichol :  For  the  purpose  of  reducing  the  burden 
on  real  estate? 

Mr.  Brown:  Yes,  along  the  line  of  contribution  to  the 
general  revenue. 

Mr.  Dallam :  We  are  all  selfish,  and  therefore  we  speak 
to  selfish  interests.  First,  as  I  said  before,  we  are  entirely 
interested  in  city  tax.  The  position  is  this:  The  City  of 
Philadelphia  must  have  an  additional  income,  and  under 
the  present  law,  as  I  said  before,  practically  all  the  city 
has  is  a  right  to  tax  real  estate.  Now,  we  want,  therefore, 
the  taxing  powers  of  the  city  enlarged  or  some  of  the  taxes 
collected  in  the  County  of  Philadelphia  to  be  diverted  to 
city  purposes.  Of  course,  people  say  to  me:  "You  have  a 
very  low  tax  in  Philadelphia. ' '  Yes,  I  grant  you.  The  City 
of  Philadelphia  collects  less  money  really  than  any  other 
large  cities  in  comparison,  without  throwing  any  bouquets, 
but  what  we  ask  is  an  equitable  apportionment  of  the 
taxes. 

Now,  the  tax  per  capita,  for  instance,  if  there  is  a  hun- 
dred dollars  to  be  raised  and  there  are  one  hundred  peo- 


989 

pie  to  pay  it,  that  is  ten  dollars  a  head,  but  where  out 
of  the  hundred  people  you  make  ten  pay  it,  we  do  object. 
That  is  the  way  it  is.  Now,  of  the  accumulated  capital 
of  the  City  of  Philadelphia  only  one-tenth  of  it  is  in  real 
estate,  and  yet  that  one-tenth  practically  pays  all  our  city 
tax.  Of  course,  the  other  nine-tenths  part  of  it  pay  the 
State  tax.  We  want  that  diverted. 

Now,  at  the  present  time  I  say  without  contradiction, 

and  I  have  been  at  it  for  forty  years,  that  we  are  paying 

more  to-day  out  of  our  net  return  from  our  real  estate  for 

taxes  than  ever  before.     We  are  paying — at  least  25  per 

cent,  of  our  net  revenue  goes  to  the  city  tax,  and  in  New 

York,  which  collects  over  125  millions,  the  highest  rate 

I  can  find  on  Broadway  is  18  per  cent.     Therefore,  we 

say  that  this  has  practically  stopped  the  purchase  of  real 

estate  in  Philadelphia  for  investment.    Parties  are  buying 

now  for  some  special  purposes,  either  for  homes  or  some 

factory  sites  or  to  increase  a  man's  business,  or  speculators, 

with  the    hope    of    unloading    on    somebody    else.     We 

claim  personal  property  ought  to  bear  its  particular  share 

of  tax,  and  if  any  increase  is  made  we  think  it  should  be 

put  upon  something  else  besides  real  estate.     If  there  is 

any  increase  to  be  made,  we  want  it  put  upon  somebody 

else.    Mr.  Brown  asked  me  particularly  about  a  mercantile 

tax.    Now,  we  have  here  what  we  call  practically  a  license. 

We  have  three  of  them,  we  have  the  liquor  license,  brokers ' 

license  and  mercantile  license.    We  ought  to  have  here  all 

that  combined.     I  am  suggesting  these  other    ways  of 

avoiding  taxing  us — we  ought  to  have  an  occupation  tax, 

and  that  was   covered   by   the   third  resolution   of  the 

Real    Estate    Brokers'    Association    presented    here    on 

February  25,  which  reads: 

''Each  and  every  individual,  firm,  limited  partnership 
and  corporation  engaged  in  a  legitimate  business  or  pro- 
fession, having  an  office  or  place  of  business  for  the  trans- 
action of  same,  shall  pay  a  license  to  the  county  in  which' 
said  office  is  located." 

The  first  thing  would  be  for  the  city  or  the  county  to 


990 

have  a  registration  of  every  person  engaged  in  any  capa- 
city, except  as  an  employe.  Now,  if  nothing  else,  they 
should  be  registered.  Now,  the  question  is  if  we  take  that 

mercantile  tax  as  it  is 

Mr.  Brown:  Let  me  interrupt  you  there.  Would  it  be 
on  gross  receipts? 

Mr.  Dallam:  I  am  talking  of  registration.  We  will 
come  to  how  to  collect  it  afterwards.  First,  we  have  the 
registration  of  every  person.  Now,  at  present  the  little 
woman  at  the  corner  who  sells  tobacco  and  candy  must 
pay  $2.50  when  she  opens  her  doors,  and  the  manufacturer 
on  the  other  side  of  the  street  doesn't  pay  a  cent,  and 
the  doctor  or  dentist  who  lives  adjoining  this  little  woman, 
who  has  probably  three  or  four  thousand  dollars  a  year 
income,  he  don't  pay  a  cent.  The  question  is  why 
shouldn't  they  all  be  registered,  and  if  we  tax  everybody 
and  everything  in  that  way,  then  we  will  get  a  lower  tax 
among  us  all.  As  I  say,  instead  of  ten  people  paying  the 
tax  a  hundred  will  pay  the  tax,  and  it  will  be  diminished 
on  all  of  us. 

By  Mr.  Brown : 

Q.  Why  should  the  real  estate  broker  pay  a  tax  and  the 
lawyer  not  pay  one  ? 

A.  I  have  asked  that  question,  but  that  hurts  the  pro- 
fessional feelings. 

Q.  What  is  the  reason  for  it  f 

A.  There  is  no  reason  for  it.  I  do  not  employ  a  cent  of 
capital.  Of  course,  I  have  my  own  capital.  It  doesn't 
require  a  cent  of  capital  for  you  to  put  your  house  in  my 
hands  for  sale,  and  I  secure  a  purchaser  for  it,  and  get 
a  hundred  dollars  for  it.  As  I  said  in  my  address  before 
the  Brokers'  Association,  one-half  of  the  real  estate  is 
sold  by  the  lawyers  and  trust  companies  that  don't  pay 
a  cent,  and  until  the  Act  of  1895—1  went  to  the  Legisla- 
ture at  Harrisburg  and  I  applied  for  the  repeal  of  the 
Act  of  1862,  and  the  Legislature  of  1895  repealed  it.  I 


991 

cite  here  as  an  exact  case,  yesterday  I  bought  a  property 
for  a  corporation.  I  was  told  it  was  worth  $75,000,  and 
I  charged  them  $750.  A  lawyer  sold  it  and  charged  them 
$800,  and  under  the  Act  of  1862,  which  was  repealed,  we, 
as  real  estate  brokers,  were  compelled  to  make  a  return 
of  that  sale  and  pay  $22.50,  and  the  lawyer  did  not  pay 
anything  to  the  State.  We  pay  one-half  of  1  per  cent, 
upon  our  gross  receipts  without  allowing  anything  for 
our  office  expenses,  which  may  in  some  offices  run  one- 
half — we  pay  one-half  of  1  per  cent,  and  do  not  object  to 
paying  it,  but  I  think  the  lawyer  should  pay  his  share  as 
well  as  I  do. 

Now,  you  asked  me  the  concrete  question  as  to  what 
tax  would  be  just.  Those  that  are  older  than  I  am — I  am 
old  enough — but  those  older  gentlemen  know  the  United 
States  in  1862  passed  an  internal  revenue  tax,  and  after 
consideration  they  fixed  upon  one  dollar  a  thousand  as  a 
just  charge  upon  a  man's  savings,  and  we  were  then  com- 
pelled to  go  down  and  make  an  affidavit  as  to  our  active 
sales  for  the  preceding  year.  There  is  no  reason  why  every 
manufacturer  or  man  who  sells  his  goods  and  every  re- 
tailer and  wholesale  dealer  should  not  pay  the  same. 
The  retailer  pays  fifty  cents  to-day  and  the  wholesaler  pays 
a  dollar.  Who  can  tell  the  difference  when  a  man  has  a 
sign  out,  "Wholesale  and  Retail  Dealer"?  I  think  they 
should  pay  a  dollar  and  everybody  pay  it,  the  manu- 
facturer included. 

As  regards  professional  men,  taken  off  on  the  second  of 
May,  there  are  659  people  in  the  five  professions,  arch- 
itects, dentists,  doctors,  engineers  and  lawyers.  Those 
men  are  in  the  Philadelphia  directory.  None  of  them 
pay  a  cent. 

Q.  Why  wouldn't  you  include  there  every  man  who 
doesn't  work  for  another? 

A.  I  picked  them  out  merely  to  show  the  number.  They 
were  easy  to  count.  I  think  our  resolution  is  very  plain : 
"Each  and  every  individual,  firm,  limited  partpership 


992 

and  corporation  engaged  in  a  legitimate  business  or  pro- 
fession, having  an  office  or  place  of  business  for  the  trans- 
action of  same,  shall  pay  a  license  to  the  county  in  which 
said  office  is  located."  Now,  if  we  do  that  we  will  get  a 
great  deal  of  money. 

As  regards  the  amount  we  will  get  on  this  mercantile 
tax  from  manufacturers,  you  asked  me  that  question. 
I  have  not  yet  been  able  to  find  any  one  in  the  associa- 
tion who  is  able  to  tell  me  the  output  of  Philadelphia. 
According  to  Mr.  ,  he  and  I  went  over  it,  the 

output  of  the  City  of  Philadelphia  manufacturers  in  1876 
was  over  $500,000,000.  That  would  be  $500,000.  Now, 
according  to  my  estimate,  the  best  I  can  find  out,  the  out- 
put of  the  City  of  Philadelphia  manufacturers  is  about 
$900,000,000.  That  would  be  $900,000  simply  at  one  mill. 

Q.  What  answer  have  you  got  to  make  to  the  manu- 
facturers that  that  is  a  prohibitive  tax  ? 

A.  If  the  manufacturer  can  not  make  as  much  or  more 
than  the  wholesale  dealer  he  is  going  out  of  business. 
They  are  not  in  business  for  fun.  If  the  business  is  not 
profitable  they  fail.  It  is  like  any  other  man — they  are 
looking  out  for  their  own  interest.  I  think  if  they  can't 
pay  one-tenth  of  1  per  cent,  on  the  sales,  because  that  is 
what  it  amounts  to — they  pay  1  per  cent,  to  the  broker 
who  sells  goods  for  them,  and  1  per  cent,  to  the  merchant— 
if  they  can't  pay  one-tenth  of  1  per  cent,  on  the  sales, 
I  don't  think  the  business  is  worth  carrying  on.  We  peo- 
ple in  the  City  of  Philadelphia  whom  I  represent,  we  are 
simply  selfish,  we  do  not  want  any  more  tax  placed  upon 
us ;  we  are  paying  enough.  We  are  paying  more  than  we 
ever  did,  and  I  think  if  the  State  will  divert  that  tax,  that 
will  divert  $900,000,  because  the  City  of  Philadelphia  must 
have  about  $5,000,000  more  added  to  its  income.  You  may 
juggle  figures  and  re-assessments  and  all  that  rigamarole, 
you  can't  get  out  of  it.  I  don't  think  it  is  fair. 


993 

By  Mr.  McNichol: 

Q.  How  do  you  make  your  calculations  of  that  $5,000,000 
more  for  current  revenue?  Give  us  the  facts.  On  what 
basis  do  you  make  that  assertion? 

A.  If  you  will  talk  to  any  of  the  operative  builders 

Q.  I  am  talking  to  Mr.  Dallam,  who  has  made  the  as- 
sertion that  no  matter  how  you  juggle  figures,  the  City 
of  Philadelphia  must  have  five  millions  more  added  to  its 
income,  and  when  a  man  makes  that  assertion  he  must 
have  some  ground  for  making  it  ? 

A.  That  is  arbitrary.  It  is  arbitrary  with  me.  I  will 
take  the  responsibility  for  it.  I  have  had  property  in  the 
lower  part  of  town  and  I  was  asked  how  much  it  would 
require  to  put  a  main  sewer  there,  and  they  say  three  or 
four  hundred  thousand  dollars.  I  will  say  to  you  in  Rich- 
mond street  we  cannot  do  any  building  whatever  north 
of  the  gas  plant  until  we  get  our  main  sewers  in,  and  it 
will  take  almost  three  hundred  thousand  dollars  to  main 
sewer  those  streets. 

Q.  How  many  streets  are  there? 
A.  About  five  or  six  of  them. 

Q.  You  do  not  consider  a  main  sewer  is  a  question  that 
affects  the  current  revenue  of  the  city? 
A.  No,  but 

Q.  Let  us  get  down  to  the  question  of  current  revenue 
of  our  city  ? 

A.  I  am  speaking  entirely  from  the  standpoint  of  the 
real  estate  builder. 

Q.  I  am  looking  from  the  viewpoint  of  the  five  millions 
additional  that  would  be  required  to  run  the  current  ex- 
penses of  the  City  of  Philadelphia,  and  I  am  hunting  for 
information  from  just  such  men  as  you  as  to  what  you 
include  in  that  item  that  you  say  represents  the  five 
millions  of  dollars? 

A.  Don't  interrupt  me  until  I  get  through.  It  all  comes 
in  the  word  "running  the  city."  You  may  run  the  city 
48 


994 

with  one  amount  of  money,  and  somebody  else  might  run 
it  with  another  amount  of  money,  but  the  way  I  want 
to  run  it  is  this :  I  want,  when  the  operative  builder  sees 
a  piece  of  ground,  and  he  says,  "I  can  use  it,  I  can  get  a 
sewer " 

Q.  I  just  want  to  check  you  up  as  you  itemize.  You 
don't  mean  to  have  this  Committee  believe  that  the  in- 
stallation of  sewers  or  opening  of  streets  should  be  con- 
sidered in  the  item  of  current  expenses  ? 

A.  Oh,  no,  not  that. 

Q.  Give  us  your  idea. 

A.  That  is  my  way  of  counting  it. 

Q.  No,  as  a  practical  man  you  wouldn't  put  it  that  way. 
A  sewer  is  a  permanent  improvement.  1  want  to  get 
from  you,  Mr.  Dallam,  wherein  you  have  the  facts  that 
it  requires  five  millions  of  dollars  additional  to  run  the 
current  expenses  of  the  City  of  Philadelphia  ? 

A.  I  put  it  in  this  way,  and  I  think  you  will  agree  with 
me,  Mr.  McNichol,  that  we  can  spend  it  very  advantage- 
ously no  matter  where  we  get  it;  I  don't  dispute  it  for  a 
moment,  we  could  spend  five  millions  of  dollars  very  ad- 
vantageously, yet  before  it  can  be  spent 

Q.  On  what? 

A.  Main  sewers  and  opening  the  streets. 

Q.  Let  me  ask  you  a  question.  Instead  of  requiring 
money  for  additional  current  expenses,  as  you  say  we  do, 
is  not  the  trouble  in  Philadelphia  that  we  are  operating 
under  a  constitutional  provision  passed  thirty  or  forty 
years  ago,  and  under  which  no  business  of  an  up-to-date 
character  is  being  conducted  under? 

A.  What  do  you  mean — the  pay-as-you-go  bill? 

Q.  We  pay  as  we  go  every  day.  In  other  words,  if  you 
have  a  permanent  investment  or  improvement  to  make, 
the  city  has  the  right  to  have  the  borrowing  capacity  to 
put  that  permanent  improvement  in  at  once  ? 

A.  If  you  put  it  that  way,  yes. 


995 

Q.  "Would  you,  as  a  business  man,  operate  your  financial 
conditions  as  you  did  thirty  years  ago? 

A.  I  don't  know  as  I  exactly  would.  I  would  have  to 
do  it  more  economically. 

Q.  You  are  not  operating  to-day  as  you  did  thirty  years 
ago? 

A.  I  don't  know  "but  I  am. 

Q.  You  have  advanced  with  the  conditions  and  with 
the  times;  your  production  has  advanced  in  that  re- 
spect? 

A.  Yes. 

Q.  The  trouble  with  Philadelphia  as  a  business  proposi- 
tion, and  you  will  admit  it,  is  that  the  borrowing  capacity 
is  limited  to  7  per  cent,  and  it  should  be  10  or  12  per  cent., 
so  that  when  the  growth  of  the  city  requires  a  permanent 
improvement  to  be  made  in  the  City  of  Philadelphia,  it 
should  not  be  compelled  to  wait  two  or  three  years  for  it  ? 

A.  I  want  the  money.  I  don't  care  how  you  get  it. 
Interest  items  are  a  very  small  item.  I  don't  care  where 
you  get  it,  we  want  five  million  dollars  additional  money 
for  this  year,  and  last  year,  and  so  on.  You  may  take 
it  out  of  a  public  loan  or  a  loan  for  current  expenses. 

Q.  Should  it  be  taken  out  of  current  improvements? 

A.  "We  perfectly  agree  with  you,  that  a  permanent  im- 
provement like  a  thirty-foot  sewer  should  be  taken  out 
of  a  permanent  loan,  but  I  know  we  don't  get  the  money 
and  we  don't  get  the  improvements,  and  therefore  the 
real  estate  fraternity  know  we  have  to  submit  to  more 
taxes. 

Q.  I  will  give  you  one  reason  why  you  haven't  got  it. 
To  our  regret,  we  for  once  in  our  lifetime  listened  to  the 
voice  of  a  reformer,  and  in  doing  that  the  City  of  Phila- 
delphia has  got  to  suffer  for  two  or  three  years  until  we 
get  ourselves  up-to-date  and  in  condition  as  other  cities. 

A.  Other  States  allow  10  per  cent.,  we  know,  and  the 
New  York  people  have  complained  that  having  left  it  at 
10  per  cent.,  they  are  now  going  to  get  an  Act  passed 


996 

to  draw  special  bonds  against  special  improvements. 
Their  necessities  have  outgrown  their  income,  yet  they 
get  thirty  millions  a  year  out  of  New  York  City,  and  we 
only  get  twenty-five  millions. 

Q.  If  we  had  sixty  millions  of  bonds  we  could  take  care 
of  every  permanent  improvement  and  complete  everything 
in  the  City  of  Philadelphia  for  the  next  thirty  years. 

A.  We  have  got  to  have  the  money.  You  remember  that 
the  moment  we  get  a  main  sewer  and  we  open  up  a  street, 
a  piece  of  property  which  I  sell  a  man  for  six  thousand 
dollars  an  acre  and  which  at  that  time  is  probably  taxed 
at  forty  thousand  dollars,  the  moment  his  houses  are  built 
it  is  taxed  for  $250,000  and  the  city  gets  that  much  revenue 
back. 

Q.  Yes,  but  you  wouldn't  think  it  was  a  fair  proposi- 
tion to  make  the  people  of  to-day  pay  an  additional  tax  to 
build  that  sewer? 

A.  No,  certainly  not.  That  is  a  different  question. 
When  I  say  we  must  have 

Q.  Just  a  common-sense  question? 

A.  Certainly. 

By  Mr.  Brown : 

Q.  You  have  made  a  comparison  between  the  propor- 
tions of  the  net  income  taken  from  the  real  estate  owner 
in  New  York  and  in  Philadelphia  ? 

A.  Yes,  sir. 

Q.  And  it  is  25  per  cent,  in  New  York  and  18  per  cent, 
in  Philadelphia  ? 

A.  Oh,  no.  Twenty-five  per  cent,  of  our  annual  revenues. 

Q.  Isn't  it  because  our  houses  are  two-story  houses, 
and  most  of  the  houses  there  are  three-story  ? 

A.  Yes. 

Q.  It  costs  just  as  much  to  pave  the  street  and  light 
the  street  here  in  the  City  of  Philadelphia,  where  we  have 
two-story  houses,  as  it  does  where  they  have  three-story 
houses  ? 


997 

A.  In  a  New  York  block  the  same  size  houses  have  a 
two-million  dollar  assessment,  and  it  will  just  cost  the  city 
as  much  to  maintain  that  street  as  it  would  a  block  in  which 
the  assessment  was  more,  but  my  point  is  this,  that  the 
taxes  have  grown  so  high  that  we  get  to-day  less  per- 
centage from  our  houses  than  we  ever  did,  and  that  is 
now  about  25  per  cent,  of  our  net  income,  and  in  New 
York  the  maximum  amount  is  only  18  per  cent. 

Q.  You  folks  have  advocated  a  tax  on  art,  pictures, 
and  so  on.  Do  you  think  that  is  the  consensus  of  opinion? 

A.  Our  consensus  of  opinion  is  to  tax  everything  in 
sight. 

Q.  You  think  the  man  who  owns  a  two  or  three  story 
house,  or  any  other  house,  would  be  better  satisfied  if 
his  personal  property  therein  is  taxed? 

A.  The  first  idea  of  taxation  is  to  exempt  necessities  as 
much  as  possible  and  tax  luxuries  as  much  as  they  will 
bear.  Therefore,  when  we  in  our  resolution  suggested  an 
exemption  to  a  householder  of  a  thousand  dollars,  we 
thought  that  would  exempt  three-quarters  of  the  ordinary 
housekeepers,  but  the  man  who  chooses  to  decorate  his 
house  with  fine  art  and  paintings  and  other  bric-a-brac,  we 
thought  he  should  pay  for  that  luxury.  The  same  way  1 
first  proposed  a  tax  on  automobiles.  As  I  said,  a  man 
drives  up  to  my  house  in  an  automobile  that  cost  $4,000, 
on  which  he  doesn't  pay  any  tax,  whereas,  if  I  sell  a  man 
a  $4,000  house  he  pays  $60  a  year.  The  man  with  the 
luxury  gets  off  free. 

Q.  Probably  if  he  had  not  had  the  automobile  he  would 
not  have  come  to  your  place  and  you  would  not  have 
induced  him  to  spend  a  hundred  thousand  dollars  in  some 
other  place. 

A.  In  the  Ohio  Tax  Law,  1910,  they  tax  everything 
there. 

Q.  How  much  of  that  do  they  collect?  We  had  a  man 
before  us  out  in  Pittsburgh,  an  expert  from  Ohio,  and 


998 

they  practically  admitted  that  they  couldn't  collect  any- 
thing of  their  personal  tax;  it  was  a  dead  letter,  and  he 
came  to  advise  us  to  exempt  all  personal  property? 

A.  That  is  the  law  of  Ohio,  1910.  The  table  that  goes 
with  it  shows  the  amount  of  the  collection  and  assessment. 
As  to  the  way  of  collecting  those  things,  that,  of  course, 
is  a  matter  for  quibble.  Most  of  it,  we  know,  is  an  income 
tax,  and  we  can't  get  it,  and  the  way  to  collect  is  to  assess 
an  approximate  estimate.  In  the  way  the  broker  makes  a 
return,  it  is  a  very  fair  way,  and  that  is,  he  swears 
whether  he  has  made  ever  ten  thousand  dollars  and  less 
than  twenty  thousand  dollars.  Any  man  is  perfectly  will- 
ing to  say  that.  Or,  if  he  has  made  over  twenty  thousand 
dollars,  he  is  perfectly  willing  to  say,  but  what  they  do 
object  to  is  to  specifying  the  exact  amount. 

Q.  That  is  graduated  between  lump  sums  ? 

A.  Yes. 

Mr.  Brown :  We  have  the  Board  of  Mercantile  Apprais- 
ers here  on  an  invitation,  and  the  Chairman,  Mr.  Van 
Valkenburg,  has  spoken  to  me  and  suggested  that  the 
information  could  be  gotten  from  Mr.  Ransley,  as  he  is 
probably  more  experienced  than  some  of  the  others. 

Murdock  Kendrick :  I  represent  the  Board  in  their  dis- 
agreements, which  are  very  few,  with  the  taxables,  and  we 
came  here  in  response  to  an  invitation  from  the  Counsel 
or  Secretary  of  your  Commission.  We  did  not  know 
just  what  you  wanted.  We  have  not  formulated  any 
particular  ideas.  We  are  spending  most  of  our  time  in 
enforcing  the  law  as  it  exists  at  the  present  time.  We 
have  statistics  here  which  will  give  you  the  amount  we 
have  collected  during  the  last  three  years,  the  amount 
it  cost  to  collect,  etc.  It  was  suggested  by  your  counsel 
that  they  would  like  to  know  what  experiences  the  ap- 
praisers found  in  going  around,  as  to  the  agreeableness 
or  disagreeableness  of  their  visits.  I  can  say,  because 
I  have  been  present  during  the  ten  days  during  which 


999 

we  have  had  appeals  from  the  assessments,  that  out  of 
50,000  assessments  there  were  during  those  ten  days  not 
more  than  500  who  presented  themselves  to  make  ap- 
peals from  the  bills  that  they  had  received,  and  in  at  least 
half  of  those  cases  they  were  where  the  taxables  had  re- 
fused to  make  returns  in  accordance  with  the  law,  and 
the  appraisers  when  there  was  a  failure  t(>  make  a  return 
always  solved  the  doubt  in  favor  of  the  Commonwealth 
and  rated  them  a  little  higher  than  they  thought  per- 
haps they  were  actually  entitled  to,  in  order  to  bring  the 
taxable  to  make  a  return. 

By  Mr.  McNichol: 

Q.  You  say  there  were  50,000  taxables? 

A.  Yes,  sir,  and  possibly  out  of  that  number  500  ac- 
tually came  in  in  the  ten  days  fixed  for  appeals,  appeals 
from  the  ratings  that  had  been  given,  and  at  least  half 
of  those  were  not  where  the  Board  refused  to  accept  the 
return,  but  where  no  returns  were  made  to  the  Board, 
in  accordance  with  their  duties  under  the  law  they  had 
to  rate  them. 

Q.  You  want  to  know  what  the  Committee  want,  and 
Mr.  Brown  can  give  you  an  idea  of  what  the  meeting  is 
for  and  why  the  Mercantile  Appraisers  were  called  here. 

Mr.  Brown:  I  might  say  that  there  has  been  an  agi- 
tation in  this  State  for  many  years,  and  at  the  last  ses- 
sion of  the  Legislature  it  took  an  acute  form  in  a 
united  opposition  to  the  continuance  of  the  levying  of 
the  mercantile  license  tax,  and  we  have  received  so 
many  letters — in  fact  out  of  the  50,000  letters  sent  out 
throughout  the  State  covering  all  the  subjects  which  this 
Committee  has  been  appointed  to  investigate,  a  very 
large  number  of  them  have  been  in  opposition  to  the 
mercantile  license  tax,  and  in  every  class  practically 
there  has  been  opposition  to  it,  and  the  thought  is 
that  we  should  gather  and  get  all  the  information  pos- 
sible as  to  the  fairness  of  the  tax,  and  as  to  whether 


1000 

or  not  it  is  one  that  should  be  repealed.  It  is  in  that 
spirit  of  gathering  information  on  the  subject  that  we 
have  invited  these  gentlemen  here  today,  so  we  can  have 
the  benefit  of  their  judgment.  That  is  the  general 
thought. 

Mr.  Kendrick:  I  would  say  to  the  Commission  in  re- 
sponse to  that  that  the  first  argument  that  might  be  made 
is  a  historical  argument,  that  it  has  been  one  of  the  oldest 
taxes  in  continuous  existence  in  this  Commonwealth  for 
almost  a  hundred  years.  It  seems  to  me  the  logical  con- 
clusion to  be  drawn  from  the  last  argument  we  heard  on 
behalf  of  the  real  estate  brokers  must  be  an  income  tax 
is  the  fairest  tax,  and  while  I  am  only  expressing  my 
own  opinion,  I  trust  sincerely  that  this  Commission  in 
making  its  report  will  consider  seriously  the  advisability 
of  framing  an  income  tax  and  also  an  inheritance  tax. 
I  speak  with  regard  to  that  for  myself.  But  the  mer- 
cantile tax  laws  as  now  enforced  have,  I  think,  all  the 
good  features  of  the  income  tax,  without  having  the  bad 
feature  in  the  income  tax,  which  is  the  inquisitorial 
tendency.  "We  do  not  ask  each  dealer  just  what  he  makes 
each  year.  We  ask  him  what  his  gross  sales  are,  and  on 
his  gross  sales,  irrespective  of  profits,  a  certain  percent- 
age is  taxed. 

By  Mr.  McNichol : 

Q.  Is  that  percentage  fixed  by  law? 

A.  Yes,  one  mill  on  retailers  and  one-half  a  mill  on 
wholesalers,  and  the  reason  for  that  is  that,  as  a  rule,  the 
retailer  makes  a  larger  percentage  on  the  amount  of 
goods  sold  than  the  wholesaler;  as  a  general  business 
proposition  the  wholesaler  has  to  sell  twice  as  much  goods 
in  order  to  get  the  same  profit  that  the  retailer  does.  The 
percentage  of  the  retailer  is  greater.  That  is,  classifying 
all  retailers.  The  Acts  draw  a  distinction  between  what 
is  a  wholesaler  and  what  is  a  retailer. 


1001 

Q.  You  do  not  mean  to  tell  this  Committee  that  the 
wholesaler  makes  less  than  the  retailer? 

A.  Percentage,  yes,  sir,  and  that  is  the  theory  on  which 
these  Acts  were  framed,  and  I  believe  it  to  be  true,  and 
I  think  that  as  a  general  business  proposition  you  will  find 
that  the  wholesale  merchant  does  not  get  as  large  a 
commission  or  percentage  of  profit  as  the  retailer  does — 
the  gross,  I  mean.  The  Act  makes  that  distinction  and 
also  defines  what  a  retailer  and  what  a  wholesaler  is. 
The  wholesaler  is  one  who  sells  to  somebody  else  not  the 
consumer,  and  the  retailer  is  one  who  sells  to  the  con- 
sumer only. 

Mr.  Brown :  Another  thing,  probably,  Mr.  Kansley  or 
one  of  the  appraisers  would  be  better  qualified  to  speak 
about  it,  but  we  find  in  a  number  of  the  letters  that 
there  is  no  opposition  to  the  tax,  but  they  complain  large- 
ly outside  of  the  city  that  all  in  the  same  class  are  not 
taxed  j  in  other  words,  that  the  tax  does  not  operate 
equally  on  all.  They  say,  "We  are  glad  to  pay  our  tax 
providing  the  other  fellow  in  the  same  business  pays  his 
share  " 

Mr.  Kendrick:  Of  course,  we  cannot  speak  for  anybody 
outside  of  the  County  of  Philadelphia,  but  so  far  as  the 
County  of  Philadelphia  is  concerned,  I  can  assure  this 
Commission  that  the  law  is  equally  administered  as  to 
all  persons  of  the  same  class.  It  may  be  that  an  ap- 
praiser when  he  has  a  whole  district  without  any  super- 
vision other  than  the  County  Treasurer  might  make  ex- 
ceptions, but  whether  through  ignorance  or  mistake  or 
otherwise  there  are  exceptions  made,  that  would  not  af- 
fect the  wisdom  of  the  law,  but  only  the  propriety  of  its 
administration. 

Mr  Brown:  If  you  want  to  answer  for  the  whole  Board 
as  to  the  practical  workings  of  it,  I  will  go  on  and  ask 
you  some  questions. 


1002 


Mr.  H.  C.  Ransley :  I  will  answer  any  questions  you  want 
to  ask.  My  experience  has  been,  so  far  as  being  a  mercan- 
tile appraiser,  that  we  have  also  received  many  letters 
from  time  to  time,  as  you  have  complained,  that  people 
have  not  been  assessed,  where  the  man  or  the  firm  making 
the  complaint  says  that  they  have  been  assessed,  but  that 
their  competitors  have  not.  We  have  made  an  investiga- 
tion of  those  facts  as  complained  of  in  the  letters,  and 
every  time,  so  far  as  the  district  that  I  have  in  hand  is 
concerned,  I  have  found  that  those  complaints  were  false. 
The  appraiser  to  a  great  extent  has  his  own  district  posi- 
tively in  charge.  He  is  responsible  for  his  district.  I 
have  never  investigated  any  other  complaints  but  those 
being  made  of  the  district  that  I  have  in  charge,  and  it 
is  fair  to  presume  that  the  complaints  that  you  have  re- 
ceived have  no  more  foundation  than  the  complaints  that  I 
have  investigated  in  the  City,  that  they  are  not  made 
on  facts.  In  the  first  place  taxes  of  any  kind  are  not 
popular  with  the  people,  and  therefore  complaints  will 
be  made  from  time  to  time.  In  other  words,  I  believe 
that  the  great  bulk  of  your  letters  complaining  are  not 
really  founded  on  facts,  judging  from  the  experience  that 
I  have  had. 

Q.  How  do  you  start  out  to  make  your  appraisements; 
what  is  the  first  step? 
A.  The  first  step  is  to  send  out — 

Q.  In  the  first  place,  there  are  five  in  your  Board. 
A.  Five  members  on  the  Board. 

Q.  Five  mercantile  appraisers? 
A.  And  each  member  has  a  clerk. 

Q.  What  is  the  first  thing  you  do  towards  getting  a  list 
of  taxables? 

A.  We  send  out  about  the  first  of  the  year,  usually  the 
last  two  or  three  days  in  December,  a  blank  form  request- 
ing all  those  who  are 


1003 

Q.  How  do  you  get  the  names  of  those  to  whom  you 
send  the  blank  form? 

A.  From  the  previous  assessment  that  has  been  made 
in  the  year  previous. 

Q.  You  take  that  from  the  book  that  is  furnished  to  the 
City  Treasurer;  a  complete  list 

A.  No,  we  take  that  from  our  own  canvass  that  has 
been  made. 

Q.  "Why  don't  you  take  it  from  the  return  which  has 
been  made  to  the  City  Treasurer 

A.  Because  we  take  all  our  own  street  books  and  per- 
fect the  State  book  according  to  our  street  book,  our 
street  book  being  at  all  times  recognized  as  the  book  of 
original  entry,  and  therefore  should  be  the  reliable  book. 

Q.  Does  your  street  book  tally  with  the  City  Treas- 
urer's book  for  the  preceding  year? 
A.  I  may  state  it  does. 

Q.  That  is  the  idea? 
A.  It  must  do  so. 

Q.  Because  the  City  Treasurer's  book  is  made  up  from 
the  street  book? 

A.  Which  is  the  book  of  original  entry. 

Q.  And  from  this  street  book  you  send  the  preliminary 
notice? 

A.  Yes. 

Q.  What  is  the  next  step? 

A.  We  will  have  probably  20  per  cent.,  20  to  30  or  35 
per  cent,  of  the  people  will  make  sworn  returns.  Those 
who  do  not  make  returns,  it  is  then  the  duty  of  the  ap- 
praiser to  call  upon  them. 

Q.  Isn't  it  the  duty  of  the  appraiser  to  call  on  all  of 
the  taxables? 

A.  Why  should  he  call  upon  the  man  who  has  made 
sworn  returns?  That  would  be  merely  interfering  with 
his  day's  business. 


1004 

Q.  How  do  you  know  whether  the  man  who  makes  the 
return  has  made  a  correct  return,  unless  you  go  into  his 
place  and  take  a  look  yourself? 

A.  Well,  as  we  go  around 

Q.  What  I  ask  you  has  been  suggested  by  these  differ- 
ent things? 

A.  As  we  go  on  the  street  of  the  man  who  has  made  a 
return  the  appraiser  naturally  will  size  up  the  business. 
If  he  has  been  in  the  district  any  length  of  time  he  is 
more  or  less  familiar  with  the  size  of  the  business,  the 
depth  of  the  store,  the  stock  carried,  and  so  on.  He  must 
have  been  at  some  time  in  that  store.  He  will  then  find 
out  whether — that  is,  he  will  judge  whether  that  return 
is  low  or  not.  If  it  is  low,  it  is  customary  for  the  ap- 
praisers to  mark  ''Low  Appraisement,"  and  next  year 
when  returns  are  made  again  and  sworn  to,  to  refuse  to 
accept  them  until  an  investigation  is  made  or  an  explana- 
tion made. 

Q.  What  is  your  next  step  ?  From  the  street  books  you 
send  a  notice,  and  then  those  that  do  not  reply  you  visit? 

A.  We  call  on  them,  not  only  getting  the  old  appraise- 
ments, but  all  new  appraisements. 

Q.  How  do  you  get  new  appraisements? 
A.  By  visiting  them,  being  upon  the  street,  by  the  ac- 
tual street  canvass  from  house  to  house. 

Q.  So  by  that  means  none  can  escape  ? 

A.  Absolutely  none,  providing  the  appraiser  is  diligent. 

Q.  Well,  have  you  folks  ever  had  any  complaints  that 
the  appraiser  had  not  been  diligent? 

A.  As  I  say,  we  have  received  letters  just  the  same  as 
you  have,  complaining;  say,  for  instance,  John  Jones 
writes  that  so-and-so  in  the  same  neighborhood  has  never 
been  appraised  and  has  boasted  that  he  has  never  been 
appraised.  I  have  investigated  those  complaints  in  the 
district  which  I  have  and  found  in  every  case  they  were 
not  true. 


1005 

Q.  What  is  your  next  step? 

A,  Then  after  the  returns  are  completed,  and  under  the 
law  they  must  be  completed  before  the  first  of  May,  then 
we  have  a  hearing.  There  are  appeals  to  be  made  where 
any  one  claims  that  the  appraisement  is  exorbitant,  or 
that  error  or  a  mistake  has  been  made.  They  then  ap- 
pear before  the  Board  and  have  a  hearing.  They  are 
sworn  to  the  facts,  and  probably  we  will  have  no  more 
than  10  or  12  per  cent,  of  the  entire  appraisement, 
appear  for  a  hearing  complaining  as  to  the  appraisement. 
After  the  hearing  the  books  must  be  written  up,  one  copy 
going  to  the  City  Treasurer  and  the  other  going  to  the 
Auditor  General.  Those  copies,  as  I  said  before,  are 
exact  copies  of  our  street  book,  which  is  the  book  of  orig- 
inal entry. 

Q.  Since  the  passage  of  the  Act  of  1897,  providing  for 
the  licensing  of  brokers,  has  there  been  any  diminution  in 
the  revenues? 

A.  Yes,  there  has  been,  to  iny  mind,  that  is  from  cer- 
tain firms,  individuals  or  corporations,  but  in  its  decreas- 
ing for  one  year,  which  was  the  returns  for  1908,  I  am 
satisfied  that  to  a  great  extent  that  is  traceable  to  what 
was  called  the  rich  man's  panic.  Many  business  men 
complained  of  a  falling  off  of  the  business.  Being  en- 
gaged in  a  little  business  myself,  I  am  satisfied  that  that 
was  true.  Again,  the  new  Act  that  went  into  effect  rela- 
tive to  brokers  had  a  tendency  to  cut  down  the  returns  of 
that  year.  That  is,  as  to  the  money  paid  into  the  State. 
For  instance,  many  people  who  had  formerly  been  classi- 
fied as  wholesalers — I  won't  say  many,  but  some  that 
were  classified  as  wholesalers,  under  the  new  Act  claimed 
that  they  were  brokers. 

Q.  Have  you  made  any  general  re-classification  since 
that  Act,  so  as  to  put  the  brokers  all  in  one  class,  and  the 
wholesalers  who  were  formerly  doing  the  same  business 
back  where  they  were? 

A.  What  is  that,  Mr.  Brown? 


1006 

Q.  1  say  have  you  separated  and  taken  all  of  the  whole- 
salers who  were  doing  a  brokerage  business,  and  made 
any  separation  so  as  to  bring  the  brokers  directly  under 
the  Act  of  1907? 

A.  We  always  separate  the  brokers  in  our  returns  to 
the  Treasurer  and  Auditor  General. 

Q.  Has  that  been  done  on  the  request  of  those  doing  a 
brokerage  business,  or  just  done  by  the  Board  since  the 
Act? 

A.  Well,  I  believe  entirely  by  the  Board  at  a  hearing. 

Q.  I  just  wanted  to  find  out  the  consensus  of  opinion 
or  sentiment  of  the  people  in  regard  to  whether  they 
should  be  considered  brokers  or  doing  a  wholesale  busi- 
ness? 

A.  I  believe  the  Board  decided  what  they  believed  was 
the  true  interpretation  of  the  Act. 

Q.  Have  you  folks  given  any  thought  as  to  the  lessening 
of  the  cost  of  collection  of  these  taxes,  as  to  whether  or 
not  that  cost  can  be  lessened  and  still  produce  substan- 
tial re&ults? 

A.  In  the  first  place,  the  figures  I  have  had  access  to 
show  that  it  cost  about  10  per  cent,  to  collect  the  tax 
I  doubt  very  much  if  it  could  be  reduced. 

Q  Isn't  it  a  very  large  sum  for  the  collection  of  what 
is  practically  fixed  by  law? 

A.  When  I  say  10  per  cent.,  that  is  for  the  entire  State. 
In  the  City  of  Philadelphia  I  think  it  is  about  8  per 
cent.,  between  8  and  9  per  cent.  We  have  tried  and 
tried  and  gone  to  extremes  in  the  matter  to  reduce 
the  cost  of  collection.  We  have  done  everything  in  our 
po\ver  to  prevent  cases  going  to  the  magistrates  to  be 
sued  out  where  we  knew  the  State  could  not  collect.  While 
a  man  might  be  liable  under  the  Act,  it  appeared  ridicu- 
lous to  us  that  we  should  sue  out  that  individual  when 
he  had  not  enough  goods  to.  pay  the  Magistrate's  costs, 
and  therefore  could  not  pay  anything  to  the  State.  We 


1007 

would  only  add  to  the  cost,  and  it  has  been  the  determina- 
tion of  the  Board  for  years  to  cut  that  down  as  far  as 
possible.  In  other  words,  where  we  find  that  the  stock 
is  not  sufficient  to  warrant  the  payment  of  the  Magis- 
trate'? fees  and  so  that  they  can  collect  the  tax  as  charged 
by  the  Stale,  we  do  not  sue  it  out.  I  am  satisfied  we  are 
right  m  doing  that,  because  the  Magistrate's  costs  would 
be  added  to  the  State's  costs. 

Q.  How  do  3'ou  fix  your  classification  tax;  how  do  you 
determine  that? 

A.  As  wholesalers? 

Q.  Yes? 

A.  That  is  fixed  by  law. 

Q.  You  get  62|  cents  for  each  classification? 

A.  For  each  classification  with  the  exception  of  brok- 
ers, and  the  broker  pays  75  cents. 

Q.  How  do  you  fix  that;  from  what  list  is  that  made 
up?  Is  that  from  your  returns  to  the  Treasurer  or  your 
street  books? 

A.  That  is  from  the  returns  to  the  Treasurer. 

Q.  Not  from  your  original  street  book? 

A.  No. 

Q.  That  would  be  for  every  one  who  would  be  properly 
classified? 
A.  Yes,  sir. 

Q.  You  are  sure  of  that  return? 
A.  Yes,  sir. 

Mr.  Kendrick:  They  make  two  returns — one  to  the 
Treasurer  and  one  to  the  Auditor  General. 

Mr.  Brown:  I  understand  that.  But  I  want  to  find 
out  where — complaint  has  been  made  that  there  is  more 
money  paid  for  classifications  than  there  were  classifica- 
tions. 

A.  It  would  not  be  possible.    It  could  not  be. 

Q.  That  is  the  reason  I  am  asking  you  what  list  you 


1008 

make  up  your  classifications  from.    It  is  from  the  street 

book 

A.  We  also  pay  according  to  the  returns  mads  to 
the  City  Treasurer  and  the  Auditor  General.  As  I  say, 
those  returns  are  copied  from  the  book  of  original  entry, 
the  street  book. 

.Q.  Have  you  folks  given  any  thought  to  the  difference 
in  the  cost  of  collection  of  that  mercantile  tax  and  the 
real  estate  tax?  I  want  to  get  your  thought  on  it.  Why 
should  there  be  a  difference  between  collecting  this 
mercantile  license  tax  and  in  the  State  tax? 

A.  Well,  in  the  first  place,  the  printing  will  enter  into 
the  expense  to  a  great  extent. 

Q.  The  what? 

A.  The  printing,  winch  is  done  by  the  State.  That,  of 
course,  will  be  charged  up.  Now,  as  I  say,  the  State  cost 
—I  think  I  am  right  when  I  say  it  runs  to  10  per  cent. 
Now,  that,  of  course,  will  include  the  printer's  bill,  which 
must  of  necessity  run  into  big  figures.  Again,  outside  of 
the  County  of  Philadelphia  all  appraisements  must  be 
advertised.  That  again  runs  into  big  figures. 

Q.  You  don't  do  that  here? 

A.  Understand  under  a  special  Act  Philadelphia  does 
not  publish  the  appraisements,  on  account  of  a  special 
Act. 

Q.  That  is  the  distinction 

A.  That  would  cut  it  down  in  the  State.  I  am  satisfied 
I  am  right  when  I  say  it  would  probably  cut  down  the  ex- 
pense 2  per  cent. 

Q.  We  have  a  number  of  letters  which  say  the  reason 
given  for  the  abolition  of  this  tax  is  that  there  is  such 
a  great  disparity  between  that  and  the  real  estate  cost. 
The  Receiver  of  Taxes  adds  about  90/100  of  1  per  cent., 
and  the  cost  of  the  revision  is  very  small,  too. 

Mr.  Kendrick:  It  doesn't  cost  any  more  to  collect 
the  tax  from  John  Wanamaker  or  Lits  than  it  does 


1009 

from  a  small  cigar  man  on   the    corner,    but   there    are 
a  great  many  people  who  pay  a  much  smaller  tax  than 
the  ordinary  householder,  and  that  is  the  reason  that 
the  percentage  of  collection  is  greater. 
Mr.  Kansley :    The  volume  is  greater. 

By  Mr.  Brown  : 

Q.  But  both  are  fixed.  The  store-keeper  who  pays  a 
tax  on  his  house,  that  is  fixed,  and  if  he  is  taxable  under 
the  mercantile  license  law,  it  is  fixed  there,  so  why  should 
there  be  a  disparity  in  the  cost  of  the  collection  of  the  tax, 
he  being  severally  assessed  by  different  assessors,  and  the 
money  for  which  practically  goes  to  the  same  destina- 
tion? 

A.  The  salaries  paid  to  the  appraiser  of  real  estate  is 
not  as  much  in  the  first  place  as  that  paid  to  a  mercantile 
appraiser,  but  still  there  are  more  in  number  of  the  real 
estate  assessors. 

Q.  That  wouldn't  aiTect  the  percentage? 

A.  That  is  my  impression  off-hand,  Mr.  Brown. 

Mr.  Brown :  The  taxes  on  real  estate  are  much  larger 
than  the  taxes  on  personality.  It  is  the  personality  that 
is  in  question  here.  I  wish  you  folks  would  give  a  little 
thought  to  that,  Mr.  VanValkenburg,  because  we  have  a 
number  of  letters  about  that. 

Mr.  VanValkenburg:  I  would  like  to  ask  you  if 
there  has  been  any  complaint  as  to  the  burden  of  this 
tax  upon  anybody? 

Mr.  Brown:  Not  so  much  that,  but  that  some  paid 
and  some  do  not.  That  seems  to  be  the  complaint 
throughout  the  State  on  all  taxes.  Everybody  seems  to 
be  willing  to  do  it,  providing  the  other  fellow  pays  his 
share. 

Mr.  VanValkenburg :  Mr.  Dallam  made  a  remark 
comparing  the  manufacturer  with  the  little  shop-keeper. 
The  only  burden  undor  this  tax  is  upon  the  little  shop- 
keeper that  does  a  gross  business  of  from  one  hundred 


1010 

to  a  thousand  dollars  a  year,  and  that  is  the  criticism 
of  the  Act,  if  any,  but  in  actual  practice  of  collecting 
this  or  making  these  appraisements  we  find  in  my  district 
particularly  little  shop-keepers  or  little  candy  stores  that 
don't  do  a  gross  business  of  $250  a  year,  and  maybe 
not  a  hundred  dollars.  We  are  obliged  to  appraise  them, 
and  the  lowest  tax  is  $2.60. 

Mr.  Brown:  I  suppose  you  have  complaints  from 
those  more  than  the  large  ones? 

Mr.  VanValkenburg :  That  is  where  the  burden  is. 
Of  course,  they  submit,  but  they  have  the  real  burden. 
We  find  no  complaint  from  the  wholesaler  and  retailer 
who  pays  one  dollar  upon  every  thousand  dollars  of 
business  done. 

Mr.  Brown :  Will  you  folks  prepare,  or  have  prepared, 
Mr.  VanValkenburg,  a  memorandum  showing  the  changes 
since  the  1907  law,  that  is  the  re-classification  from  the 
1907  law?  For  instance,  take  1907,  a  man  would  have 
been  taxed  for  $100,000  or  $50,000,  and  he  comes  in  under 
the  1907  law  part  for  brokerage  and  part  for  the  other. 
Will  you  have  a  table  made  showing  that  difference,  and 
also  showing  the  relative  appraisements,  say  for  1908, 
1909  and  1910?  The  thought  is  to  see  just  how  in  the 
volume  of  business  this  tax  has  worked. 

Mr.  VanValkenburg :  With  reference  to  the  Brokers* 
Act,  I  can  give  you  off-hand  and  very  briefly :  In  1907, 
that  was  before  the  Act  went  into  effect,  we  collected 
under  the  old  Brokers'  Act  $21,515.  In  1908,  when  the 
new  Act  goes  into  effect,  $30,190.  In  1909,  which  was 
based  upon  1908  business,  which  was  a  very  bad  year, 
it  was  $33,365,  and  no  increase  in  the  wholesale  or  re- 
tail. 

By  Mr.  Brown : 

Q.  That  shows  they  were  drifting  from  the  wholesale 
and  other  classes  into  the  broker  class? 

A.  Well,  yes.  No  decrease,  however.  In  fact,  there 
was  an  increase  of  over  $50,000  >n  1907  and  1908. 


1011 

Q.  In  the  aggregate? 

A.  Yes. 

Q.  That  is,  you  got  more  brokers? 

A.  Under  the  retail  and  wholesale,  so  there  Js  an 
increase  under  the  Brokers'  Act,  an  increase  in  three  years, 
except  1908  there  was  a  slight  decrease,  due  to  the  panic 
year,  I  think,  but  the  two  years  indicate  an  increase  rather 
than  a  falling  off. 

Q.  You  evidently  have  that  table  already  prepared? 

A.  Yes,  sir,  I  have  that.    I  have  three  years. 

Q.  Now,  if  we  can  have  the  other,  so  that  we  can  make 
some  comparison  there  between  1908,  1909  and  1910,  the 
increase  or  reduction 

A.  I  think  this  will  be  of  some  value  to  you.  Just  one 
other  thing  I  think  of  that  is  in  favor  of  this  Act,  and 
that  is  it  is  not  subject  to  the  fluctuations  a  corporation 
tax  is.  You  are  absolutely  sure  of  one  million  dollars 
from  this  source  every  year,  an^  that  will  surely  increase 
unless  it  is  in  the  case  of  a  panic  such  as  we  passed 
through  a  year  ago. 

Q.  Mr.  VanValkenburg,  ho^v?  much  do  you  depend  upon 
the  return  of  the  taxable? 

A.  Well,  that  is  in  some  cases  a  farce  and  a  joke. 

Q.  In  other  words,  do  you  take  his  word? 

A.  Well,  each  appraiser  is  qualified  to  administer  an 
oath,  and  they  are  supposed  to  make  these  returns  under 
oath.  In  our  experience  we  find  people  do  not  think  much 
about  an  oath.  They  swear  to  most  anything.  That  is, 
a  certain  class. 

Q.  If  it  is  a  good  tax,  of  course,  the  law  ought  to  be 
enforced? 

A.  Yes. 

Q.  What  have  you  to  suggest  as  to  a  better  method  of 
enforcing  that  law? 

A.  Well,  I  haven't  any.  I  think  if  the  appraiser  does 
his  work  properly  he  should  go  on  the  premises,  and  if  he 
has  any  doubt  make  the  appraisement  himself. 


1012 

Q.  Do  you  folks  do  that? 

A.  Yes,  sir. 

Q.  Is  that  very  offensive  to  the  people  ? 

A.  Not  at  all. 

Mr.  Kendrick :  Not  to  the  guilty. 

A.  In  fact,  they  expect  us.    They  don't  make  the  return. 

Q.  Do  you  examine  into  their  books  at  all? 

A.  Yes. 

Q.  In  other  words,  you  do  everything  you  think  ought 
to  be  done  to  get  a  proper  return? 

A.  Yes. 

Q.  In  looking  over  the  returns  to  the  Auditor  General 
my  thought  was  that  there  seemed  to  be  a  small  return 
for  pool  tables  and  bowling  alleys,  and  things  of  that 
sort.  Are  all  pool  tables  and  all  those  things  outside  of 
social  clubs,  saloons  and  all 

Mr.  Kendrick :  Most  of  them  are  in  saloons,  and  the 
saloonkeeper  comes  up  and  swears  he  does  not  keep  it 
for  profit  or  charge  anything.  The  nearest  decision 
we  have  in  favor  of  fixing  the  tax  is  the  decision  that  says 
where  a  man  put  up  a  sign  "Pool  Room.  Games  must 
be  settled  for  immediately  afterwards, "  and  the  method 
of  settling  was  for  the  loser  to  buy  drinks  for  the  par- 
ticipants, the  saloonkeeper  was  held  liable  for  the  tax 
of  keeping  shuffle  boards  and  pool  tables.  This  year  it 
is  thought  they  will  assess  all  keepers  of  pool  tables  or 
•shuffle  boards. 

By  Mr.  Brown: 

Q.  Mr.  VanValkenburg,  under  what  class  do  you  head 
the  men  who  are  known  as  loan  sharks  and  usurers. 
We  have  some  communications  about  those,  that  they  are 
taxed  and  are  exhibiting  their  certificates  from  the 
Board  as  an  authority  to  go  on  and  do  business.  What 
is  the  thought  of  the  Board  on  that  subject? 

A.  I  don't  think  that.  We  were  charged  with  that, 
and  it  isn't  true.  The  appraisers  are  supposed  to  have 


1013 

personal  knowledge  of  every  appraisement  of  every  man, 
and  every  appraisement  he  makes.  I  am  sure  that  for  the 
last  three  years  this  Board  has  not  issued  any  license  for 
loan  sharks.  The  reports  given  me  will  show  that. 

Q.  Has  there  been  an  increase  in  the  number  of  ap- 
praisements each  year? 

A.  Yes. 

Q.  Greatly  increased  each  year? 

A.  Yes,  sir. 

Q.  And  does  that  increase  in  amount,  too? 

A.  Yes,  sir. 

Q.  More  appraisements  and  more  revenue? 

A.  Yes,  and  more  money.  I  think  this  would  be  a  proper 
suggestion  from  our  standpoint.  I  think  the  manufac- 
turers should  pay  a  tax.  I  think  the  time  has  arrived 
when  they  should  be  taxed. 

Q.  You  mean  you  think   the    manufacturers   should 


pay 

A.  A  mercantile  tax,  yes  sir.  It  could  be  done  with 
the  same  force  and  under  the  same  Act.  Of  course,  we 
do  have  a  great  many  manufacturers  on  our  list. 

Q.  Have  you  talked  any  with  manufacturers?  You 
get  around  among  them.  What  is  the  thought  that  you 
get? 

A.  I  am  unfortunately  over  in  the  center  of  opposition 
to  that,  and  I  hear  more  of  that  end  of  it  than  I  do  the 
other  side,  but  I  believe  generally  the  manufacturer  is 
willing  to  pay  a  tax. 

Q.  As  you  folks  go  ai  ound  have  you  had  any  suggestions 
from  the  people  who  pay  this  tax  as  to  what  others  should 
do?  Complaints  that  they  are  paying  more  than  their 
share?  I  mean  to  gather  the  general  thought  on  the 
subject? 

A.  No,  unless  that  it  would  be  that  the  manufacturer 
should  pay.  That,  of  course,  we  hear  all  the  time.  They 
don't  see  why  the  manufacturer  should  be  exempt. 


1014 


Mr.  Brown:  I  may  ask  you  for  further  informa- 
tion, if  you  will  grant  me  the  courtesy.  I  will  write  you 
a  letter,  as  I  read  over  the  correspondence  I  have  got- 
ten, and  I  may  want  data  to  check  up  those  things. 

Mr.  Moyer:  Did  you  go  into  the  matter  of  com- 
plaint about  the  expense  of  collecting  this  mercantile 
tax? 

Mr.  Brown:  I  have  asked  a  number  of  questions 
and  I  can  ask  Mr.  VanValkenburg  whether  or  not  the 
collection  can  be  less  expensively  done. 

Mr.  Moyer:  What  are  the  advantages  of  advertis- 
ing, if  any,  in  the  State? 

Mr.  Brown:  I  only  asked  him  about  the  local  situa- 
tion here. 

Mr.  Moyer:  That  seemed  to  be  the  chief  complaint 
all  over  the  Commonwealth,  that  the  machinery  for  the 
collection  of  this  tax  was  so  expensive.  Many  people 
seemed  to  think  the  advertising  ought  to  be  cut  out. 

Mr.  VanValkenburg:  I  don't  think,  as  a  matter  of 
fact,  that  that  amounts  to  very  much,  simply  a  report 
written  in  a  country  newspaper,  and  you  know  what  that 
is,  perhaps  $75. 

Mr.  Brown :  I  stopped  on  my  way  in  here  this  morn- 
ing to  ask  the  City  Treasurer  if  he  had  any  memoranda 
or  tables  showing  the  cost  to  the  State,  and  he  handed 
me  something  I  think  you  had  prepared  there. 

Mr.  Kendrick:  The  report  from  the  Auditor  General's 
office  shows  that.  It  cost  us  8.9  per  cent,  last  year, 
and  in  addition  to  that  percentage  there  is  a  certain 
amount  of  fees  which  goes  into  the  City  Treasury  which 
was  not  made  in  the  report,  and  which  would  re- 
duce that.  That  is  the  fee  which  goes  to  the  City  which 
is  supposed  to  pay  the  State  Department  of  the  City 
Treasurer's  office. 

Mr.  Moyer:  The  chief  complaint  at  Pittsburgh,  in  Alle- 
gheny county,  they  had  advertised,  and  they  said  the 
bill  for  that  was  enormous. 


1015 

Mr.  VanValkenburg :  That  is  a  very  bad  situation  out 
there.  They  are  under  a  special  Act  and  there  should  be 
some  legislation,  and  the  bill  was  prepared  last  year 
similar  to  our  special  Act  here,  but  it  wasn't  passed. 

Mr.  Moyer:  The  most  of  the  complaints  came  in  from 
the  merchants  of  that  locality,  who  said  they  did  not 
object  to  paying  the  tax,  but  what  they  did  object  to  was 
so  much  of  this  tax  was  paid  to  support  the  machinery 
for  the  purpose  of  collection. 

Mr.  VanValkenburg :  That  is  a  very  bad  showing  out 
there,  and  it  makes  a  bad  showing  in  the  State. 

Mr.  Brown:  It  raises  the  average. 

Mr.  VanValkenburg:  Yes,  but  we  feel  here  the  actual 
expense  will  not  exceed  6  per  cent.,  and  that  is  about  as 
cheaply  as  the  tax  could  be  collected. 

This  Board  has  made  every  effort  to  hold  the  social 
clubs.  We  believe  there  are  people  engaged  in  the  retail 
business  conducting  a  meeting  house  for  pool  and  billiard 
players,  and  we  have  also  tried  to  hold  the  express  com- 
panies, whereever  they  have  an  office. 

Mr.  Brown :  We  would  be  glad  to  receive  any  sugges- 
tions you  may  wish  to  make  in  order  to  make  the  law 
more  effective. 

Mr.  Ke?idrick:  W"e  will  confer  and  communicate  with 
you. 

Mr.  Carroll:  I  happened  to  be  in  office  at  the  tune  tne 
Act  of  1900  went  into  effect  and  I  have  been  there  ever 
since,  about  half  of  that  time  as  a  clerk,  and  the  other 
half  as  an  appraiser,  and  I  find  the  people  are  satisfied 
with  the  present  Act,  more  so  than  they  were  with  the 
old  Act.  Some  of  the  larger  firms  pay  more  than  they 
did  under  the  Act  of  1900,  but  at  the  s&me  time  they 
are  satisfied  to  this  extent  that  they  brought  every  person 
in.  There  are  no  e'xemptings.  In  the  previous  Act  there 
was  an  exemption  clause.  I  feel  satisfied  the  present  Act 


1016 

is  satisfactory  to  the  business  men,  and  in  my  going 
around  during  the  last  ten  years  I  find,  as  a  rule,  they  are 
satisfied,  with  the  exception  of  the  agitators,  and  they 
aren't  satisfied.  When  the  matter  is  properly  explained 
to  the  business  man  he  is  satisfied.  I  think  the  majority 
of  them  are  satisfied  with  the  tax  at  the  present  time, 
providing  it  is  properly  administered  and  properly  col- 
lected. I  find  very  little  fault  with  the  average  business 
man  who  keeps  any  kind  of  books  at  all.  As  a  rule,  no 
complaint  at  all.  But  take  it  in  the  district  I  have,  there 
are  a  great  many  small  storekeepers,  lots  of  them  don't 
speak  the  English  language.  They  don't  keep  books  at 
all.  They  have  one  song  they  sing :  they  take  in  so  much 
a  week  and  they  don 't  give  any  different  from  that.  The 
appraiser  in  the  majority  of  instances  like  that  has  to  use 
his  own  discretion  by  visiting  the  place.  Not  in  all  cases 
is  the  affidavit  of  the  person  taken.  The  appraiser 
knows  in  Jots  of  cases  they  are  not  making  a  proper  re- 
turn and  he  refuses  to  take  it.  It  is  as  I  say  only  by  a 
personal  visit  that  you  can  really  do  your  duty  properly, 
and  I  think  the  Act  as  it  stands  at  the  present  is  not  un- 
popular with  the  business  men,  except  when  the  agitators 
misrepresent  things  to  them. 

Mr.  Brown:  Mr  Kendrick  has  said  that  1  per  cent,  ap- 
peal to  the  Board.  How  many  go  on  to  the  Court  and  are 
decided? 

Mr.  Carroll :  None  at  all,  except 

Mr.  Kendrick .  There  were  only  three  appealed  to  Court 
last  year. 

Mr.  Brown :  Do  they  express  any  dissatisfaction  or  say 
it  is  the  amount  they  object  to? 

Mr.  Kendrick:  Perhaps  one  out  of  a  hundred  come  in, 
but  it  is  our  opinion  that  the  great  majority  of  them 
go  out  with  smiles  on  their  faces. 

Mr.  Carroll :  When  a  man  swears  he  did  $3,000  a  year 
business,  after  a  personal  visit  to  that  man  he  will  not 
hesitate  to  tell  you  he  takes  in  from  $125  to  $200  a  week, 


1017 

and  will  also  swear  to  that,  and  the  appraiser  has  to  use 
his  discretion.  That  is  a  sample  of  what  you  get  some- 
times, but  you  don't  get  it  from  a  man  who  keeps  books. 

By  Mr.  McNichol: 

Q.  How  do  you  make  your  classifications  in  the  larger 
caseo? 

A.  We  take  into  consideration  the  location,  character 
of  business,  how  much  of  a  return  they  made  before  that. 
We  find  little  fault  with  the  people  who  keep  books.  It 
is  a  msiness  proposition  with  them.  The  people  of  for- 
eign nation ality  who  do  not  keep  books,  we  have  trouble 
with  them. 

Q.  Do  they  swear  to  the  return  in  the  larger  cases? 

A.  Oh,  \es.  Also  I  would  like  to  say  this:  In  some 
cases  it  may  be  a  new  business,  and  a  man  may  be  in  busi- 
ness a  month  or  two,  and  therefore  he  can't  make  a  re- 
turn .for  a  whole  year.  It  is  within  the  discretion  of  the 
appraiser  to  rate  that  man  counting  up  twelve  months 
the  amount  of  business  he  might  have  done  in  twelve 
months,  and  the  amount  is  figured  out.  Of  course,  if  he 
had  been  in  business  twelve  months,  he  could  make  the 
proper  return  for  the  full  year. 

Q.  What  information  do  you  generally  require  to  classi- 
fy under  the  mercantile  Act  and  the  subsequent  Act  of 
1907,  known  as  the  Brokers'  Act? 

A.  Well,  that  matter,  of  course,  has  been  gone  into  by 
Mr.  Kendrick  and  Mr.  Ransley  in  regard  to  that.  Since 
that  time  there  has  been  a  different  classification  made 
of  quite  a  number  of  people 

Q.  A  la^ge  number? 
A.  Yes,  sir. 

Q.  Especially  among  the  large  people? 

A.  Some  of  them  only  made  a  return  as  a  wholesale 
dealer,  but  since  that  time  they  have  been  classified  as  a 
broker  and  also  sometimes  as  a  wholesale  dealer. 


1018 

Q.  How  often  have  they  been  classified  as  both? 

A.  I  couldn't  tell  you  off-hand. 

Mr.  VanValkenburg :  There  was  no  falling  off  under 
the  Retail  Venders'  Act.  There  was  an  increase  in  two 
years  ,and  also  an  increase  under  the  Brokers'  Act. 

Mr.  McNichol:  The  Board  would  not  recommend  the 
repeal  of  the  Brokers'  Act? 

Mr.  VanValkenburg:  It  would  not,  no  sir.  There  are 
features,  I  think,  but  on  the  whole  it  is  a  very  good  Act. 

Adjourned  to  meet  at  the  call  of  the  Chair. 


1019 


Public  meeting  of  the  Commission  held  in  Room  496, 
City  Hall,  Philadelphia,  on  Tuesday,  October  4,  1910,  at 
11  A.  M.  Present :  James  P.  McNichol,  Chairman ;  William 
H.  Keyser,  James  F.  Woodward,  William  C.  Sproul,  of  the 
Commission;  Francis  Shunk  Brown,  Esq.,  Counsel. 

Meeting  called  to  order  by  the  Chairman. 

Mr.  Brown: 

Mr.  Chairman  and  Gentlemen : — For  the  information  of 
those  present  who  have  not  attended  any  of  the  previous 
meetings  of  this  Committee,  it  might  be  well  to  inform 
them  of  the  reason  why  we  are  here. 

This  Committee  was  appointed  by  a  joint  resolution  of 
the  Senate  and  the  House  of  Representatives  of  the  Com- 
monwealth, to  constitute  a  Joint  Committee  composed  of 
three  members  of  the  Senate  and  three  members  of  the 
House,  for  the  purpose  of  considering  a  revision  of  the 
revenue  laws  of  this  Commonwealth,  together  with  a  con- 
sideration of  certain  proposed  amendments  in  the  gen- 
eral corporation  laws  of  the  Commonwealth. 

Tn  pursuance  of  that  duty,  the  Committee  has  visited 
Pittsburgh,  Williamsport,  Scranton,  Erie,  and  we  have  had 
several  meetings  here  in  Philadelphia  for  the  purpose 
of  ascertaining  from  our  people  who  are  interested  their 
views  upon  the  subjects  outlined.  For  this  purpose  we 
have  heard  representatives  from  all  business  interests 
and  all  tax  paying  interests,  our  idea  being  to  give  the 
people  of  the  Commonwealth  who  pay  the  taxes  an  op- 
portunity to  present  their  views  of  the  reasonableness 
and  fairness  of  the  methods  of  the  taxation  systems  of 
the  Commonwealth.  As  we  have  gone  around,  we  have 
had  suggestions — a  hundred  of  them — yes,  a  thousand  of 
them — from  all  interests.  Some  of  these  interests  are  rep- 
resented here  today.  We  have  invited  here  today  repre- 
sentatives of  the  railroad  companies,  of  banks,  saving 


1020 

funds,  trust  companies,  insurance  companies  and  other 
interests,  for  the  purpose  of  ascertaining  from  them  their 
views  as  to  whether  or  not  the  present  taxation  system  of 
Pennsylvania  is  fair  and  equitable,  and  if  not,  wherein  it  is 
not  so,  that  we  might  have  the  benefit  of  their  suggestions, 
that  when  we  make  our  report  to  the  Legislature,  the 
proper  consideration  might  be  given  their  suggestions. 


1021 


As  the  Pennsylvania  Eailroad  Company  is  probably  the 
largest  tax  payer  of  the  Commonwealth,  we  would  re- 
quest Mr.  Nichols  to  appear  for  them. 

Mr.  H.  S.  P.  Nichols,  representing  the  Pennsylvania 
Railroad  Company: 

Mr.  Chairman  and  Gentlemen  of  the  Commission:  I 
am  here  to  represent  the  Pennsylvania  Railroad  Company 
today. 

Mr.  Brown: 

In  the  first  place,  Mr.  Nichols,  has  your  company  any 
suggestion  to  make  as  to  any  proposed  amendments  to 
our  laws  or  any  changes  which  they  would  consider  bene- 
ficial? If  so,  we  should  be  glad  to  hear  thems. 

Mr.  Nichols:  I  cannot,  as  you  suggest,  state  definitely 
any  suggestions  that  the  Pennsylvania  Railroad  Company 
may  have  to  make  with  reference  to  any  proposed  changes 
in  the  taxation  system  of  Pennsylvania,  but  I  will  say,  in 
behalf  of  the  company,  that  we  are  perfectly  willing — and 
we  consider  it  our  pleasure,  as  well  as  our  duty — to  co- 
operate with  this  Committee  in  suggestions  it  has  to  make 
with  reference  to  any  changes  it  has  to  suggest  or  any 
changes  in  the  method  of  taxation  it  might  suggest.  If 
this  Committee  will,  at  any  time,  intimate  to  the  company 
exactly  along  what  lines  they  want  an  expression  of  the 
views  of  our  company.  I  will  say  now  to  the  Committee 
that  an  executive  officer,  of  the  company  will  present  to 
them  in  writing  the  views  of  the  company  along  the  lines 
suggested  by  the  Committee. 

Mr.  Brown :  It  has  been  suggested  that  the  taxation  of 
railroad  companies  and  transportation  companies,  in  fact, 
all  corporations,  but  especially  transportation  companies, 
should  be  on  the  basis  of  gross  receipts.  Direct  your  atten- 
tion to  furnishing  this  Committee  your  views  as  to  how 
such  a  tax  would  operate  from  the  standpoint  of  the  com- 


1022 

pany  as  well  as  that  of  the  State,  and  if  such  a  tax,  in  the 
opinion  of  the  company,  would  be  considered  a  fair 
method. 

It  has  also  been  suggested  that  there  should  be  a  local 
tax  on  the  real  estate  of  transportation  companies.  The 
counties  complain  that  they  do  not  get  the  benefit  they  are 
entitled  to  from  the  inclusion  of  the  real  estate  values  in 
th  valuation  of  the  capital  stock,  and  that  they  should  tax 
this  real  estate  locally;  and  the  thought  is  by  some  that 
that  valuation  should  be  deducted  as  an  item  from  the 
valuation  of  the  capital  stock. 

Mr.  Nichols :  They  get  it  on  the  real  estate  located  in 
the  county,  and  all  these  counties  also  get  taxes  from  the 
company  in  the  matter  of  the  distribution  of  the  school 
fund. 

Mr.  Brown:  But  they  think  that  ought  to  be  done 
locally.  They  would  tax  the  water  tanks  and  road-beds 
locally.  There  have  been  suggestions  that  the  values  of  real 
estate  as  included  in  the  capital  stock  valuation  have  not 
been  the  full  values  of  the  real  estate  as  compared  to 
similar  real  estate  in  these  several  localities. 

Mr.  Nichols:  You  are  speaking  of  real  estate,  as  I 
understand  you,  that  is  used  in  connection  with  the  rail- 
road— not  real  estate  not  used  in  connection  with  the  rail- 
road purposes? 

Mr.  Brown:   Yes. 

Mr.  Nichols :  That  is  taxed  in  Allegheny  and  Philadel- 
phia counties. 

Mr.  Brown:  There  has  been  another  suggestion  :  That 
there  ought  to  be  an  assessment  of  the  total  valuation 
of  all  assets,  irrespective  of  liabilities.  The  farmers  claim 
that  their  debts  are  not  allowed  for  in  the  assessment 
of  their  real  estate,  and  hence  there  should  not  be  any 
abatement  or  reduction  allowed  to  anybody  else. 
^  Mr.  Nichols :  That  is  along  the  lines  suggested  by  the 
Supreme  Court  that  they  cannot  be  deducted  but  are  to 
be  taken  into  consideration. 


1025 

Mr.  Brown:  Yes.  The  Supreme  Court  decided  you 
can  consider  debts  but  not  deduct  them.  It  has  also  been 
suggested  that  that  a  corporation  should  pay  a  tax  on 
all  bonds,  whether  owned  by  the  residents  or  otherwise. 
In  other  words,  there  should  be  no  preference  shown  as 
against  the  non-resident :  but  that  the  company  should  pay 
the  tax  on  all  bonds  and  should  be  assessed  against  them 
as  such. 

Mr.  Nichols :  I  understand  from  that  that  they  should 
pay  a  tax  on  all  loans  they  might  issue? 

Mr.  Brown:    Yes. 

Mr.  Nichols:    Irrespective  of  who  may  own  them. 

Mr.  Brown :  The  contention  is  that  with  many  corpora- 
tions in  Pennsylvania  there  is  little  or  no  effort  made  to 
ascertain  the  residence  of  the  bond-holders,  and  many 
large  amounts  go  untaxed. 

Mr.  Nichols:  I  assume  you  gentlemen  want  a  legal 
opinion  on  that? 

Mr.  Brown:  One  gentleman,  when  he  appeared  before 
us,  claimed  that  liabilities  represent  assets.  They  are  sup- 
posed to  represent  the  actual  value  of  the  company  and 
are  embodied  in  their  assets,  hence  should  be  taxable  as 
such  and  should  not  be  deducted. 

Mr.  Nichols :  We  will  see  that  answer  is  made  to  these 
various  questions  that  have  been  suggested.  I  don't 
think  the  Committee  would  expect  that  I  would  be  able  to 
give  at  once  an  answer  to  questions  which  have  not  been 
fully  considered.  Those  matters  have  been  the  subject  of 
legislation  for  sixty  years,  and  I  would  not  want  to  say 
that  our  companj^  could  do  it  in  a  day. 

The  Chairman :  I  thought  you  kept  your  business  up-to- 
date? 

Mr.  Nichols :  Yes ;  but  this  is  new  business.  The  other 
is  old  business. 

Mr.  Brown:  Is  there  an  objection  to  the  toll-paying 
custom  in  our  present  laws? 


1024 

Mr.  Nichols:   Yes. 

Mr.  Brown :  We  would  like  to  have  your  views  also  on 
the  time  of  return.  There  have  been  many  suggestions 
that  the  fiscal  year  should  be  the  calendar  year.  Give 
us  your  views  on  that. 

Mr.  Nichols:  There  might  be  a  difficulty  there  owing 
to  the  fact  that  the  Interstate  Commerce  Commissioners 
require  our  accounts  to  be  made  up  to  a  certain  date. 
That  would  have  to  be  taken  into  consideration. 

Mr.  Brown:  I  think  there  is  a  movement  to  make  them 
agree  with  that. 

Mr.  Nichols :  That  would  be  subject  to  the  future  orders 
of  the  Interstate  Commerce  Commission. 

Mr.  Brown:  Your  company  is  supposed  to  return  all 
property  under  its  cortrol? 

Mr.  Nichols:  Yes,  it  appears  on  the  returns  furnished 
the  Auditor  General.  It  appears  exactly  just  as  stock  is 
owned  and  controlled  by  the  Pennsylvania  Railroad  Com- 
pany. 

Mr.  McNichol:  We  are  referring  to  public  railways 
under  the  control  of  the  railroad  company. 

Mr.  Nichols:  They  will  appear  that  way.  We  make 
that  return  and  it  appears  exactly  what  these  companies 
are.  We  have  furnished  it  to  the  Auditor  General  and 
can  furnish  it  to  this  Committee,  and  thus  it  will  appear 
before  you  what  the  facts  are. 

Mr.  Brown :  You  understood  what  I  mean  by  toll  ? 

Mr.  Nichols:  Yes,  sir. 

Mr.  Brown:  Is  there  anything  else  on  your  mind,  Mr. 
Nichols? 

Mr.  Nichols:  No,  sir.  But  if  you  will  make  any  sug- 
gestions to  the  Pennsylvania  Railroad,  we  will  be  very  glad 
to  take  the  matters  up  and  give  such  information  as  re- 
quested. 

Mr.  McNichol,  Chairman :   Thank  you,  Mr.  Nichols. 


1025 


Mr.  Brown :  We  would  be  pleased  to  hear  from  Mr.  W. 
E.  Taylor,  Vice  President  of  the  Philadelphia  and  Reading 
Railroad  Company.  Mr.  Taylor,  have  you  any  suggestions 
to  offer  as  to  any  changes  in  the  present  taxation  methods  ? 
If  so,  we  would  be  pleased  to  hear  them. 

MR.  W.  R.  TAYLOR,  Vice  President  of  the  Philadelphia 
and  Reading  Railroad  Company : 

Mr.  Chairman  and  Gentlemen  of  the  Commission :  My 
people  expect  me  to  bring  to  them  the  suggestions  and 
plans  of  this  Committee,  and  the  company  will  consider 
and  stand  willing  to  give  you  any  information  we  have 
and  to  make  any  suggestions  we  think  proper. 

Mr.  Brown:  I  presume  you  are  not  in  a  position  to 
answer  as  to  whether  or  not  the  company  has  any  sug- 
gestions to  make  as  to  the  taxation  system? 

Mr.  Taylor:  My  people  do  not  understand  that  the 
Committee  has  any  definite  plan,  and  any  suggestion  they 
wish  to  make  to  the  company  will  receive  consideration. 
If  you  submit  the  plan  as  outlined  to  the  Pennsylvania 
Railroad  Company,  I  am  sure  my  people  will  be  glad  tc 
investigate  it  and  give  you  their  views  and  furnish  you 
with  any  information  we  may  have. 

Mr.  Brown :  Is  your  company  satisfied  with  the  present 
methods  of  taxation? 

Mr.  Taylor:  Now,  I  wouldn't  express  any  opinion  on 
that  subject  either.  I  am  merely  here  for  the  purpose 
of  obtaining  the  views  of  the  Committee  so  we  can  make 
our  answer  to  them.  We  have  received  one  communica- 
tion from  the  Committee  in  regard  to  our  real  estate  and 
are  engaged  in  making  up  a  statement  such  as  you  desire. 

Mr.  Brown :  That  is  in  reference  to  the  suggestion  made 
by  the  farmers  as  to  the  subject  of  local  taxation? 
49 


1026 

Mr.  Taylor:  Yes,  the  first  communication.  We  have 
here  a  return  that  our  three  companies  made  to  the  Audi- 
tor General  last  year — the  Reading  Company,  the  Rail- 
way Company  and  the  Philadelphia  and  Reading  Coal  and 
Iron  Company. 

Mr.  Brown :  So  far  as  I  know,  we  have  received  no  com- 
plaints from  the  railroad  companies  that  the  present  taxa- 
tion system  was  not  fair  so  far  as  they  are  concerned. 

Mr.  Taylor:  Well,  I  don't  know. 

Mr.  Brown:  T  presume  unless  complaints  are  heard  we 
are  to  consider  them  as  satisfied. 

Mr.  Taylor :  I  guess  they  are  like  every  other  tax  payer. 
They  all  think  they  are  paying  too  much  taxes. 

The  Chairman :  Mr.  Taylor,  how  long  will  it  take  to  an- 
swer the  questions? 

Mr.  Taylor:  On  the  subjects  that  Mr.  Brown  presented 
to  Mr.  Nichols? 

The  Chairman :  Yes. 

Mr.  Taylor :  Well,  at  least  a  couple  of  weeks.  A  week 
or  ten  days  probably  at  least. 

The  Chairman:  I  just  asked  the  question  so  it  would 
guide  us. 

Mr.  Taylor:  If  these  questions  are  submitted  to  our 
people  they  will  take  them  under  consideration  imme- 
diately. 

Mr.  Brown:  We  communicated  with  all  railroads  and 
other  taxable  interests  in  Pennsylvania  as  soon  as  the 
Committee  was  appointed.  We  have  heard  from  some. 
It  was  done  in  the  hope  that  those  interested  in  taxation 
would  come  forward  and  give  us  their  views  on  the  sub- 
ject. 

Mr.  Taylor:  I  don't  think  our  .company  ever  received  a 
communication  that  would  warrant  them  in  coming  for- 
ward. 


1027 

Mr.  Brown:  We  have  Mr.  George  S.  Garrett,  of  the 
Philadelphia  and  Reading  Coal  and  Iron  Company  here. 
Perhaps  he  has  some  suggestions  to  make. 

Mr.  Taylor :  AVhat  I  have  said  about  the  Railroad  Com- 
pany will  apply  to  the  others. 

Mr.  Brown :  Then  we  will  excuse  Mr.  Garrett. 


1028 


MR.  J.  F.  SCHAPERKOTTER  entered  appearance  for 
the  Lehigh  Valley  Railroad  Company. 

Mr.  Brown:  We  will  now  be  pleased  to  hear  from  the 
United  States  Express  Company.  I  believe  they  are  rep- 
resented today  by  Mr.  W.  W.  Callin.  We  would  liite  to 
hear  from  Mr.  Callin. 

MR.  W.  W.  CALLIN,  Attorney  for  United  States  Ex- 
press Company: 

Mr.  Chairman  and  Gentlemen  of  the  Commission :  I  am 
here  to  represent  the  United  States  Express  Company. 

Mr.  Brown :  Is  your  company  satisfied  with  the  present 
system  of  taxation  in  Pennsylvania? 

Mr.  Callin:  I  don't  know  of  any  objection  we  have. 
I  would  not  like  to  commit  the  company  on  that. 

Mr.  Brown:  Are  you  familiar  with  the  subject  of  taxa- 
tion of  your  company? 

Mr.  Callin:  To  a  certain  extent,  yes. 

Mr.  Brown:  Have  you  your  return  with  you? 

Mr.  Callin:  Yes,  sir. 

Mr.  Brown:  May  I  see  it,  please? 

Mr.  Callin:  (Hands  Mr.  Brown  returns). 

Mr.  Brown :  Is  it  for  1909  ? 

Mr.  Callin :  There  is  1909  and  1908  together. 

Mr.  Brown:  You  don't  have  capital  stock.  You  have 
interest  ? 

Mr.  Callin :  Yes,  only  interest.  The  company  is  not  in- 
corporated. 

Mr.  Brown:  Your  interest  represents  ten  millions? 
Mr.  Callin:  Yes. 

Mr.  Brown :  What  is  the  total  value  of  the  assets  of  the 
company  as  represented  by  business  in  Pennsylvania  ? 


1029 

Mr.  Callin:  Do  you  mean  real  and  personal  property? 

Mr.  Brown :  Yes,  assets  in  Pennsylvania. 

Mr.  Callin :  It  comes  to  approximately  one  hundred  and 
fifty  thousand. 

Mr.  Brown :  What  is  your  bonded  debt  in  Pennsylvania 
for  which  you  get  reduction  ? 

Mr.  Callin :  None  at  all. 

Mr.  Brown:  Have  you  any  suggestions  to  make  at  all 
to  the  Committee? 

Mr.  Callin :  I  have  none  at  all.  I  expected  the  Commit- 
tee would  have  suggestions  that  perhaps  we  might  be  able 
to  take  up. 

Mr.  Brown :  We  invited  you  down  here  to  get  infor- 
mation as  to  the  present  system  and  get  suggestions  from 
you  as  to  any  changes  you  thought  proper. 

Mr.  Callin:  I  don't  think  any  have  been  thought  of 
along  that  line. 

Mr.  Brown  (referring  to  paper)  :  Does  that  show 
the  total  amount  of  business  done  in  Pennsylvania? 

Mr.  Callin:  No,  this  just  shows  the  gross  earnings  an- 
nually. 

Mr.  Brown:  What  does  that  amount  to? 

Mr.  Callin :  The  tax  for  the  last  half  of  the  year  1910 
is  three  thousand  five  hundred  and  fifty- four  and  for  the 
first  half  three  thousand  five  hundred  and  forty-four — 
about  seven  thousand  for  the  year. 

Mr.  Brown:  What  does  that  represent  in  property? 
Mr.  Callin :  That  is  hard  to  say. 

Mr.  Brown:  What  is  the  gross  profit?  What  is  the 
profit  resulting  from  your  business  in  Pennsylvania? 

Mr.  Callin:  The  books  of  the  company  are  not  kept  in 
such  a  way  that  you  can  separate  the  expense  of  doing 
business  in  any  one  State. 

Mr.  Brown :  How  does  that  compare  with  the  mileage  in 
Pennsylvania — compare  with  the  mileage  elsewhere? 


1030 

(No  answer). 

The  Chairman:  What  is  the  approximate  amount? 

Mr.  Callin:  As  I  stated  before,  the  books  of  the  com- 
pany are  kept  and  the  business  is  done  in  such  a  way 
that  it  is  impossible  to  state  the  profits  for  one  State. 
The  best  we  can  do  is  to  approximate  this — take  the  gross 
business  throughout  the  country  as  a  basis.  We  have 
had  great  difficulty  in  separating  these. 

The  Chairman :  What  is  the  percentage  of  business  done 
in  Pennsylvania  of  the  whole  business? 

Mr.  Callin:  I  have  not  the  gross  earnings  report  here, 
and  I  cannot  tell  you  off-hand. 

The  Chairman:  It  looks  like  a  small  return  to  the 
State,  just  in  a  casual  way  of  looking  at  it? 

The  Chairman:  What  is  the  net  profit  of  the  company 
on  the  whole  of  its  business? 

Mr.  Callin :  A  little  less  than  63  per  cent.  The  gross 
business  was  a  little  over  seventeen  million  and  the  net 
was  four  hundred  and  forty-five  thousand. 

The  Chairman :  Do  you  mean  to  say  that  is  all  the  profit 
the  express  company  paid? 

Mr.  Callin :  Yes,  net  profit  in  operation. 

Mr.  Brown :  What  is  the  net  profit  on  the  whole  busi- 
ness done? 

Mr.  Callin:    That  is  the  total  business  done. 

Mr.  Brown:  The  only  way  you  can  get  the  amount  of 
business  done  in  Pennsylvania  is  by  comparing  the  total 
amount  of  business  done  with  what  is  done  here.  How 
about  finding  out  from  the  dividends  paid? 

Mr.  Callin:  You  cannot  tell  by  the  dividends  paid  be- 
cause they  are  paid  largely  out  of  surplus  investments. 
The  earnings  of  operation  would  not  suffice  to  pay  them. 

Mr.  Brown :  Are  you  required  to  pay  anything  on  your 
surplus? 

^  Mr.  Callin :  No,  we  do  not  pay  any  tax  on  our  surplus 
The  return  here  to  the  State  shows  that  the  personal  prop- 


1031 

erty  in  use  in  the  business,  by  which  is  meant  stocks  and 
bonds  of  the  company,  amounts  to  about  eight  millions 
of  dollars. 

The  Chairman:  You  don't  want  to  say  that  the  United 
States  Express  Company  cannot  give  us  a  signed  state- 
ment of  their  business  in  Pennsylvania? 

Mr.  Callin:  We  cannot  get  a  precise  account  of  the 
expense  of  doing  business  in  the  State. 

The  Chairman:  Would  it  be  possible  for  us  to  enter 
the  United  States  Express  Company's  place  and  ascertain 
for  ourselves? 

Mr.  Callin :  Yes.  We  would  be  very  glad  if  you  could 
ascertain  it.  We  have  been  trying  to  get  a  line  on  that 
for  some  time. 

The  Chairman :  The  Pennsylvania  business  is  as  profit- 
able as  any  business  that  the  company  conducts,  isn't  it? 

Mr.  Callin:  That  is  a  matter  for  the  company  to  de- 
termine. 

The  Chairman:  Who  would  be  the  man  to  get  that 
information  from? 

Mr.  Callin:  Mr.  Edward  Platt,  the  treasurer  of  the 
company. 

The  Chairman:  Mr.  Brown,  will  you  kindly  make  a 
note  of  that  name? 

Mr.  Brown:  How  do  you  fix  the  gross  earnings  for 
Pennsylvania  ? 

Mr.  Callin:  Take  the  way  bills  and  count  the  earnings 
as  shown  on  the  face  of  the  way  bills. 

Mr.  Brown:  You  don't  make  any  comparison  for  the 
number  of  miles? 

Mr.  Callin:  Do  you  mean  the  mileage  proportion? 

Mr.  Brown:     ifes. 

Mr.  Callin:   Nc. 

No  further  questions  by  the  Committee. 


1032 


MR.  SAMUEL  T.  BODINE,  First  Vice  President  and 
General  Manager,  United  Gas  Improvement  Company, 
called. 

Mr.  Bodine :  Mr.  Chairman  and  Gentlemen  of  the  Com- 
mission : — In  the  notice  I  received  requesting  my  presence 
here,  you  stated  that  it  had  been  suggested  to  this  Com- 
mittee that  the  total  value  of  the  assets  of  corporations  of 
the  class  the  United  Gas  Improvement  Company  is  in 
should  be  a  basis  or  subject  of  State  taxation  and  that  real 
estate  should  be  taxed  locally. 

That  is  exactly  the  state  of  affairs  so  far  as  we  are 
concerned.  We  are  taxod  upon  the  market  value  of  our 
stock  for  the  year,  which  I  think  is  a  fair  representation 
of  the  value  of  the  assets.  It  is  a  larger  value  than  we 
carry  on  our  ledger. 

This  is  subject  to  the  following  exemptions:  Amount 
of  capital  invested  in  actual  tangible  property  and  real 
estate  outside  the  State  of  Pennsylvania,  amounting  to 
about  two  millions  of  dollars ;  amount  invested  in  patents 
necessary  for  the  conduct  of  the  business,  about  fifty 
thousand  dollars ;  investment  in  the  stock  of  other  corpora- 
tions of  the  State  of  Pennsylvania,  about  two  million 
six  hundred  thousand  dollars ;  invested  in  the  Philadelphia 
Gas  Works,  about  twenty  millions  of  dollars — that  is  made 
up  by  the  common  stock  of  the  Equitable  Gas  Light  Com- 
pany, three  million  two  hundred  thousand,  and  invest- 
ment for  betterment,  :n  addition  to  that,  seventeen  mil- 
lions, making  the  total  of  about  twenty  millions.  That 
reverts  to  the  city  at  the  end  of  the  lease,  and  we  have 
to  recover  it  out  of  the  price  of  gas  year  by  year. 

So  far  as  we  are  concerned,  we  are  undoubtedly  sat- 
isfied with  the  method  of  taxation,  although  there  are  one 
or  two  amendments  in  matters  of  detail  that  might  be 
made. 


1033 

The  tax  year  in  the  State  of  Pennsylvania  is  a  very 
awkward  year.  That  was  made,  I  believe,  when  the  Legis- 
lature met  in  the  middle  of  December,  with  the  idea  that 
they  would  have  to  have  these  reports  to  get  the  amounts 
available  for  appropriation.  But  most  of  the  corpc  ra- 
tions, particularly  since  the  Federal  tax,  have  adopted  the 
calendar  year.  It  is  impossible  for  us  to  give  a  report 
to  the  Auditor  General  when  he  asks  us  for  our  profits 
for  the  period  covered,  but  if  it  was  for  the  calendar  year, 
we  would  be  delighted  to  state  that  in  detail. 

There  is  another  question  which  I  think  is  important. 
It  is  a  matter  of  contention  between  a  representative  of 
our  company  and  the  Auditor  General ;  and  that  is, 
whether  the  market  value  of  the  stock  should  be  taken 
as  an  average  for  the  whole  year  or  simply  the  market 
value  during  the  first  fifteen  days  of  November.  The 
Auditor  General  takes  the  point  of  view  that  whichever 
happens  to  be  the  higher  figure  is  the  figure  for  taxation, 
and  we  take  the  other  view. 

For  1909,  our  return  would  make  our  tax  to  the  State 
three  hundred  and  nine  thousand  five  hundred  dollars 
for  the  year.  The  Auditor  General  claims  three  hundred 
and  eighteen  or  nineteen  thousand.  We  paid  the  three 
hundred  and  nine  thousand  on  account  and  submitted  the 
other  question  to  the  Dauphin  County  Court  for  decision. 

If  you  have  any  detail  questions,  Mr.  Douthert,  the 
secretary  of  the  company,  is  here.  He  has  charge  of 
our  taxation  matters. 

Mr.  Brown :  Why  should  a  corporation  that  has  invest- 
ments in  the  stock  or  other  corporations  be  relieved  from 
paying  a  tax  on  theso  investments,  because  the  other  cor- 
porations pay  a  capital  stock  tax? 

Mr.  Bodine :   Because  it  would  be  double  taxation. 

Mr.  Brown :  If  I  own  a  farm  and  have  a  mortgage  on 
it,  I  pay  a  tax  on  the  mortgage.  If  I  borrow  money  from 
a  trust  company  and  am  using  that  money  in  a  dozen  dif- 
ferent ways,  I  pay  a  tax  on  all  of  it.  Why  should  a  cor- 


1034 

poration  be  relieved  of:  that  tax?  In  other  words,  you 
have  stock  in  a  company  that  pays  10  per  cent.  That 
corporation  pays  a  tax  on  its  capital  stock,  and  why  should 
you  be  relieved  from  paying  a  tax  on  the  10  per  cent,  that 
you  receive? 

Mr.  Bodine:  If  it  was  in  the  same  State  (in  the  State 
of  Pennsylvania),  it  would  be  paying  twice  on  the  same 
property.  I  am  only  a  layman,  I  am  not  a  lawyer ;  but  1 
have  always  been  instructed  by  members  of  your  profes- 
sion that  double  taxation  is  unconstitutional. 

Mr.  Brown :  What  is  your  thought  on  taxing  a  corpora- 
tion on  its  bonds,  representing  money  on  loan? 

Mr.  Bodine :  I  think  that  is  exactly  the  same  thing.  That 
debt  has  to  be  paid. 

Mr.  Brown:  But  what  it  represents  has  gone  into  tlie 
corporation  and  the  corporation  has  used? 

Mr.  Bodine :  Yes ;  but  that  does  not  apply  to  us. 

Mr.  Brown:  I  am  only  asking  you  gentlemen,  as  you 
represent  a  large  corporation.  You  speak  of  paying  a 
local  tax.  Your  company  does  not  pay  a  local  tax  on 
operating  plants? 

Mr.  Bodine:  We  pay  taxes  on  a  valuation  of  seven 
hundred  and  ninety- one  thousand  dollars  in  the  City  of 
Philadelphia. 

Mr.  Brown:   In  addition  to  the  gas  companies? 
Mr.  Bodine  :  They  belong  to  the  City  of  Philadelphia. 

Mr.  Brown :  Any  property  independent  of  that  belong- 
ing to  the  city? 

Mr.  Bodine :  We  have  none  outside  of  that  belonging  to 
the  City  of  Philadelphia. 

Mr.  Brown:    Any    operating    works    of  your    own    at 
all? 
Mr.  Bodine :  No,  sir. 

Mr.  Brown :  So  far  as  you  know,  do  the  operating  plants 
of  gas  companies  pay  a  tax  on  their  real  estate  ? 
Mr.  Bodine :   They  do  not. 


1035 

Mr.  Brown:  It  has  been  suggested  they  should  pay  a 
tax  on  real  estate  and  deduct  from  the  valuation  in  the 
item  of  capital  stock  ? 

Mr.  Bodine :  Gas  companies  are  manufacturing  com- 
panies and  I  think  thoy  should  be  free  from  the  tax. 

Mr.  Brown :  Why  should  the  manufacture  of  gas  be 
exempted  and  the  manufacture  of  electric  light  pay  a 
tax? 

Mr.  Bodine :  I  think  it  has  been  held  that  the  electric 
light  companies  are  in  a  different  class  from  the  gas  com- 
panies. I  don't  think  there  is  any  more  reason  why  an 
electric  light  company  should  pay  a  tax  than  a  gas  com- 
pany. I  don't  think  the  gas  company  should  pay  as  large 
a  tax  as  the  electric  light  company,  because  they  get  a 
higher  rate  per  unit  of  light  than  the  gas  companies,  and 
they  embark  in  business  with  the  knowledge  that  they 
would  be  taxed  and  were  able  to  regulate  their  prices 
accordingly. 

Mr.  Brown:  Is  there  any  reason  why  gas  companies 
should  not  be  included  with  the  other  manufacturing 
companies? 

Mr.  Bodine :  I  see  ro  reason  why  they  should  not. 

Mr.  Brown:    Do    you    think  they  should  be  included 
in  the  same  class  as  electric  light  companies? 
Mr.  Bodine:    No,  I  do  not  think  they  should. 

Mr.  Brown:  You  think  they  should  be  subject  to  a 
lower  rate? 

Mr.  Bodine:   Yes,  for  the  reasons  I  have  given. 

Mr.  Brown :  In  estimating  the  value  of  the  capital  stock 
of  the  companies  owned  by  the  United  Gas  Improvement 
Company,  is  your  opinion  that  the  real  estate  is  valued  at 
its  fair  valuation  and  so  included  in  the  capital  stock  ? 

Mr.  Bodine :  Yes. 

Mr.  Brown:  You  pay  local  tax  on  everything  except 
what  is  used  in  the  manufacture  of  gas? 

Mr.  Bodine :  Now  you  are  getting  back  to  the  United 


1036 

Gas  Improvement  Compary.  The  U.  G.  I.  pays  local 
taxes  on  all  real  estate  it  owns  which  is  not  used  for  the 
purposes  of  the  Philadelphia  Gas  Works.  They  pay  taxes 
on  the  building  at  Broad  and  Arch  streets,  assessed  at 
seven  hundred  «md  twenty-five  thousand  dollars;  the 
building  at  Broad  and  Tasker  streets  and  one  up  in  Ken- 
sington, which  are  leased  to  the  Philadelphia  Department 
for  office  purposes.  They  pay  taxes  on  a  certain  portion 
of  land  in  West  Philadelphia  which  they  had  to  buy  in 
order  to  get  that  on  which  we  built  our  new  gas  holder 
and  distributing  department.  So  much  has  gone  into 
our  report  to  the  Controller  of  the  City  of  Philadelphia, 
We  pay  taxes  in  Philadelphia  of  seven  hundred  and  nine- 
ty-one thousand  dollars  on  real  estate;  five  mills  tax  on 
the  capital  stock,  which  amounts  to  three  hundred  and 
nine  thousand  five  hundred  dollars. 

Mr.  Brown :  How  do  you  get  the  estimate  of  your  valua- 
tion, by  sales  of  capital  stock?  Do  you  keep  a  record? 

Mr.  Bodine :  Yes,  from  daily  official  reports  of  the  Stock 
Exchange. 

Mr.  Brown:  That  you  furnish  the  Auditor  General? 

Mr.  Bodine :  Yes,  in  the  shape  of  an  affidavit  of  myself 
as  Vice  President,  and  the  Treasurer  and  Assistant  Treas- 
urer. 

No  further  questions  by  the  Committee. 


1037 


Mr.  Brown :  We  would  be  pleased  to  hear  from  Colonel 
Beath,  President  of  the  United  Firemen's  Insurance  Com- 
pany. 

COLONEL  ROBERT  B.  BEATH,  President  of  the 
United  Firemen's  Insurance  Company: 

Mr.  Chairman  aud  Gentlemen : — First,  a  word  on  behalf 
of  my  colleagues  in  the  business,  who  have  received  the 
request  of  the  Committee  in  regard  to  taxation. 

Rather  than  enter  into  new  and  unknown  measures  of 
taxation  we  are  satisfied  with  the  present  tax  on  the  capi- 
tal stock  and  on  the  premiums.  It  is,  of  course,  under- 
stood that  increased  taxation  must  come  from  the  insured 
in  the  matter  of  premiums. 

We  are  prepared  to  give  you  any  figures  you  may  re- 
quire, but  I  may  say  to  the  Counsel  of  the  Committee 
that  these  figures  can  be  found  in  the  Insurance  Com- 
missioners' reports  on  file.  They  are  easy  of  access  and 
you  have  these  for  all  the  companies  in  the  State  of  Penn- 
sylvania, with  the  exact  figures  given  in  detailed  reports 
made  to  the  departments  on  the  31st  day  of  December  of 
each  year. 

Mr.  Brown:  What  is  your  thought  on  the  discrimina- 
tion made  against  fire  insurance  companies?  Mr.  Fouse 
says  that  a  discriminatory  tax  has  militated  against  doing 
business  in  other  States? 

Mr.  Beath :  I  do  not  understand  Mr.  Fouse  's  application 
on  this  as  applied  to  fire  companies.  It  would  only  affect 
us  seriously  if  the  tax  on  other  State  companies  should  be 
increased. 

Mr.  Brown:  That  is  the  retaliatory  tax? 

Mr.  Beath:  The  so-called  reciprocal  tax.  In  other 
words,  if  you  ir crease  the  tax  on  outside  companies,  it 
comes  back  at  as  by  way  of  retaliation  in  about  thirty 


1038 

States  of  the  Union,  the  principal  ones  being  New  York, 
Illinois  and  Massachusetts. 

Mr.  Brown :  Do  these  thirty  States  include  all  in  which 
the  most  of  the  insurance  business  is  done? 

Mr.  Beath:  Yes.  Some  of  the  others  don't  amount  to 
much.  Some  years  ago,  on  that  account,  the  tax  in  Penn- 
sylvania on  outside  companies  was  reduced  from  3  per 
cent,  to  2  per  cent.  I  think  I  have  the  figures  then  pre- 
pared on  this  point. 

Mr.  Brown:  Your  thought  is  what?  What  should  be 
the  tax? 

Mr.  Beath:  They  should  stand  just  where  they  are  to- 
day. We  should  make  our  returns  on  the  present  well  es- 
tablished basis.  If  you  take  the  gross  assets  as  a  basis  of 
taxation  it  would  include  the  premiums  outstanding, 
which  would  amount  to  hundreds  of  thousands  of  dollars 
in  this  State  alone.  Then  the  premium  on  stocks  and 
bonds  and  accrued  interests  on  stocks  and  bonds — these 
necessarily  go  into  our  assets  and  swell  them  to  that  ex- 
tent. They  are  all  available,  coming  in  afterward.  In 
order  to  get  at  that  properly,  you  would  have  to  take  the 
report  and  eliminate  these  three  items,  and  then  you  have 
the  net  assets  of  the  company;  but  this  will  change  year 
by  year  and  month  by  month,  you  might  say.  This  is 
easily  measured  by  our  business.  When  it  comes  to  a 
question  of  assets,  I  think  it  would  be  bad  policy  to 
change  the  present  system 

Mr.  Brown:  As  to  foreign  companies? 
Mr.  Beath:  Yes. 

Mr.  Brown:  You  would  put  the  tax  on  gross  premiums 
and  eliminate  the  capital  stock  tax? 

Mr.  Beath:  That  would  apply  only  for  the  Pennsyl- 
vania companies,  but  how  it  would  work  out  would  re- 
quire some  figuring. 

Mr.  Brown :  You  have  nothing  to  tax  outside  other  than 
the  premiums? 


1039 

Mr.  Beath :  We  have  the  capital  stock  tax  valued  by  the 
Auditor  General. 

Mr.  Brown:  Isn't  that  more  equitable? 

Mr.  Beath:  Yes. 

Mr.  Brown:  Have  you  any  objection  to  talking  with 
your  interests  in  Pennsylvania  to  get  the  consensus  of 
opinion  on  the  subject? 

Mr.  Beath :  I  W!J1  be  pleased  to  do  so  and  report  later. 

Mr.  Brown :  Thank  you. 

No  further  question  by  the  Committee. 


1040 


Mr.  Brown:  We  would  be  pleased  to  hear  from  Mr. 
Porter,  of  the  American  Fire  Insurance  Company. 

MR.  CLARENCE  E.  PORTER,  President  of  the  Ameri- 
can Fire  Insurance  Company. 

Mr.  Chairman  and  Gentlemen  of  the  Committee: — I 
think  General  Beath  has  pretty  thoroughly  covered  the 
ground.  One  thought  I  would  add,  however,  is  tha\,  Uie 
more  you  burden  us  with  tax,  the  more  it  will  come  back 
on  the  public. 

Mr.  Brown :  Isn't  that  so  with  every  tax,  as  a  rule? 

Mr.  Porter:  No,  because  we  furnish  an  indemnity  that 
effects  commercial  credit.  In  our  line  of  business  we 
stand  good  in  case  of  public  loss.  If  you  increase  your 
tax,  then  you  will  simply  place  it  back  on  the  public  to 
pay  for  it. 

Mr.  Brown:  Are  you  satisfied  with  the  present  laws? 

Mr.  Porter:  I  feel  that  you  are  taxing  the  companies 
at  the  present  time  on  everything  that  is  taxable.  To 
increase  the  tax,  taking  into  consideration  the  effect  of 
the  retaliatory  laws,  would  make  a  tremendous  burden 
on  the  Pennsylvania  corporations. 

Mr.  Brown:  I  think  Mr  Fouse  suggested  we  might  in- 
crease on  the  local  companies  and  reduce  on  the  foreign 
companies;  and  the  balance  of  the  trade  would  be  with 
the  foreign  companies. 

Mr.  Porter :  Well,  that  would  be  a  matter  of  compe- 
tition. I  don't  know  what  things  are,  offhand. 

Mr..  Brown :  If  the  present  laws  are  harmful  to  the  local 
companies  thera  ought  to  be  some  remedy  for  it.  Have 
you  folks  an  association  here? 

Mr.  Porter:  No,  except  we  meet  from  time  to  time  in 


1041 

Colonel  Death's  office.  We  can  get  the  officers  together 
and  talk  over  the  matter.  We  will  be  very  glad  to  co- 
operate with  you,  I  am  sure,  in  giving  you  any  informa- 
tion you  desire. 

Mr.  Brown :  We  would  be  very  glad  to  have  any  infor- 
mation you  can  give. 


1042 


Mr.  Brown :  We  have  the  vice  president  of  the  Fidelity 
Trust  Company  with  as.  We  shall  be  pleased  to  hear 
from  him. 

MR.  WILLIAM  GEST,  Vice  President  of  the  Fidelity 
Trust  Company. 

Mr.  Chairman  and  Gentlemen: — On  receipt  of  the  first 
communication  from  this  Committee,  our  company  ad- 
dressed a  letter  to  this  Committee,  which  stated  as  fully 
as  necessary  the  position  of  the  company  as  to  the  present 
taxation.  I  have  the  letter  here  dnd  will  read  it  if  you 
desire. 

Mr.  Brown :  Mr.  Gest,  what  was  the  amount  of  deposits 
of  the  Fidelity  Trust  Company  for  1909? 

Mr.  Gest:  I  cannot  tell  you.  The  present  amount  of 
deposits  is  twenty-seven  millions.  That  is  probably  some- 
what above  the  average. 

Mr.  Brown:  What  proportion  of  that  amount  bears 
interest  ? 

Mr.  Gest :  I  giiess  almost  all. 

Mr.  Brown :  All  bearing  interest  at  what  rate  ? 

Mr.  Gest:  Some,  almost  all,  at  2  per  cent.;  some,  pos- 
sibly at  V.  per  cent. 

Mr.  Brown:  What  proportion  of  that,  in  your  opinion, 
pays  tax  to  the  Commonwealth;  1  mean  on  which  the 
tax  is  paid  by  the  depositor? 

Mr.  Gest:  I  am  only  speaking  for  the  company  as  far 
as  the  law  goes;  anything  else  I  may  say  is  my  own 
opinion.  I  do  not  know  how  much  of  this  deposit  pays 
a  tax. 

Mr.  Brown :   Can  you  make  an  approximation  ? 
Mr.  Gest:    No.     Do  you  mean  whether  the  depositors 
return  it? 

Mr.  Brown:    Yes. 


1043 

Mr.  Gest:  I  have  no  way  to  know  whether  any  de- 
positors make  any  returns  or  not. 

Mr.  Brown:  We  are  preparing  a  table  showing  the 
total  amount  of  wealth  and  the  total  amount  returned  for 
taxation.  I  was  told  by  the  president  of  a  trust  company 
that  this  was  not  returned  for  taxation? 

Mr.  Gest :  I  believe  it  is  a  general  rule.  It  is  generally 
regarded  that  they  are  not  included  in  that  tax — that 
that  tax  is  intended  to  catch  investments.  Of  course,  these 
deposits  are  fluctuating  and  it  would  not  be  right  to  re- 
turn them  for  the  whole  year,  when  they  would  be  there 
for  a  year  and  maybe  only  for  a  day.  These  deposits 
often  represent  money  used  in  the  course  of  business  and 
money  withdrawn  for  investment,  and  if  you  tax  these 
deposits  for  the  whole  year,  and  then  tax  the  investments 
into  which  they  find  their  way,  it  will  be  unjust. 

Mr.  Brown:  The  man  who  gets  2  per  cent,  pays  the 
same  tax  as  a  man  who  gets  3,  4,  5,  6  or  7.  It  has  been 
suggested  that  you  make  a  tax  on  the  amount  of  in- 
terest paid? 

Mr.  Gest :  My  own  personal  thought  is  that  such  a  law 
would  be  subject  to  the  same  objections  that  would  be 
brought  against  an  income  tax. 

Mr.  Brown :  What  do  you  think  of  a  law  requiring  the 
treasurer  of  a  trust  company  to  pay  a  return  to  the 
Commonwealth  as  a  tax  on  the  interest  the  company  has 
paid  to  its  depositors? 

Mr.  Gest:  You  didn't  put  that  question.  I  thought  you 
meant  requiring  the  individual  to  make  the  return.  If 
you  make  the  trust  company  or  depository  the  agent  of  the 
Commonwealth  you  will  be  involved  in  a  number  of  diffi- 
culties, and  it  would  most  certainly  result  in  a  very  large 
withdrawal  of  money. 

Mr.  Brown:    Where  would  that  go  to? 
Mr.  Gest :   New  York  or  Camden.    A  great  amount,  in 
my  opinion,  would  go  to  New  York.     Certainly  a  great 


1044 

corporation  which  puts  its  money  at  interest  would  rather 
go  to  New  York  where  there  is  no  tax,  than  here  where 
there  is  a  tax.  A  great  many  of  these  large  corporations 
have  deposits  in  both  places,  and  there  is  no  doubt  that 
should  there  be  a  tax  of  this  kind  our  share  of  the  de- 
posits would  be  withdrawn.  I  think  such  a  tax  as  that  is 
impractical. 

Mr.  Brown :  How  about  moneys  evidenced  by  certificate 
of  deposit  issued  by  the  company? 

Mr.  Gest:  I  think  he  should  return  it  as  money  at 
interest. 

Mr.  Brown:  Suppose  he  does  not  return  it?  Why  not 
have  the  company  return  it  and  pay  it  for  him? 

Mr.  Gest:  Because  they  are  temporary  certificates.  In 
Philadelphia  there  are  not  very  many  of  them  issued.  Our 
company  has  no  certificates  of  deposit  outstanding  what- 
ever, and  we  haven't  issued  any  for  some  time. 

Mr.  Brown :  There  has  been  considerable  criticism  along 
these  lines  as  we  have  gone  around  the  State.  We  have 
been  told  that  there  is  ten  millions  of  dollars  in  Lancaster 
county  trust  companies  on  which  no  return  is  made  for 
taxation  ? 

Mr.  Gest :  A  tax  on  moneys  at  interest  or  on  income  will 
always  be  evaded  by  unscrupulous  people.  It  is  inherent 
and  will  never  be  obviated. 

Mr.  Brown:  How  does  the  Fidelity  Company  fix  the 
value  of  its  stock? 

Mr.  Gest :  We  return  under  the  Act  of  1909,  in  which 
the  tax  is  based  upon  the  value  of  the  capital  stock,  sur- 
plus and  undivided  profits. 

Mr.  Brown:  How  is  the  real  estate  valued  in  that? 

Mr.  Gest:  The  real  estate  is  included  in  the  general 
assets  and  therefore  results  in  double  taxation  on  that. 

Mr.  Brown:  The  real  estate  is,  of  course,  included  in 
that  valuation? 

Mr.  Gest:    Yes. 


1045 

Mr.  Brown:  Is  that  valuation  revised  in  any  way  by 
the  Commonwealth,  or  is  the  valuation  taken  as  final? 

Mr.  Gest:  I  don't  know  how  far  they  have  revised  it. 
They  have  the  right  to  revise  it. 

Mr.  Brown:  How  would  it  be  to  tax  your  property 
locally  and  deduct  that  as  an  item  in  the  valuation  of  the 
capital  stock? 

Mr.  Gest :  I  think  that  would  be  an  entirely  just  reduc- 
tion. 

Mr.  Brown:  You  see  no  reason  why  they  should  not 
be  taxed  locally,  provided  that  deduction  is  made? 

Mr.  Gest :  No. 

No  further  questions  by  the  Committee. 


1046 


MR.  EDWARD  SYDENHAM  PAGE,  Secretary  of  the 
Girard  Trust  Company,  called. 

Mr.  Brown :  Have  you  any  suggestions  to  make  to  the 
Committee  as  to  a  tax  on  trust  companies,  banks,  saving 
institutions,  etc.  ? 

Mr.  Page :  No.  I  think  I  agree  with  what  Mr.  Gest  has 
said.  I  think  what  we  want  is  some  positive  basis  as  we 
have  now — the  book  value  of  the  stock — capital,  surplus 
and  undivided  profits.  In  our  mind,  to  tax  the  total  assets 
would  take  in  the  deposits,  which,  in  view  of  the  fact 
that  they  are  not  under  our  supervision,  are  likely  to  be 
drawn  out  at  any  time.  If  the  tax  on  these  is  made, 
we  may  be  called  upon  to  pay  a  tax  largely  in  excess  of 
what  we  are  getting  the  use  of. 

Mr.  Brown:  How  do  you  fix  the  value  of  your  real 
estate  ? 

Mr.  Page :  Generally  speaking,  our  real  estate  is  on  our 
books  at  its  assessed  valuation. 

Mr.  Brown:    City  assessment? 

Mr.  Page :  Yes. 

Mr.  Brown:  What  proportion  is  that  in  comparison 
with  the  real  value?  Take  your  new  building,  for  in- 
stance ? 

Mr.  Page :  The  property  is  assessed  at  two  millions  and 
a  half.  That  doesn't  take  in  the  cost  of  the  building  itself. 
That  is  charged  off  as  we  built  the  building. 

Mr.  Brown :  Take  your  building— what  is  the  total  value 
of  your  property  there  at  Broad  and  Chestnut  to-day- 
at  the  last  time  you  made  the  return? 

Mr.  Page:    What,  the  stone  building? 

Mr.  Brown:  Yes.  Have  you  your  last  return  to  the 
Commonwealth  ? 

Mr.  Page :  Yes. 


1047 

Mr.  Brown:  May  I  see  it?  (looking  over  return).  I 
notice  your  building  is  returned  February  18,  1910,  real 
estate  at  two  millions  eight  hundred  and  ninety-six  thou- 
sand five  hundred  and  forty-six  dollars.  What  real  estate 
does  that  cover? 

Mr.  Page :  That  covers  our  property  Broad  and  Chest- 
nut and  also  certain  properties  we  have  foreclosed  on 
mortgages  that  go  back  over  twenty-five  years  ago. 

Mr.  Brown:  Can  you  give  us  any  idea  as  to  the  real 
value  of  that  property? 

Mr.  Page :  I  can  give  you  an  idea  of  that  at  Broad  and 
Chestnut.  The  ground  cost  in  the  neighborhood  of  two 
and  a  half  millions  of  dollars  and  we  put  the  building 
there,  costing  a  million  and  a  half  of  dollars. 

Mr.  Brown:    That  is  four  millions? 

Mr.  Page :  Yes. 

Mr.  Brown :  What  is  the  real  value  of  that  corner  ? 

Mr.  Page :   It  depends  on  what  you  want  to 

Mr.  Brown:    What  you  carry  on  your  books? 

Mr.  Page  :  At  its  assessed  valuation  ? 

Mr.  Brown :   The  building  itself  as  profit  and  loss  ? 

Mr.  Page :  Yes.  In  making  our  return  to  the  State  we 
take  the  valuation  as  shown  on  our  books. 

Mr.  Brown:  Why  don't  you  include  the  total  value  of 
the  property?  Why  don't  you  return  to  the  State  the 
total  value  of  that  property,  instead  of  returning  the  land 
less  the  buildings? 

Mr.  Page:  In  the  judgment  of  our  board,  they  don't 
think  it  a  tangible  asset.  If  the  Girard  Trust  Company 
got  into  difficulties  and  wanted  to  realize  on  the  building, 
there  would  be  no  buyer  for  it.  It  is  more  or  less  orna- 
mental. 

Mr.  Brown:  Wouldn't  that  apply  to  almost  any  other 
building?  For  instance,  John  Wanamaker's  building? 

Mr.  Page  :  John  Wanamaker  is  an  individual,  and  here, 
we  are  taking  care  of  the  depositors  ancl  stockholders. 


1048 

Mr.  Brown:  You  are  doing  that  for  profit  the  same  as 
John  Wanamaker  is  selling  goods  for  a  profit? 

Mr.  Page :  Yes. 

Mr.  Brown:  If  the  real  estate  of  corporations  now 
included  in  the  capital  stock  was  taxed  locally  it  would 
be  taxed  for  a  higher  sum  and  the  counties  that  get  the 
money  would  get  a  higher  sum  out  of  it — the  counties 
would  get  an  additional  benefit? 

Mr.  Page :  I  understand  what  you  say,  but  I  don't  think 
that  is  possible.  The  City  of  Philadelphia — does  it  not 
assess  its  tax  for  the  county's  use? 

Mr.  Brown:    Yes. 

Mr.  Page :  And  if  they  thought  that  property  was  not 
a  fair  valuation  at  two  and  a  half  millions  after  the  real 
estate  tax  was  deducted  from  the  State  tax  (the  capital 
stock  tax)  they  would  increase  our 

Mr.  Brown :  But  it  is  not  assessed  as  high  as  it  ought  to 
be,  because  it  is  taken  into  consideration  with  numerous 
other  items,  whereas,  if  separated,  it  would  be  its  full 
value.  In  other  words,  in  Philadelphia  they  would  get  the 
benefit  of  five  millions  of  dollars  and  the  State  would 
lose  the  tax  on  the  two  million  eight  hundred  and  ninety- 
six  thousand. 

Mr.  Page :  That  is  something  we  would  not  like  to  con- 
sider. The  company  in  making  returns,  make  the  returns 
on  its  book  values,  taking  the  price  of  its  securities  and 
real  estate  at  which  it  is  carried  on  its  books.  In  other 
words,  if  we  bought  a  bond  at  one  thousand  dollars,  we 
would  return  it  at  that.  We  don't  re-appraise  it.  We 
just  take  our  values  which  we  think  are  approximate.  We 
don't  mark  it  up  or  mark  it  down — except  in  1907,  when 
we  marked  down  quite  extensively.  Therefore,  these  re- 
turns show  our  book  value,  based  on  the  book  value  of  our 
securities. 

We  consider  the  building  at  Broad  and  Chestnut  as 
more  or  less  monumental  in  character,  and  while  it  cost 
quite  considerable  amount  of  money,  we  couldn't  realize 


1049 

that  amount  on  it.  In  view  of  the  fact  that  we  are  re- 
turning our  book  value,  all  we  can  do  is  to  take  the  figures 
that  our  assets  represent,  and  add  them  together. 

Mr.  Brown :  I  wish  you  would  give  us  your  thought  on 
whether  or  not  it  would  be  practical  to  levy  a  tax  on  the 
gross  receipts  and  eliminate  the  capital  stock;  whether 
or  not  it  would  be  a  practical  method  for  the  Common- 
wealth of  Pennsylvania  to  levy  a  tax  on  the  gross  receipts 
on  companies  such  as  yours.  Mr.  Gest,  I  would  like  you 
to  give  that  some  thought,  too.  Of  course,  I  don't  want 
your  answer  now.  (Addressing  Mr.  Page)  :  Do  the  trust 
companies  have  an  association  in  Pennsylvania? 

Mr.  Page :  No. 

Mr.  Brown:  You  get  together,  don't  you? 

Mr.  Page :  Yes  The  tax  used  to  be  based  on  the  earn- 
ings. The  book  value  you  don't  seem  to  think  is  the  right 
way? 

Mr.  Brown:  Any  question  I  ask  here  is  simply  from 
suggestions  made  throughout  the  State  by  others. 

Mr.  Page :  To  :ne,  the  book  value  is  a  very  fair  way  to 
get  at  it.  If  the  books  of  companies  were  regulated,  the 
stockholders  would  get  book  value 

Mr.  Brown:  If  you  sold  your  building  at  Broad  and 
Chestnut,  the  stockholders  would  get  their  share  of  the 
four  millions  and  not  the  two  millions,  which  is  its  value 
on  the  books? 

Mr.  Page:  Yes. 

Mr.  Brown:  \\hat  is  your  thought  of  the  treasurer  of 
your  company  being  made  the  agent  of  the  State  to  return 
the  tax  on  moneys  at  interest? 

Mr.  Page:  My  thought -is  that  it  is  not  a  good  thing. 

Mr.  Brown:  Why  do  you  think  these  moneys  should  not 
bear  their  share  of  the  tax? 

Mr.  Page:  Because  I  dcn't  consider  a  depositor  as  hav- 
ing money  at  interest. 


1050 

Mr.  Brown;  \Yhat  is  the  difference  between  a  man  who 
deposits  money  in  your  company  and  gets  3  per  cent,  and 
a  man  who  owns  a  Government  bond  and  gets  3  per  cent.  ? 

Mr.  Page :  Unless  it  is  some  special  arrangement  he 
gets  2  per  cent. 

Mr.  Brown:  The  average  depositor? 

Mr.  Page:  Yes. 

Mr.  Brown:  AVhy  shouldn't  that  money  bear  its  share 
of  the  tax  the  same  as  any  other  interest  money? 

Mr.  Page:  Well,  simply  upon  the  theory  that  it  is  in- 
come. 

Mr.  Brown:  AU  interest  is  income. 

Mr.  Page:  Ypu  would  then  be  taxing  income. 

Mr.  Brown:  Isa't  all  interest  income? 

Mr.  Page:  No;;  the  amount  on  deposit.  The  amouut  on 
deposit  largely  represents  income.  If  you  are  going  to 
tax  a  deposit  that  is  made  up  of  income,  then  you  have 
an  income  tax. 

Mr.  Brown:  AVhy  shouldn't  moneys  received  by  me, 
for  instance,  coming  from  an  income,  pay  a  tax  just  as 
much  as  from  somebody  else  who  has  loaned  money  to 
somebody  else  and  gels  the  interest? 

Mr.  Page :  Because  I  think  the  loan  is  a  fixed  invest- 
ment. 

Mr.  Brown:  Isn't  the  income  he  gets  from  the  trust 
company  a  great  deal  more  certain  than  anything  he 
would  get  from  some  solvent  debtor  where  he  might  have 
to  sue  to  recover? 

Mr.  Page :  If  a  man  chooses  to  leave  his  income  on  de- 
posit in  tne  trust  company,  he  will  get  2  per  cent.  But, 
on  the  other  hand,  he  may  take  it  out  any  moment  if  he 
wants  to  use  it.  I  think  if  they  are  going  to  be  taxed 
on  their  deposits,  a  great  many  of  the  people  would  not 
bother  about  making  a  return  and  would  put  their  money 
in  a  national  bank,  which  does  not  pay  interest  on  the 
deposits. 


1051 

Mr.  Brown:  Are  there  many  that  don't  pay  interest  on 
deposits? 

Mr.  Page:  I  don't  know  that.  I  was  just  throwing  out 
that  idea.  There  are  a  great  many  individuals  that  bank 
in  the  national  banks,  because  they  are  accommodated 
in  other  ways  than  getting  interest  I  should  think  that 
might  be  a  means  of  shifting  the  deposits  without  gaining 
anything  for  thy  State. 

Mr.  Brown :  How  about  the  time  of  return  ?  Is  that 
satisfactory  to  your  company? 

Mr.  Page:  Yes. 

Mr.  Brown:  You  pay  prior  to  the  1st  of  March  and 
get  the  benefit  of  that? 

Mr.  Page:   ¥es. 

Mr.  McNichol:  As  your  association  has  taken  up  the 
question  as  to  the  revision  of  the  system  for  the  better- 
ment of  conditions—  have  you  given  it  any  thought  in 
the  last  few  years,  as  to  whether  you  are  carrying  suf- 
ficient burden  in  the  way  of  pay/nents  to  the  State,  or 
whether  there  should  be  some  correction  in  the  laws,  in 
your  opinion,  wherein  you  would  have  a  more  equal  dis- 
tribution than  now  exists? 

Mr.  Page :  "We  feel  that  we  are  taxed  sufficiently.  I 
mean  our  capUtii  stock  tax  of  fifty  thousand  and  our  real 
estate  tax  of  some  thirty-fi^e  or  fo>nty  thousand.  I  think 
that  is  quite  an  amount  to  pay  m  taxes. 

Mr.  McNichol.  Yo-i  men  are  in  a  position  to  aid  the 
Legislature  in  revising  or  equalizing  the  burden.  A 
great  many  people  believe  they  are  unduly  or  unjustly 
taxed.  People  in  your  atmosphere  believe  the  same  way. 
We  find  that  the  man  who  is  paying  rent  is  being  taxed 
unjustly  to  the  extent  that  those  who  are  doing  a  large 
business  are  only  paying  a  small  proportionate  share 
of  the  burden.  The  time  is  coming  when  these  things 
have  to  be  corrected,  and  it  is  from  you  gentlemen  that 
the  Legislature  looks  for  information  which  will  enable 
them  to  bring  about  satisfactory  results. 


1052 

Mr.  Brown:  Take  your  company,  for  instance ;  what 
dividend  did  your  company  pay  in  1909  ? 
Mr.  Page:  They  paid  30  per  cent. 

Mr.  Brown:   30  per   cent,   dividend? 
Mr.  Page :  We  raised  our  dividend  on  July  1, 1909,  up  to 
30  per  cent. 

Mr.  Brown:  You  paid  30  per  cent,  for  the  year? 
Mr.  Page :  Yes. 

Mr.  Brown:  Assuming  that  the  State  of  Pennsylvania 
needs  more  money  for  roads,  needs  more  money  for  her 
public  schools  and  other  public  utilities — assuming  she 
needs  that,  we  would  like  to  have  a  thought  from  you 
gentlemen  as  to  whether  or  not  there  should  not  be  some 
contribution  from  such  companies  towards  making  up 
the  sufficient  sum? 

Mr.  Page:  In  the  way  of  taxes? 

Mr.  Brown:  Yes,  by  additional  taxation. 
Mr.  Page :  We  are  assessed  a  State  tax  to  take  care  of 
the  roads  and  streets. 

Mr.  Brown :  I  am  speaking  about  building  public  high- 
ways and  State  roads  and  public  schools,  which  is  a  State 
institution.  We  would  like  to  have  a  thought  from  you 
gentlemen  as  to  whether  or  not  you  should  not  help,  and 
if  not,  why  not.  If  you  have  an  association  in  this  city 
in  whieli  all  the  institutions  are  represented,  we  should 
like  to  have  the  consensus  of  thought  upon  it. 

Mr.  McNichol :  We  have  got  to  pass  upon  the  question 
of  an  income  tax,  that  question  that  has  occupied  the 
thought  and  mind  of  the  people  for  yeats.  Don't  you 
think  it  is  up  to  you  gentlemen  to  help  the  Commonwealth 
by  furnishing  such  information  and  suggestions  as  you 
can? 

Mr.  Page :  I  think  it  would  be  a  good  thing.  If  our 
company  can  be  a  help  to  you,  I  know  they  will  be  glad 
to  assist  you. 


1063 

Mr.  McNichol:  We  would  like  to  have  these  sugges- 
tions from  men  who  come  in  contact  with  that  particular 
line  of  work.  We  want  to  be  fair  to  everybody  and  we 
want  to  get  the  best  suggestions  possible. 

Mr.  Brown :  Will  you  be  on  hand  tomorrow,  please,  Mr. 
Page? 

Mr.  Page :  Someone  from  Our  company  will  be  present. 


1054 


MR.  T.  M.  DALY,  President  of  the  Continental  Title  and 
Trust  Company,  called. 

Mr.  Brown:  Mr.  Daly,  have  you  any  suggestions  to 
make  to  this  Committee  as  to  the  present  system  of  taxa- 
tion? If  so,  we  would  be  glad  to  have  you  make  them. 

Mr.  Daly:  Well,  we  were  complaining  some  years  ago 
because  the  companies  were  taxed  on  the  selling  value  or 
market  value  of  their  stock,  and  it  was  the  consensus  of 
opinion  that  that  was  a  very  unfair  standard.  It  meant 
in  some  cases  that  the  stock  was  above  par  and  in  other 
cases  the  sales  were  below  the  book  value,  because  people 
had  some  doubts  as  to  the  future  earning  capacity  of  that 
particular  company. 

I  remember  one  year,  when  there  were  very  few  shares 
of  our  stock  offered  for  sale,  and  when  a  small  lot  was 
offered  a  man  who  wanted  to  piece  out  his  holdings,  he 
bought  it  at  a  figure  in  excess  of  the  market  value.  That 
man  for  that  year  determined  the  assessable  value  of  our 
assets  for  the  purpose  of  taxation. 

Mr.  McNichol:  He  was  figuring  on  the  future? 

Mr.  Daly:  Yes;  and  he  was  one  man  against  a  hundred. 
We  were  entirely  at  the  mercy  of  the  one  man  for  that 
year's  taxes. 

Mr.  McNichol :  You  are  figuring  on  the  book  value? 

Mr.  Daly :  Yes.  The  bankers  and  business  men  interest- 
ed in  the  business  appealed  to  the  Legislature  because 
this  plan  of  assessing  became  burdensome  and  oppressive. 
As  I  say,  they  appealed  to  the  Legislature  and  there  was 
a  conference,  which  resulted  in  the  book  value  being  ac- 
cepted as  the  proper  standard  for  assessment.  That  is 
the  standard  today,  and  it  is  the  proper  standard. 

Mr.  Brown :  What  about  real  estate 


1055 

Mr.  Daly:  There  has  been  some  question  suggested  as 
to  the  undervaluation  of  real  estate. 

Mr.  Brown:  Or  the  undervaluation  of  any  other  estate? 

Mr.  Daly:  That  is  fully  answered  by  the  fact  that  a 
man  going  to  a  national  bank  in  order  to  borrow  to  the 
utmost  of  his  ability  will  hardly  be  accused  of  underesti- 
mating his  assets,  but  he  will  probably  state  everything 
he  has  in  order  to  get  as  full  a  value  as  he  can. 

So,  with  a  trust  company,  it  would  be  manifestly  to 
its  interest  to  make  as  good  a  showing  as  possible,  because 
the  public  is  usually  influenced  by  the  strength  of  a  com- 
pany based  upon  its  capital  and  surplus. 

I  think  it  is  fair  to  assume  that  every  company  put 
in  that  position  would  put  its  best  foot  forward  in  th^ 
swelling  of  its  assets  and  would  not  undervalue  any  of 
its  assets. 

Mr.  McNiehol :  What  is  the  dividend  paid  to  your  stock- 
holders. 

Mr.  Daly :  Six  per  cent,  on  the  money  paid  in. 

Mr.  McNiehol:  How  about  surplus? 

Mr.  Daly :  Our  capital  paid  in  is  five  hundred  thousand 
dollars  and  we  are  a  few  dollars  short  of  three  hundred 
thousand.  Our  stock  is  selling  at  forty-seven  and  forty- 
eight. 

Mr.  McNiehol :   How  many  years  organized  1 
Mr.  Daly:    Twelve  years  organized.     That  money  has 
been  earned.     We  started  in  with  no  surplus,  and  what 
we  have  done  since  has  been  earned.    That  is  why  I  think 
that  the  present  method  of  valuing  is  a  fair  one. 

As  to  the  question  of  valuing  real  estate  separately,  as 
suggested  by  Mr.  Brown — take  our  own  particular  case, 
for  instance.  We  carried  for  some  time  some  real  estate 
which  was  valued  by  the  city  at  probably  one-quarter  of 
what  we  valued  it  on  our  books.  We  finally  sold  it  at  our 
own  value.  Now,  if  that  were  taken  at  the  city  valuation, 
the  returns  to  the  State  would  be  much  less  than  the  valua- 


1056 

tion  based  on  our  book  value.  So,  if  you  are  going  to 
value  the  real  estate  separately,  you  may  gain  and  you 
may  lose. 

Mr.  Brown :  The  suggestion  is  this :  As  the  item  of  real 
estate  now  is  not  given  serious  consideration  by  the  State 
authorities  in  the  value  of  the  capital  stock,  it  would  be 
in  the  future  if  it  was  assessed  by  the  local  authorities 
locally? 

Mr.  Daly :  I  doubt  if  there  is  very  much  difference.  That 
would  involve  another  point,  and  that  is,  how  would 
encumbered  real  estate  be  valued?  Trust  companies  are 
usually  unwilling  owners  of  real  estate  except  that  needed 
for  their  offices,  and  when  they  get  it  encumbered  it  would 
not  be  fair  to  disregard  the  encumbrances  in  assessing 
State  taxes.  Take,  for  example,  a  hundred  thousand  dol- 
lar property  subject  to  a  fifty  thousand  dollar  mortgage? 

Mr.  Brown :  That  is  not  carried  as  one  hundred  thousand 
dollars  worth  of  real  estate  with  fifty  thousand  dollars 
against  it? 

Mr.  Daly :  That  would  be  carried  on  the  books  at  fifty 
thousand  dollars. 

Mr.  Brown :  The  contention  is  that  if  that  one  hundred 
thousand  were  taxed  locally,  it  would  be  taxed  at  one 
hundred  thousand,  and  there  would  be  no  rebate  for  the 
fifty  thousand? 

Mr.  Daly:  You  would  increase  our  burden  by  this 
method.  Of  course,  there  are  various  plans  that  could  be 
adopted  which  would  be  fair,  and  all  that  we  ask  is  a  fair 
plan. 

Mr.  Brown:  The  contention  is  that  the  one  hundred 
thousand  should  be  taxed  just  the  same  as  one  hundred 
thousand  dollars  that  any  other  person  has,  whereas,  in 
the  value  of  the  capital  stock,  it  is  assessed  at  fifty  thou- 
sand. Why  shouldn't  the  "A"  trust  company  pay  the 
same  tax  as  I  pay? 

Mr.  Daly:  You  don't  pay  a  State  tax  on  your  prop- 
erty  


1057 

Mr.  McNichol:  If  I  engage  in  business,  I  have  to  pay 
a  tax.  You  are  taking  the  question  of  separating  your 
individual  ownership,  and  denying  the  right,  in  the  man- 
agement of  your  business,  of  the  State  to  tax,  and  that  you 
should  bear  an  equal  burden.  The  argument  is  as  to  the 
individual  payment  of  taxation.  That  is  the  thing  we 
have  got  to  unravel? 

Mr.  Daly :  If  you  are  taxing  a  business,  there  is  some 
system  of  taxation  for  that.  We  are  not  saying  the  State 
has  not  a  right  to  tax,  but  the  question  is  as  to  the  fairness 
of  the  method  to  be  adopted.  A  company  having  only 
40  per  cent,  equity  in  real  estate  should  not  pay  State 
taxes  on  that  real  estate  on  a  100  per  cent,  basis  of  valua- 
tion. We  are  doing  business  on  capital  stock,  assets  and 
earnings.  Tax  us  what  is  fair  on  these.  If  we  own  40 
per  cent,  of  real  estate  and  somebody  else  owns  60  per 
cent,  of  it,  and  you  charge  us  with  100  per  cent.,  that 
will  be  a  burden. 

By  a  Member  of  the  Committee :  Most  of  the  real 
estate  held  by  trust  companies,  outside  of  their  office  build- 
ings, are  sort  of  unwilling  assets? 

Mr.  Daly:  Yes;  the  most  of  it  we  are  obliged  to  take 
in  business  transactions,  that  come  to  us  loaded  with  en- 
cumbrances. 

By  a  Member  of  the  Committee  :  To  avoid  these  troubles, 
what  would  be  your  view  in  regard  to  putting  the  trust 
companies  under  gross  income  tax,  rather  than  book 
value  1 

Mr.  Daly:  I  don't  know.  I  don't  think  that  would  be 
fair  either.  If  any  income  is  to  be  taxed  in  the  business, 
it  should  be  the  net  income.  The  amount  of  money  you 
are  obliged  to  pay  out — 

By  a  Member  of  the  Committee :  It  is  the  same  as  the 
running  expenses  of  any  other  business,  isn't  it? 

Mr.  Daly:  A  banking  company  is  somewhat  different 
from  other  businesses.  On  the  money  you  take  in  deposit, 
you  are  asked  to  pay  interest.  We  have  to  pay  2  per  cent. 
50 


1058 

on  check  accounts  and  3  per  cent,  on  ten-day  accounts. 
This  is  about  the  most  we  can  do  consistent  with  good 
banking  methods.  Some  of  the  saving  funds  have  raised 
their  percentage  to  three  sixty-five.  I  don't  know  whether 
or  not  any  of  the  trust  companies  tried  to  follow  their 
example,  but  a  great  bulk  of  the  well-managed  trust  com- 
panies would  prefer  a  loss  of  deposits  and  a  loss  of  business 
rather  than  do  anything  that  would  have  an  injurious 
effect  on  the  business. 

Mr.  Brown  :  Why  should  they  be  favored  over  any  other 
taxpayers  ? 

Mr.  Daly:  Taxation,  as  I  say,  should  not  be  burden- 
some. Every  company  should  contribute  a  fair  share. 
Take  the  case  Mr.  Gest  mentioned  about  deposits  going  to 
another  city.  I  know  of  a  case  of  a  woman  who  went  be- 
tween New  York  and  Philadelphia,  and  who  made  an 
investment  here  and  lived  here  for  a  while.  She  had  a 
twenty  thousand  dollar  mortgage  here.  She  said  she 
didn't  think  she  would  stay  here  because  she  would  have 
to  pay  a  State  tax.  She  said  she  would  go  to  New  York 
to  live  and  make  her  home  there. 

Mr.  McNichol:  Is  it  not  true  that  85  per  cent,  ot  the 
money  in  Philadelphia  is  sent  over  to  New  York,  any- 
how? 

Mr.  Daly:   I  cannot  say  that. 

Mr.  McNichol :  Do  you  know  if  any  part  of  your  com- 
pany 's  money  is  sent  over  there  for  investment? 
Mr.  Daly :  No,  we  sent  no  money  there. 

Mr.  McNichol :  It  is  a  general  belief  that  big  money  was 
made  in  New  York  for  the  past  ten  years  on  account  of 
the  big  demand  for  large  amounts  of  money? 

Mr.  Daly :  I  don't  think  in  that  time  we  have  sent  any 
money  at  all  over  there.  We  have  been  able  to  invest  our 
money  here. 

Mr.  McNichol:   But  this  has  been  done? 
Mr.  Daly :  Yes. 


1059 

Mr.  McNichol :  Is  it  a  fact  that  taxation  drives  out  in- 
vestors ? 

Mr.  Daly:  Yes,  and  a  general  depression  of  business. 
There  was  a  time  when  you  couldn't  give  money  away, 
and  in  New  York,  at  that  time,  they  were  willing  to  pay 
a  fair  return. 

Mr.  Brown :  Let  us  have  your  thought  on  companies  that 
pay  high  rates  of  dividend.  Shouldn't  they  be  taxed 
on  the  gross  receipts  ? 

Mr.  Daly :   The  net  income  would  be  fairer. 

Mr.  Brown:  Why  not  gross  receipts.  The  operating 
expenses  are  the  same.  Wouldn't  it  reach  these  companies 
that  pay  20  and  25  per  cent,  dividend,  to  make  them  pay 
proportionately  with  the  companies  that  pay,  say  6  per 
cent.  ? 

Mr.  Daly :  No,  sir ;  for  you  would  not  get  the  same  re- 
sult. I  think  the  fairer  way  would  be  the  net  income. 

Mr.  Brown :  That  would  involve  a  whole  lot  of  figuring, 
and  sending  a  man  to  your  company  to  go  into  your 
affairs  ? 

Mr.  Daly :  You  would  hare  to  do  that  to  get  the  gross 
income.  You  would  have  to  go  into  our  affairs  and  see 
what  our  receipts  were  from  each  particular  source. 

Mr.  Brown:  The  Commonwealth  would  have  to  pass 
upon  whether  you  had  too  many  clerks,  or  whether  this 
was  fair,  or  that  was  unfair 

Mr.  Daly :  In  other  words,  the  accounting  officer  would 
say,  "You  are  not  running  this  business  right.  John 
Brown  is  doing  a  great  deal  more  business  than  you  are 
and  in  a  better  way."  And  then  you  are  getting  into  the 
inquisitorial.  I  think  the  net  income  represents  the  very 
best  judgment  and  the  very  best  knowledge  of  those  in 
charge  of  the  company. 

Mr.  McNichol:  Can  you  enlighten  this  Committee  as 
to  a  comparison  of  the  laws  of  this  State  and  the  laws 
of  New  York? 


1060 

Mr.  Daly :  I  don't  think  they  tax  deposits  in  New  York. 
I  think  that  non-residents  investing  money  here  in 
mortgages  and  things  of  that  kind  should  pay  the  same 
tax  that  residents  do.  I  do  believe  there  are  some  peo- 
ple who  loan  money  here,  and  by  living  outside  of  the 
State  escape  the  taxation.  Then,  another  example  shows 
the  danger  of  legislating  against  the  non-resident.  In 
Jersey,  it  is  a  difficult  matter  to  foreclose  a  mortgage.  I 
had  a  mortgage  down  there  in  the  hands  of  one  of  the 
ex-Judges,  and  it  took  six  or  eight  months  to  foreclose. 
The  same  thing  could  be  done  here  in  probably  three 
months.  In  speaking  of  the  matter,  I  was  told  that  this 
slow  procedure  was  for  the  benefit  of  the  debtor,  and  as 
most  of  the  lenders  were  non-residents,  the  Legislature  did 
not  favor  them.  That  condition  made  it  difficult  to  get  out- 
side money  for  New  Jersey  mortgages.  In  the  particular 
case  I  have  in  mind,  the  debtor  was  for  several  months 
trying  to  place  the  mortgage.  You  can  go  to  Atlantic 
City  to-day  and  get  6  per  cent,  without  any  trouble  for 
money  on  good  mortgages. 

Mr.  Brown:  You  think  there  should  be  some  short-cut 
for  collection? 

Mr.  Daly:  I  am  speaking  of  people  outside  the  State, 
and  of  the  danger  of  drastic  legislation  against  them. 

Mr.  McNichol :  Is  your  company  engaged  in  the  surety 
business,  Mr.  Daly? 

Mr.  Daly :  No,  we  are  not  doing  a  surety  business  regu- 
larly, and  what  business  we  are  doing  is  going  security  for 
persons,  acting  in  a  fiduciary  capacity,  and  in  these  cases 
moneys  must  be  deposited  with  us.  We  take  no  risks 
whatever. 


1061 


W.  U.  HENSEL,'of  the  Lancaster  Trust  Co., 
Lancaster,  Pa.,  called. 

Mr.  Brown:  Mr.  Hensel,  we  would  be  pleased  to  hear 
any  suggestions  you  may  desire  to  make  to  the  Com- 
mittee. 

Mr.  Hensel :  I  think  as  far  as  the  Lancaster  Trust  Co. 
is  concerned,  we  are  satisfied  with  the  present  method 
of  taxation;  but,  before  going  into  that,  I  would  like  to 
say  to  the  members  of  this  Commission,  with  all  due  defer- 
ence, that  they  are  misinformed  when  they  are  told  that 
there  are  ten  millions  of  dollars  on  certificates  of  deposit 
in  Lancaster  banks  that  go  untaxed. 

Mr.  Brown :  Mr.  Eschelman  said  this,  I  believe,  at  one  of 
our  meetings  in  Philadelphia. 

Mr.  W.  H.  Keller:  We  pay  no  interest  on  certificates 
subject  to  check.  The  only  interest  we  pay  is  on  the  cer- 
tificates of  deposit,  and  the  whole  issue  of  these  in  all  the 
trust  companies  does  not  amount  to  ten  millions  of  dol- 
lars ;  and  a  great  proportion  of  the  certificates  out  are  re- 
turned for  taxation.  The  assessors  in  the  different  town- 
ships have  gone  to  every  person  and  asked  them  if  they 
had  certificates  of  deposit,  and  the  proportion  is  consid- 
erably over  50  per  cent,  that  are  returned  for  taxation. 
We  pay  4  per  cent,  on  certificates  of  deposits  left  with 
us  for  a  year;  for  six  months,  we  pay  3  per  cent.  Some 
pay  only  3^  for  a  year  and  these  investments  are  re- 
garded as  permanent  investments  and  a  great  proportion 
are  returned  for  taxation. 

Mr.  Brown:  You  don't  pay  on  two  weeks'  notice? 

Mr.  Keller :  In  trust  companies  I  know  if  the  deposit  is 
drawn  out  at  the  expiration  of  the  certificate,  they  pay 
the  interest  earned  at  the  termination  of  the  certificate. 


1062 

Mr.  Brown :  Is  there  any  rule  for  that  in  Lancaster  as 
distinguished  from  any  other  city? 

Mr.  Keller :  It  seems  to  be  the  practice  there. 

Mr.  Brown:  Is  there  any  reason  why  you  should  not 
pay  a  tax  on  your  real  estate? 

Mr.  Keller :  We  pay  a  tax  on  our  real  estate.  Our  real 
estate  is  carried  on  our  books  at  what  it  cost,  which  is 
approximately  what  it  is  worth.  We  pay  local  tax  oil 
that  in  the  valuation  of  our  capital  stock. 

Mr.  Brown:  Have  you  any  suggestions  to  make  to  the 
Committee  as  to  any  amendments  to  the  present  laws  ? 

Mr.  Keller:  None,  except  I  think  we  all  feel — all  the 
trust  companies  feel — that  it  would  be  a  great  injustice 
to  tax  the  gross  income  or  the  net  income  either.  Again, 
we  do  not  all  operate  our  institutions  for  the  same  cost, 
and  as  long  as  the  running  charges  are  not  the  same, 
it  seems  to  me  a  gross  income  tax  would  be  an  unequal 
method  of  taxing  these  institutions.  I  would  think  the 
present  method  of  taxing  the  value  of  the  stock  would  be 
the  most  satisfactory  and  equitable  way  of  getting  at  it. 

Mr.  Brown:  Has  any  of  the  Committee  any  further 
questions  to  ask  Mr.  Keller? 

No  further  questions  asked  by  the  Committee. 

MR.  HENSEL,  of  the  Lancaster  Trust  Company,  called. 

Mr.  Hensel :  I  think  the  stock  of  trust  companies  ought 
to  be  taxed  on  just  what  it  is  worth  in  the  hands  of 
its  holders.  It  certainly  ought  to  tax  its  debts. 

Mr.  Brown :  You  are  satisfied  with  the  present  laws  ? 

Mr.  Hensel :  I  think  the  present  law  is  a  very  good  one 
in  that  respect. 


1063 


JAMES  AYLWARD  DEVELIN,  President  of  the  Mort- 
gage Trust  Company,  Philadelphia,  called. 

Mr.  Develin :  I  do  not  know  that  it  is  practically  worth 
while  for  me  to  go  into  the  special  business,  the  nature 
of  the  business  of  the  Mortgage  Trust  Company,  which 
it  is  specially  engaged  in.  So  far  as  I  know  there  are 
only  two  companies  engaged  in  the  special  business  of 
selling  or  issuing  debenture  bonds  that  are  secured  by 
mortgage. 

Most  of  the  companies  have  been  obliged  to  take  real 
estate  outside  of  the  State,  which  we  think  ought  not  to 
be  taxed  in  our  capital  stock. 

Mr.  Brown :  You  are  satisfied  with  the  present  laws  ? 

Mr.  Develin :  I  was  satisfied  better  with  the  old  law.  I 
thought  that  the  valuation,  which  was  ascertained  partly 
by  the  market  price  of  the  stock,  was  the  better  way  to 
get  at  it  than  the  book  value,  as  under  the  present  law, 
because  I  thought  that  introduced  the  element  of  ability 
to  pay  the  tax ;  that  net  income  was  affected  in  that  way, 
because  the  market  value  of  the  stock  fluctuated  largely, 
according  to  the  profits  of  the  company,  and  that  in  turn 
decided  or  determined  to  a  certain  extent  at  least  the 
ability  of  the  company  to  pay  the  tax.  In  the  case  of 
our  company  we  felt  the  hardship  of  the  book  value 
method,  because  we  owned  a  large  amount  of  real  estate 
situated  outside  of  the  State,  and  which  was  of  very  un- 
certain value.  Whether  or  not  the  present  law  is  the 
best  method  of  determining  generally,  I  am  not  prepared 
to  say.  Perhaps  it  is,  but  in  my  own  case  and  in  the  case 
of  companies  engaged  in  a  similar  business,  I  think,  in 
fact,  it  is  a  hardship.  We  also  pay  a  tax  upon  our  de- 
bentures, and  I  think,  but  I  am  not  sure  of  this,  that  the 
companies  who  do  not  issue  debentures,  but  do  practically 


1064 

the  same  business,  escape  taxation.  I  am  not  sure  about 
that. 

Mr.  Brown :  They  ought  to  be  included  in  .the  same 
class  with  you? 

Mr.  Develin:  Yes.  Well,  I  do  not  say  that.  I  do  not 
want  to  bring  that  burden  upon  anybody  else,  but  that 
we  are  better  satisfied  with  the  old  law,  and  for  that  rea- 
son we  made  an  attack — it  was  our  company,  I  believo, 
whose  name  was  used  in  the  attack  upon  the  Act  of  1907, 
which  changed  the  basis  of  taxation,  although  perhaps 
they  were  one  of  the  smallest  concerns. 


1065 


WM.  H.  KINGSLEY,  representing  the  Penn  Mutual  Life 
Insurance  Company,  called. 

Mr.  Kingsley :  Mr.  Chairman  and  Gentlemen  : — I  am  not 
going  to  take  very  much  of  your  time  this  morning.  Since 
I  have  been  listening  to  all  that  has  been  said,  I  believe 
that  our  grievance  is  monumental.  I  have  learned  a  good 
deal  about  taxation,  and  a  great  deal  of  the  taxation  as 
related  to  the  condition  under  which  the  capital  stock  of 
these  companies  is  fixed,  and  objection  has  been  raised 
to  that  system.  The  Penn  Mutual  Life  Insurance  Com- 
pany stands  almost  alone  as  a  company,  having  no  capital 
stock.  It  operates  its  business  solely  on  a  mutual  basis. 
Its?  so-called  assets  to  the  extent  of  95  per  cent,  of  their 
amount  are  in  reality  liabilities.  They  are  trust  obliga- 
tions that  are  being  held  for  two  or  three  hundred  thou- 
sand people  all  over  the  country,  returnable  to  them  in 
the  event  of  death  and  in  the  event  of  a  lapse  of  time, 
and  withdrawable  almost  as  bank  balances  or  any  deposit 
may  be.  It  has  been  argued  that  some  relief  should  be 
afforded  the  companies  who  are  forced  to  pay  on  the  ave- 
rage market  value  of  their  stock  during  the  year  just  pro- 
ceding  the  levy.  I  would  like  for  a  moment  to  point  out 
what  happens  to  us,  because  we  have  no  capital  stock  on 
which  to  pay  dividends.  We  are  obliged  to  pay  a  four 
mill  tax  on  our  entire  taxable  assets.  Other  companies  in 
the  same  line  of  business,  having  a  capital,  received  the 
benefits  of  the  method  of  taxation,  and  we  are  placed  to 
a  disadvantage  which  last  year  resulted  in  our  company 
paying  more  money  for  taxation  than  its  entire  admin- 
istration expenses.  We  do  not  consider  it  an  equitable 
basis,  and  we  believe  the  attorney  for  the  Committee  was 
in  error  when  he  said  the  Pennsylvania  Railroad  Com- 
pany was  the  largest  taxpayer  in  Pennsylvania,  because 
we  think  we  have  that  distinction  in  so  far  as  it  relates 


1066 

to  the  four  mill  tax,  and  we  do  not  want  to  be  selfish  and 
hold  it  any  longer.  We  would  like  very  much  indeed  to 
have  some  relief  from  the  position  in  which  we  are  placed. 
I  think  there  is  one  other  company  you  referred  to  this 
morning,  the  Fidelity,  which,  in  a  measure,  is  in  the  same 
class,  but  in  being  a  larger  company  it  does  not  suffer  quite 
so  much.  It  appears  to  us  that  we  have  been  taxed  from 
every  possible  angle.  In  the  first  place,  the  premium  is 
ascertained  when  its  amount  is  ascertained  when  the 
policy  is  issued;  we  are  immediately  taxed  eight  mills. 
The  next  day  that  premium  is  transferred  into  an  in- 
vestment, in  order  to  carry  out  the  terms  of  the  policy, 
and  thru  is  taxed  four  mills  as  a  personal  possession 
Then  along  comes  the  Insurance  Company  of  the  State 
which  supervises  us,  which  is  entirely  proper,  and  which 
was  the  purpose  for  which  taxes  were  originally  collected 
from  insurance  companies,  and  we  pay  for  that  super- 
vision. They  then  value  our  policies  at  the  rate  of  one- 
half  ci-nt  per  thousand  dollars.  So,  as  I  stated  before, 
our  taxes  last  year  were  one  hundred  and  thirty-seven 
dollars  more  than  our  entire  administration  expenses. 

Member  of  the  Committee :  What  was  your  total  tax? 
Mr.  Kingsley :  Our  total  tax  paid  was  $520,777. 

A  Member  of  the  Committee :  How  does  that  compare 
with  the  tax  on  similar  companies  in  other  States? 

Mr.  Kingsley :  It  is  very  much  more  heavy  and  burden- 
some and  the  rate  of  tax  imposed  by  other  States  upon 
insurance  companies,  even  where  it  is  lower  than  Penn- 
sylvania, has  been  recently  lessened,  because  they  have 
appreciated  the  power  and  force  of  the  argument  that 
has  been  made  against  tax  levy  on  insurance  companies 
We  accumulate  money  for  the  benefit  of  a  man  who  can 
withdraw  it,  and  perform  a  greater  function  than  a  saving 
fund,  because  we  have  the  clement  of  life  insurance,  and 
we  feel  there  should  certainly  be  no  discrimination  as  be- 
tween a  Mutual  Life  Insurance  Company  and  a  fraternal 


1067 

organization,  which  does  not  serve  its  members  as  well  as 
the  old  line  life  insurance  companies  or  saving  funds,  in 
that  it  only  returns  the  money  which  is  deposited 

A  Member  of  the  Committee :  Neither  of  which  is  taxed. 

Mr.  Kingsley:  Neither  of  which  is  taxed.  This  is  a 
subject  which  has  been  before  the  members  of  the  insur- 
ance fraternity  for  some  years,  and  organizations  have 
gone  back  to  the  original  belief  that  the  purpose  of  taxing 
insurance  companies  is  to  provide  funds  for  its  super- 
vision. We  have  gone  somewhat  into  statistics,  and  we 
find  that  a  drug  store  doing  a  business  of  $64,000  a  year, 
pays  a  .tax  of  $91.  Our  tax  on  $64,000  a  year  business  is 
$1,280.  A  grocery  store  doing  a  business  of  $61,800  pays  a 
tax  of  $70.00,  and  we  pay  a  tax  of  $1,239.  A  retail  drug 
store  doing  a  business  of  $342,000,  pays  $639,  and  we  pay 
$6,840  on  the  same  amount  of  business,  and  a  wholesale 
implement  house  doing  a  business  of  $464,000  pays  $283, 
and  we  pay  $9,280.  We  realize  the  fact  that  insurance 
companies,  in  common  with  all  other  beneficiaries  of  the 
State's  protection,  should  pay  a  fair  proportion  of  the  ex- 
penses of  the  Government,  both  local  and  State,  but  I 
think  you  gentlemen  must  agree  that  in  comparing  the 
situation  of  a  mutual  company  with  that  of  a  stock  com- 
pany there  is  a  great  injustice  and  burden  placed  upon 
the  mutual  company,  for  which  it  is  very  desirable  1 3  seek 
relief.  Of  course,  we  try  to  think  out  the  remedy.  We 
are  rot  tax  dodgars.  We  have  already  done  our  share, 
and  we  feel  a  great  deal  moro  than  our  share,  in  contribu- 
i:'ug  to  tax  revenue,  but  we  believe  that  if  the  mutual 
life  insurance  companies  were  taxed  upon  their  surplus, 
you  would  come  nearer  having  an  equitable  basis  than 
under  the  present  system,  and  in  that  way  perhaps  bring 
about  an  anomalous  position  with  the  stock  company,  be- 
cause it  is  the  surplus  accumulated  by  the  company  which 
gives  market  value  to  its  stock.  It  is  all  net  profit.  It  is 
the  surplus  alone  which  reflects  the  value  of  the  stock  in 
the  market,  and  in  that  way  you  could  perhaps  take  the 


1068 

surplus  of  a  mutual  life  insurance  company  and  regard 
it  in  the  same  light  you  would  the  market  value  of  a 
stock  company,  and  tax  it  on  that  basis. 

Mr.  Brown :  Do  you  carry  a  surplus  in  addition  to  your 
reserve?  Do  you  make  a  distinction  between  them? 

Mr.  Kingsley:  We  carry  both.  Our  reserve  is  made 
by  the  laws  of  the  State.  They  require  us  to  maintain  a 
reserve,  say  3£  per  cent.  If  we  earn  4  per  cent,  we 
pay  a  four-mill  tax,  which  is  equivalent  to  one-tenth  of  1 
per  cent.  If  you  have  any  considerable  number  of  invest- 
ments of  that  sort,  you  haven't  enough  margin  to  properly 
conduct  your  business. 

Mr.  McNichol :  Have  you  made  any  attempts  to  remedy 
the  condition? 

Mr.  Kingsley:  Without  being  offensive  to  the  Legisla- 
ture, we  have  spoken  to  some  of  the  members,  and  they 
have  always  said  it  was  a  condition  which  should  be  looked 
into  and  should  be  remedied,  and  we  pinned  our  faith 
to  that,  and  in  the  meantime  have  paid  our  tax  under 
protest,  to  protect  what  we  thought  was  our  position,  in 
the  event  of  the  Legislature  taking  proper  action. 

Mr.  Brown:  Mr.  Foust  addressed  the  Committee  on 
this  subject  several  weeks  ago,  and  he  seemed  to  share  the 
same  opinion. 

Mr.  Kingsley :  I  have  not  consulted  Mr.  Foust  about  it. 
In  fact,  I  did  not  know  he  had  been  before  the  Committee. 
While  it  won't  disturb  the  revenue  of  the  State,  at  the 
same  time  you  want  equity,  and  there  are  not  many  mutual 
life  insurance  companies  in  the  State,  and  the  other  States 
do  not  treat  them  as  we  are  treated  in  Pennsylvania. 

Mr.  Brown:  How  about  the  tax  on  foreign  insurance 
companies  ? 

Mr.  Kingsley :  You  are  coming  to  the  point  of  premium 
collections.  We  have  the  same  retaliatory  law  which  they 
mildly  call  a  reciprocal  law,  where  as  we  tax  so  will  they 
tax. 


1069 

Mr.  Brown :    Is  that  beneficial  to  our  home  companies  ? 

Mr.  Kingsley:  Well,  we  would  have  to  study  that  out. 
I  would  not  want  to  answer  that  off-hand. 

Mr.  Brown:   I  always  thought  it  was. 

Mr.  Kingsley:  I  believe  it  would  be,  and  we  believe 
the  support  from  the  insurance  companies  should  come 
from  that  direction,  from  the  collection  of  premiums,  from 
the  vitals  of  the  business,  rather  than  the  residuum.  We 
are  compelled  to  maintain  the  reserve  which  you  spoke  of 
a  little  while  ago,  and  we  are  merely  custodians  of  those 
funds,  and  they  change  every  day  and  pass  out  into  the 
hands  of  those  for  whose  benefit  they  are  accumulated, 
just  as  the  deposit  of  a  bank  would  be. 


1070 


FRANK  B.  SHATTUCK,  representing  the  Postal  Tele- 
graph Company,  called. 

Mr.  Shattuck :  I  came  here  on  behalf  of  the  Postal  Tele- 
graph Company,  which  received  itself  and  through  these 
numerous  light  companies  a  great  many  requests — they 
are  all  along  the  line  that  has  been  mentioned  here — as 
to  whether  or  not  the  tax  ought  to  be  on  the  actual  value 
of  the  property.  I  have  had  considerable  experience  in 
looking  into  the  returns  and  making  them  for  the  Postal 
Company  and  others,  and  I  am  emphatically  in  favor  of 
the  present  situation.  Of  course,  in  any  method  of  fixing 
the  tax  on  capital  stock,  the  judgment  of  individuals  must 
come  into  play,  but  where  you  get  the  actual  figures  of 
the  gross  income  and  expenses  and  other  figures  which 
go  to  make  market  value,  you  can  do  it  better  with  those 
figures  than  if  the  judgment  of  people  was  passed  upon  the 
value  of  a  telegraph  line.  It  is  almost  impossible  actually 
to  fix  what  its  value  is.  Good  will  enters  into  it ;  whether 
or  not  you  have  paid  damages  as  an  additional  servitude, 
and  it  has  been  held  in  our  Superior  and  Supreme  Courts 
that  you  can  institute  such  proceedings  at  any  time  if  the 
property  has  not  been  condemned  actually.  By  reason  of 
these  decisions  it  is  an  existing  liability  really.  But  rights- 
of-way  and  the  right  to  go  into  the  highway,  which  exists, 
I  take  it,  upon  the  part  of  companies  which  have  accepted 
the  Post-roads  Act  of  Congress,  and  not  upon  the  part 
of  those  who  have  not,  to  the  same  extent,  you  could  not 
properly  value  a  telegraph  line.  And  the  way  it  was 
originally  constructed  is  a  great  factor  when  you  take 
depreciation  into  consideration.  Different  companies  de- 
sire different  kinds  of  wire  and  will  equip  it  more  ex- 
pensively than  others.  Telephone  lines  would  come  within 
the  same  definition.  It  is  my  judgment  that  there  would 
be  trouble  existing  between  the  taxing  officers  and  the 


1071 

companies,  and  more  dissatisfaction  than  exists  now,  if 
the  tax  was  levied  on  the  value  of  a  telegraph  or  telephone 
line.  The  present  system  is  working  very  well,  I  think. 
There  is  very  little  trouble  in  regard  to  it.  The  stock  is 
fixed  at  the  market  value,  just  the  same  as  stock  of  other 
corporations,  taking  all  the  factors  into  consideration  that 
they  have  to  report  upon.  I  do  not  know  of  any  dissatis- 
faction on  the  part  of  any  of  the  companies  in  regard  to 
the  present  system. 

Mr.  McNichol :  Would  it  be  possible  for  the  telegraph 
companies  to  consider  paying  an  additional  tax? 

Mr.  Shattuck :  Well,  frankly  speaking,  I  do  not  think 
the  telegraph  and  telephone  companies  are  over-taxed  by 
the  State.  I  am  opposed  to  the  numerous  methods  in- 
dulged in  by  cities  and  boroughs  and  first-class  townships 
all  over  the  State.  I  do  not  really  conceive  they  are  over- 
taxed. They  might  stand  some  more. 

Mr.  Brown:  What  is  the  dividend  of  the  Postal  Teie- 
graph  Company,  say  for  the  past  year? 

Mr.  Shattuck :  You  see,  I  cannot  answer  those  questions, 
for  the  reason  that  there  is  no  Postal  Telegraph  stock  in 
the  market,  and  there  is  no  American  District  Telegraph 
Stock  in  the  market;  there  is  no  Commercial  Telegraph 
stock  in  the  market,  or  any  stock  of  any  corporation 
which  is  generally  known  as  a  Postal  Telegraph  or  a  Com- 
mercial Cable  Company.  All  of  that  stock  is  held  by  the 
Mackey  Companies  of  Boston,  which  also  hold  the  stocks 
of  a  great  many  other  corporations.  It  is  only  within 
the  last  six  months  that  it  has  sold  ten  million^  of 
dollars  worth  of  American  Telegraph  and  Telephone  Com- 
pany, the  Bell  parent  company.  That  Mackey  Company 
owns  a  great  many  corporation  stocks,  and  it  owns  prac- 
tically all  of  the  stocks  of  these  companies,  and  they  are 
known  as  Postal  Companies,  Commercial  Cable  Com- 
panies, Pacific,  and  others. 

Mr.  Brown :  Would  a  tax  on  intra  state  messages  be 
objectionable,  and  if  such  a  tax  were  levied,  would  it  be 
added  to  the  tax  on  the  customers? 


1072 

Mr.  Shattuck:  I  do  not  think  you  possess  the  power 
to  levy  a  tax  on  inter  state  messages,  because  a  telegraph 
message  has  been  held  to  be  inter-state  commerce. 

Mr.  Brown :  I  say  intra  state.  I  say  what  would  be  the 
objection  to  a  tax  on  messages  within  the  State,  and  if 
such  a  tax  were  levied,  would  it  be  added  to  the  charge 
to  the  customer? 

Mr.  Shattuck:  Well,  the  objection  to  levying  a  tax  is 
the  same  one  every  man  has.  He  hates  to  pay  any  tax. 
He  does  not  amble  forward  and  ask  to  pay  the  tax. 
Whether  or  not  it  would  be  added  to  the  message,  I  do  not 
know. 

Mr.  Brown :  Do  you  recall  that  there  was  a  bill  in  the 
last  Legislature  to  tax  messages?    Do  you  recall  that? 
Mr.  Shattuck :  I  recall  it. 

Mr.  Brown:  I  thought  probably  your  companies  had 
given  some  consideration  to  that  and  come  to  some  con- 
clusion about  it? 

Mr.  Shattuck:  Of  course,  speaking  generally,  it  would 
depend  on,  perhaps,  a  meeting  between  the  Postal  Tele- 
graph Company  and  the  Western  Union  officials.  Gen- 
erally speaking,  the  regular  ten-word  rate  is  in  a  certain 
amount,  say  twenty,  twenty-five,  thirty  or  thirty-five  cents. 
Of  course,  extra  words  bring  it  into  pennies,  but  a  tax 
on  messages,  I  take  it,  would  be  in  pennies,  and  for  that 
reason  it  might  not  be  added  on. 

Mr.  Brown:    And  again  it  might? 

Mr.  Shattuck:  Again  it  might,  and  as  a  result,  of 
course,  it  might  be  worse  for  the  public.  Now,  they  have  a 
law  of  that  kind  down  in  Maryland.  I  don't  know.  It  made 
the  operator  stamp  the  hour  that  the  message  was  delivered 
for  transmission,  and  putting  a  tax  on  it  also.  The  result 
was  that  it  cost  the  public  more  in  the  long  run  than  it 
otherwise  would  have,  because  they  added  it  on  in  different 
ways,  charging  them  for  messenger  service  and  so  on. 
Of  course,  I  could  not  answer  for  what  the  executive  of- 


1073 

ficers  of  those  two  corporations  might  do.  I  know  their 
general  feeling  is  against  taxation,  and  I  believe  if  they 
were  taxed  they  would  certainly  give  it  earnest  considera- 
tion as  to  whether  or  not  the  public  should  pay. 

Mr.  Brown:  Well,  the  presumption  is  against  the 
public. 

Mr.  Shattuck :  They  have  no  other  source  of  telegraph- 
ing practically  then  with  one  or  the  other  of  these  cor- 
porations, and  therefore  so  long  as  they  serve  the  public 
equitably  in  the  way  of  making  charges,  there  is  no  com- 
plaint on  the  part  of  the  public. 

Mr.  Brown :  It  might  resolve  itself  into  the  upper  and 
nether  mill  stone? 

Mr.  Shattuck :  I  really  think  it  would.  That  is  my  per- 
sonal opinion,  but  I  am  not  able  to  speak  for  the  executive 
officers. 

Mr.  Brown:  Mr.  Shattuck  is  the  only  man  who  has 
come  before  us  asking  to  be  taxed.  Do  you  wish  to  ask 
him  any  questions? 

Mr.  Shattuck :  I  say  I  do  not  think  they  are  over-taxed 
in  the  State? 

Mr.  Brown :  It  is  the  borough  tax  and  license,  and  one 
and  a  hundred  other  things? 

Mr.  Shattuck:  It  is  the  boroughs  and  first-class  town- 
ships that  I  have  made  complaint  about.  I  do  not  know 
as  it  would  produce  a  great  deal  of  extra  income  even  if 
they  were  taxed  a  reasonable  amount  more.  I  do  not  think 
the  income  to  the  State  from  telephone  and  telegraph  com- 
panies is  very  much. 

Mr.  McNichol :  Not  half  as  much  as  it  should  be. 

Mr.  Shattuck :  I  would  not  want  to  see  it  doubled,  but 
take  an  ordinary  fair  raise  of  10  per  cent,  or  something 
like  that,  I  do  not  think  it  would  amount  to  much  in 
dollars  and  cents. 


1074 


WILLIAM  H.  KELLER,  of  the  People's  Trust  Company, 
Lancaster,  Pa.,  called. 

Mr.  Keller:  I  do  not  know  as  I  have  anything  special 
to  say. 

Mr.  Brown:  I  invited  the  Lancaster  Trust  Company, 
because  Mr.  Eschelman  came  here  and  stated  that  they  had 
a  grievance,  and  it  was  out  of  courtesy  to  Mr.  Eschelman. 

Mr.  Keller :  I  can  corroborate  what  Mr.  Newman  stated 
to  you,  that  the  amount  that  was  placed  on  deposit  is 
entirely  too  high.  We  do  not  pay  any  interest  on  any- 
thing except  certificates  of  deposit,  and  that  while  these 
certificates  of  deposit  are  all  fixed  for  a  certain  time,  yet 
the  universal  custom  has  been  to  pay  them  on  presentation, 
and  if  we  did  not  pay  them  there  would  be  a  run  on  the 
bank.  That  has  been  the  custom.  They  are  paid.  The  only 
result  is  that  if  they  are  presented  at  less  than  six  months, 
they  lose  their  interest.  If  they  are  presented  after  six 
months  or  over  they  get  3  per  cent.,  and  if  they  are  allowed 
to  remain  in  for  a  whole  year  they  get  4  per  cent.  I  think 
a  trust  company  and  a  bank  are  in  a  different  situation 
from  any  other  class  or  corporation.  Their  business  is 
borrowing  and  lending  money,  and  therefore  their  assets 
are  in  proportion  to  their  net  capital  stock.  The  great 
bulk  of  the  assets  of  a  bank  or  trust  company  are  really 
liabilities.  We  do  not  believe  there  could  be  any  fairer 
method  of  determining  the  tax  than  that  which  is  de- 
termined now.  Previous  to  the  Act  of  1907  there  was 
nearly  always  previously  continuous  friction  between  the 
Auditor  General  and  the  different  banking  institutions  as 
to  the  exact  market  value  of  the  capital  stock.  Taking 
their  book  value,  there  can  be  none.  It  is  shown  on  the 
books,  and  there  can  be  no  falsification.  It  has  worked 
very  well,  and  we  think  any  change  from  it  would  be  a 
mistake. 


1075 

Mr.  Brown :  Do  you  change  the  value  of  your  real  estate 
from  year  to  year? 

Mr.  Keller :  The  value  of  the  real  estate  is  changed  from 
year  to  year  as  there  are  additions  to  it. 

Mr.  Brown :  If  your  real  estate  appreciates  in  value  do 
you  change  that  on  your  books? 

Mr.  Keller :  Not  on  the  books,  unless  there  has  been  some 
material  change,  like  a  building  added  or  something  of  that 
kind.  It  is  generally  carried  at  the  cost,  but  I  may  say  the 
cost  of  nearly  all  banking  institutions  in  Lancaster  is  away 
ahead  of  the  assessed  value. 

Mr.  Brown:  How  about  the  selling  value  of  the 
building  ? 

Mr.  Keller:  The  selling  value  is  somewhat  less  than 
the  amount  that  is  carried  on  the  books,  because  the  bank- 
ing houses  are,  as  a  rule,  rather  nice  institutions.  They  are 
well  built  and  look  well,  and  I  doubt  if  they  were  exposed 
to  public  sale  whether  they  would  bring — unless  there  had 
been  a  material  increase  in  the  ground — as  much  as  they 
actually  cost  with  their  fixtures. 

Mr.  Brown:  And  at  what  they  are  carried  on  your 
books? 

Mr.  Keller :  Yes.  And  as  Mr.  Newman  has  said,  we  are 
all  taxed  locally,  of  course.  We  pay  our  tax  to  the  county, 
and  to  the  city,  and  to  the  school  district,  on  the  as^^ssed 
valuation  of  our  real  estate,  in  addition  to  paying  State 
tax. 


1076 


HARRY  L.  LEAM,  representing  the  Shamokin  Trust 
Company,  called. 

Mr.  Brown :  Have  you  any  suggestions  to  make  to  us  ? 

Mr.  Learn :  Well,  I  think  the  present  law  is  pretty  good. 
I  do  not  think  you  can  get  a  fairer  or  more  equitable  way 
of  arriving  at  the  tax  value  than  the  actual  book  value. 

Mr.  Brown :  Do  you  carry  your  real  estate  on  your  books 
at  its  assessed  valuation? 

Mr.  Learn :  The  only  thing  we  have  charged  off  on  the 
real  estate  is  for  furniture  and  fixtures.  The  rest  we  carry 
at  exactly  what  we  paid  for  it. 

Mr.  Brown :  As  it  increases  in  value,  do  you  keep  pace 
with  the  valuation  from  year  to  year? 

Mr.  Learn:  No,  we  have  not  increased  the  value.  We 
are  paying  just  like  the  other  trust  companies,  we  are 
paying  a  borough  and  county,  poll  and  school  tax,  of 
course,  and  also  paying  to  the  State. 

Mr.  Brown :  How  about  your  moneys  at  interest  ? 

Mr.  Learn :  We  do  not  issue  certificates  of  deposit.  We 
pay  interest  on  the  time  they  deposit  at  the  rate  of  six 
months  or  longer,  we  pay  3  per  cent. 

Mr.  Brown:    They  are  not  taxed? 

Mr.  Learn:   No. 

Mr.  Brown:  The  depositors  as  a  rule  do  not  pay  the 
tax? 

Mr.  Learn :   That  I  do  not  know. 

Mr.  Brown:   You  never  heard  any  complaint? 

Mr.  Learn:  No.  I  believe  this,  in  regard  to  the  sug- 
gestion that  was  made  here,  that  if  they  were  to  appoint 
the  trust  companies  as  officers  to  return  to  the  State  what 
moneys  are  there,  I  think  it  would  cause  no  end  of  trouble. 
To  begin  with,  money  that  has  to  be  with  us  six  months 
before  we  pay  any  interest,  very  often  it  is  there  six 


1077 

months  and  one  day  and  taken  out.  If  we  returned  it 
to  the  State,  how  would  we  collect  it? 

Mr.  Brown:  You  pay,  for  instance,  $10,000  a  year  in 
interest,  and  if  you  paid  that  tax  on  it,  you  deduct  it  from 
your  depositors'  accounts? 

Mr.  Learn :  How  would  you  do  that  ?  A  large  portion 
of  the  accounts  we  have  the  preceding  year  are  checked 
out. 

Mr.  Brown :  When  you  pay  the  interest,  there  is  a  time 
when  you  pay  interest? 

Mr.  Learn:   Yes. 

Mr.  Brown:  When  you  pay  interest,  deduct  the  tax. 
Let  the  thing  be  contemporaneous  ? 

Mr.  Learn :  I  believe  that  would  result  in  driving  a  lot 
of  depositors  away  from  the  bank. 

Mr.  Brown :  Where  would  they  go  to  ? 

Mr.  Learn :  They  would  go  to  the  savings  funds. 

Mr.  Brown:    Tax  the  savings  funds  the  same? 

Mr.  Learn :  That  is  what  they  would  do  undoubtedly,  if 
you  put  the  tax  on  you  are  speaking  of. 

Mr.  Brown :  Is  there  any  reason  why  saving  and  trust 
deposits  should  not  be  taxed  the  same  as  a  bank  or  trust 
company? 

Mr.  Learn :  I  do  not  see  any  reason.  I  think  they  should 
be  put  on  an  equal  basis. 

Mr.  Brown :   So  if  they  were,  it  would  be  rather  foolish 

Mr.  Learn:  Certainly.  It  would  also  act  against  the 
banks  in  another  way,  or  the  trust  companies.  It  would 
result  in  a  good  many  using  the  old  stocking,  instead  of 
the  bank.  A  good  many  would  hoard  it  at  home. 

Mr.  Brown:  You  think  they  would  rather  lose  it  al- 
together, rather  than  to  pay  the  3  per  cent,  extra  tax? 

Mr.  Learn:  Yes,  they  take  chances.  Lots  of  them  are 
taking  chances  now.  That  I  know. 


1078 


FRANCIS  N.  WHITNEY,  ESQ.,  Tax  Attorney  for  the 
Western  Union  Telegraph  Company,  called. 

Mr.  Whitney:  On  behalf  of  the  Western  Union,  I  read 
the  notice  that  was  sent  to  Col.  Fowler,  and  it  speaks  of 
taxing  real  estate  locally.  Now,  if  it  is  contemplated  by 
this  Commission  to  alter  the  tax  laws  of  the  State  of 
Pennsylvania  so  as  to  place  upon  the  local  assessor  the 
power  to  attempt  to  value  telegraph  property,  it  will  sim- 
ply mean  a  chaotic  condition.  There  is  no  assessor  that 
is  intelligent  enough  to  tax  a  railroad  locally,  or  a  tele- 
graph company  or  express  company  locally. 

Mr.  McNichol :  How  is  it  possible  for  any  business  man 
to  value  his  plant  and  show  appreciation  and  fix  a  value 
on  it,  if  it  would  not  be  possible  to  do  that,  and  why  is  it 
not  possible  to  value  a  pole  or  a  wire  as  a  part  of  the 
plant  ? 

Mr.  Whitney :  As  a  whole,  yes,  but  not  in  short  sections. 
I  mean  taking  the  boundaries  of  a  borough,  or  a  town- 
ship, or  a  county,  and  attempting  to  make  a  good  many 
bites  at  one  cherry. 

Mr.  McNichol :  Take  the  county  of  Philadelphia. 

Mr.  Whitney :  The  county  of  Philadelphia,  the  property 
as  a  whole  here  might  be  valued  and  might  come  pretty 
near  its  value.  Of  course,  the  element  of  depreciation 
would  enter  largely  and  that  would  be  the  stumbling 
block,  as  to  the  amount  of  depreciation.  I  think  myself 
that  the  scheme  provided  by  the  State  for  taxing  the 
property  as  a  whole,  taking  its  capital  stock  at  its  average 
value  for  a  year,  arrives  at  the  value  of  the  property  and 
you  tax  every  element  in  that. 

Mr.  Brown :  In  the  valuation  of  capital  stock,  of  course, 
it  included  all  the  assets? 

Mr.  Whitney :  Everything.  You  take  into  consideration 
every  element  that  is  taxable. 


1079 

Mr.  Brown :  How  is  it  possible  for  one  man  practically 
today  to  tax  the  value  of  all  the  real  estate  of  the  "Western 
Union  in  Pennsylvania? 

Mr.  Whitney:  He  does  not  do  it. 

Mr.  Brown:  He  takes  your  word? 

Mr.  Whitney:  He  doesn't  do  it,  no.  I  do  not  mean 
that.  It  isn't  necessary  to  value  its  tangible  property 
under  the  existing  law.  For  that  reason  I  believe  the 
present  law  is  preferable  by  far  to  any  law  that  would 
require  a  tangible  valuation.  I  think  when  you  come  to 
make  a  tangible  valuation  for  ad  valorem  assessment,  you 
are  going  to  have  a 

Mr.  Brown:  What  does  your  return  to  the  State  of 
Pennsylvania  include? 

Mr.  Whitney:  We  return  all  miles  of  line  in  the  State, 
the  total  miles  for  the  system,  $99,817,100  of  capital 
stock,  and  we  give  the  average  price  of  the  stock  for  the 
last  fifteen  days  in  November,  and  the  highest  and  lowest 
for  the  year  preceding  the  first  Monday  in  November. 
Then  it  is  upon  those  stock  valuations  that  the  capital  of 
the  company  is  valued.  That  is,  the  capital  outstanding 
is  a  little  over  ninety-nine  millions  of  dollars,  and  then 
that  amount  is  apportioned  to  the  State  of  Pennsylvania 
on  the  mileage  ratio. 

Mr.  Brown :  And  that  is  all  the  State  gets? 
Mr.  Whitney:  No,  they  pay  on  gross  receipts. 

Mr.  Brown:  If  I  understand,  like   all  transportation 
companies,  you  pay  a  gross  receipt  tax? 
Mr.  Whitney:  Yes. 

Mr.  Brown:  And  there  is  no  attempt  to  get  at  the  real 
value  of  the  physical  property? 

Mr.  Whitney:  I  don't  see  how  there  can  be. 

Mr.  McNichol :  Why  couldn  't  it  be  done  ?     You  have 
got  your  accounts  of  what  you  paid  for  lumber  and  poles? 
Mr.  Whitney :  That  is  true. 


1080 

Mr.  McNichol:  You  have  got  your  labor  account  of 
your  men  for  construction? 

Mr.  Whitney :  Yes. 

Mr.  McNichol :  What  is  the  difference 

Mr.  Whitney:  If  the  State  was  to  make  the  valua- 
tion  

Mr.  McNichol:  We  are  talking  about  your  valuation 
and  submitting  it  to  the  State,  and  if  the  State  wants  to 
investigate  that  proposition  that  is  their  business. 

Mr.  Whitney :  That  is  not  what  I  understood  this  Com- 
mission to  be  after.  It  was  what  was  taxable  locally. 

Mr.  McNichol :  You  say  it  would  be  impossible  to  tax  it 
locally? 

Mr.  Whitney :  I  think  it  would.  I  don 't  think  the  ordi- 
nary assessor  has  intelligence  enough  to  value  a  railroad 
or  telegraph  line.  You  get  all  kinds  of  value.  We  have 
them  in  New  York  State,  and  we  have  a  frightful  con- 
dition there.  We  have  there  an  assessment  by  the  State 
Board  of  all  lines  that  occupy  the  highways,  and  all  the 
rest  of  the  property  is  assessed  by  the  local  assessor,  and 
we  have  all  kinds  of  valuations  and  all  kinds  of  trouble. 

Mr.  McNichol:  What  do  you  pay  in  to  the  State  of 
Pennsylvania  in  the  way  of  tax  ? 

Mr.  Whitney:  On  the  Western  Union,  or  on  its  allied 
lines? 

Mr.  McNichol:  On  the  whole  system? 

Mr.  Whitney :  I  cannot  give  you  that.  I  do  not  know 
the  gross  amount.  We  pay  our  gross  earnings  tax  and  on 
intra  state  business.  The  last  six  months'  bill  was  paid 
a  few  days  ago,  and  it  was  on  intra  state  business  about 
$120,000,  not  quite  $120,000 ;  I  think  $116,000  or  $118,000. 

Mr.  Brown :  How  does  the  valuation  of  the  capital  stock 
compare  with  the  real  physical  value  of  your  property  ? 

Mr.  Whitney:  I  do  not  know  that  we  ever  made  an 
inventory  of  the  property  in  Pennsylvania.  Our  books 
are  not  kept  by  State  lines  at  all;  they  are  kept  as  a 


1081 

whole,  or  in  some  instances  the  expense  and  repairs  ac- 
counts are  kept  by  districts ;  they  are  made  up  of  railroad 
routes.  Nearly  all  of  the  lines  of  the  Western  Union  are 
on  right-of-way  of  railroads. 

Mr.  Brown:  At  present  your  stock  is  practically  fixed 
on  the  market  value? 

Mr.  "Whitney :  Yes,  which  I  think  is  a  fair  way  of  assess- 
ing the  value  of  the  property.  Of  course,  it  is  taxed  ever^ 
year,  and  if  that  price  is  high  one  year  and  low  the  next, 
while  the  physical  property  does  not  vary  in  cost,  to  that 
extent  it  is  a  fair  way  to  equalize  it  with  other  proper- 
ties. 

Mr.  McNichol :  How  long  has  that  system  been  in 
vogue? 

Mr.  Whitney :  As  long  as  I  know,  and  that  is 

Mr.  McNichol :  Do  you  think  it  is  fair  that  the  Western 
Union  or  any  other  corporation  should  be  permitted  to  go 
on  under  conditions  existing  thirty-five  or  forty  years  ago, 
and  avoid  the  increased  responsibility  and  duties  devolv- 
ing upon  every  citizen? 

Mr.  Whitney :  We  do  not  avoid  it,  because  we  pay  upon 
our  increased  mileage  and  increased  returns — increased 
receipts. 

Mr.  McNichol:  On  a  basis  formed  thirty-five  or  forty 
years  ago.  Isn't  it  out  of  all  proportion  and  ridiculous 
at  this  present  day?  That  is  what  the  Legislature  is 
confronted  with.  Men  who  are  occupied  in  laborious 
work,  and  are  having  their  rental  increased  35  or  50  per 
cent.,  when  in  point  of  fact  a  corporation  is  allowed  to 
go  on  and  run  on  the  same  system  they  were  run  years 
ago.  You  wouldn't  say  you  are  conducting  your  business 
with  the  public  as  you  conducted  it  thirty  years  ago  ? 

Mr.  Whitney:  No,  I  don't  think  we  are. 

Mr.  McNichol :  You  have  made  improvements  and  your 
income  is  much  larger,  the  receipts  being  that  much  more? 


1082 

Mr.  Whitney :  Our  income  has  kept  pace  with  the  ex- 
penditure. 

Mr.  McNichol:  The  State  of  Pennsylvania  is  trying 
to  adjust  conditions. 

Mr.  Whitney:  I  hope  when  they  do  adjust  them,  they 
won't  go  out  of  the  frying  pan  into  the  fire,  and  get  back 
to  the  local  assessor.  We  have  kept  pace  with  the  others 
by  paying  on  the  increased  mileage  and  increased  invest- 
ment. 

Mr.  McNichol :  And  every  increase  you  add  to  it  means 
that  much  increase  of  income  to  your  stockholders? 

Mr.  Whitney:  Which  we  have  paid  on. 

Mr.  Brown:  How  much  is  the  dividend  in  your  com- 
pany? 

Mr.  Whitney :  Last  year  the  dividend  was  3  per  cent. 

Mr.  Brown:  Twenty-five  years  ago  it  was  what? 

Mr.  Whitney:  Twenty  years  ago  it  was  5  per  cent. 

Mr.  Brown:  What  is  charged  off  before  that  dividend 
is  fixed?  How  large  do  you  put  the  surplus  or  undivided 
profits,  for  instance? 

Mr.  Whitney:  The  company  has  no  surplus  account  as 
generally  understood.  Their  surplus  has  been  invested 
from  time  to  time  in  the  extension  and  building  of  new 
lines.  The  construction  of  new  lines  does  not  come  in 
as  an  operating  expense. 

Mr.  Brown:  So  the  net  results  to  your  stockholders 
are  only  3  per  cent. 

Mr.  Whitney:  Three  per  cent.,  the  last  three  years,  1 
think,  since  the  strike  of  1907.  Prior  to  that  it  was  5  per 
cent,  for  twenty  years. 

Mr.  Brown :  How  is  that  compared  to  the  Postal  ? 

Mr.  Whitney:  I  don't  know  anything  about  the  Postal. 
I  do  want  to  impress  upon  this  Committee  the  fact  that 
we  have  a  burden,  a  very  great  burden,  in  the  State  of 
Pennsylvania,  pole  tax,  wire  tax,  license  tax,  and  things 
of  that  kind,  and  it  has  been  extended  now  to  townships, 


1083 

but  fortunately  the  Legislature  saw  fit  in  1905  not  to 
send  us  to  a  jury,  but  it  left  the  Court  of  Common  Pleas 
to  determine  the  rate,  which  makes  it  a  very  fair  way  of 
determining. 

Mr.  Brown :  How  is  our  tax  compared  with  New  York, 
the  net  results  to  the  Company? 

Mr.  Whitney :  It  is  a  New  York  company,  and  of  course, 
they  have  to  pay  there  a  tax  on  their  capital  stock,  an 
excise  tax,  as  it  is  called,  which  is  similar  to  the  gross 
receipts  here,  and  franchise  tax  for  doing  business,  and 
then  we  have  a  special  franchise,  right  of  occupancy  of 
streets. 

Mr.  Brown:  That  is  the  same  thing  you  pay  the  bor- 
oughs and  townships  in  Pennsylvania  for? 

Mr.  Whitney:  They  levy  a  pole  tax.  In  the  City  of 
Philadelphia  we  have  a  pole  and  wire  tax,  and  recently 
under  an  ordinance  of  June  last  a  conduit  tax ;  that  is,  the 
conductors  and  conduits. 

Mr.  Brown:  You  are  satisfied  with  present  conditions, 
as  I  understand  you? 

Mr.  Whitney :  Yes,  I  think  it  is  a  fairer  way  to  estimate 
the  tax. 

Mr.  McNichol:  Can  your  company  stand  an  additional 
burden? 

Mr.  Whitney:  We  are  paying  3  per  cent.  now.  The 
gross  receipts  for  the  preceding  year  ending  June  30, 
1909,  were  about  thirty  million  dollars,  and  the  operating 
expenses  were  over  twenty-five  million.  We  have  $38,- 
500.000  of  bonds,  and  of  course,  that  is  a  fixed  charge. 
The  interest  on  those  bonds  varies  from  4  to  5  per  cent. 

Mr.  McNichol:  You  do  make  the  interest  and  enough 
to  pay  3  per  cent,  on  the  stock? 

Mr.  Whitney:  Yes. 

Mr.  McNichol :  Quite  a  profitable  company  for  the  bond- 
holders. 

Mr.  Whitney:  For  the  bondholders,  yes. 


1084 

Mr.  Brown:  Does  that  stock  represent  actual  cash  to 
the  company? 

Mr.  Whitney:  Yes,  property,  not  actual  cash,  because 
in  some  instances  the  old  telegraph  companies  organized 
in  this  State,  the  Erie,  Delaware  River  and  Susquehanna, 
Philadelphia  and  Wilkesbarre,  some  of  the  old  companies 
were  purchased  by  stock  of  the  Western  Union  at  differ- 
ent times,  and  those  pay  capital  stock  tax.  I  am  very 
anxious  to  avoid  the  local  assessors. 

WALTER  C.  SINGER,  representing  the  Erie  Railroad, 
enters  his  appearance. 


1085 


Fublic  Meeting  of  the  Committee  held  at  Room  496, 
City  Hall,  Philadelphia,  Wednesday,  October  5,  1910,  at 
eleven  o'clock  A.  M. 

Present:  James  P.  McNichol,  Esq.,  Chairman;  Win.  C. 
Sproul,  Win.  H.  Keyser,  James  F.  Woodward,  of  the  Com- 
mittee ;  Francis  Shunk  Brown,  Esq.,  Counsel. 

Mr.  Brown:  As  the  Committee  is  aware,  we  have  in- 
vited here  today  probably  a  hundred  to  one  hundred  and 
ten  of  representative  men  and  women  of  Philadelphia 
and  this  section  of  Pennsylvania,  who  are  payers  of  large 
sums  in  taxes  to  the  State  of  Pennsylvania,  for  the  pur- 
pose of  obtaining  from  them  their  views  upon  the  pro- 
priety of  the  State  of  Pennsylvania  ratifying  the  proposed 
amendment  to  the  Constitution  of  the  United  States  au- 
thorizing the  Federal  Government  to  tax  incomes,  and  a 
similar  invitation  has  been  extended  to  all  banks,  sav- 
ings institutions,  trust  companies,  and  like  institutions, 
which  represent  a  large  amount  of  capital,  all  of  which 
would  be  subject  to  that  tax  if  this  amendment  were 
adopted.  We  have  also  with  us  today  the  representatives 
of  the  various  Legislative  Committees,  who  have  asked 
for  an  audience  or  hearing  for  the  purpose  of  protesting 
against  the  continuance  of  the  mercantile  tax  law.  If 
it  is  your  pleasure,  we  will  take  the  Legislative  Commit- 
tee first.  Mr.  Lord,  is  there  anyone  present  who  will 
speak  for  the  association  as  an  association? 

Mr.  Lord :  No,  sir.     We  will  file  a  brief. 


1086 


Mr.  Brown:  I  will  commence  with  the  Philadelphia 
Commercial  Exchange. 

MR.  SAMUEL  L.  McKNIGHT,  President  of  the  Philadel- 
phia Commercial  Exchange,  called. 

Mr.  McKnight :  I  shall  not  inflict  upon  you  any  lengthy 
argument  in  addition  to  the  brief  which  has  been  filed 
in  behalf  of  the  association  which  I  represent,  but  I  beg 
permission  to  advance  one  or  two  suggestions  that  would 
seem  to  be  pertinent  to  the  occasion.  The  Act  to  provide 
revenue  by  imposing  a  mercantile  tax  on  venders  of  or 
dealers  in  goods,  wares  and  merchandise,  does  not  seem 
from  its  phraseology  to  have  been  especially  aimed  at  the 
branch  of  business  in  which  my  colleagues  and  myself  are 
engaged,  but  it  has  seemed  to  strike  our  trade  with  more 
than  the  ordinary  force.  Let  me  illustrate  briefly  my 
meaning  by  first  pointing  out  that  some  of  the  members 
of  the  Commercial  Exchange  are  brokers,  some  are 
wholesalers  and  some  are  retailers. 

The  Act  provides  that  each  retail  vender  shall  pay  an 
annual  mercantile  license  tax  of  two  dollars,  and  one  mill 
additional  on  each  dollar  of  the  whole  volume,  gross,  of 
business  transacted  annually.  Each  wholesale  vender 
shall  pay  an  annual  mercantile  license  tax  of  three  dol- 
lars, and  one-half  mill  additional  on  each  dollar  of  the 
whole  volume  of  business  transacted  annually.  Each 
dealer  in  or  vender  of  goods,  wares  or  merchandise  at  any 
exchange  or  board  of  trade  shall  pay  a  mercantile  license 
tax  of  twenty-five  cents  on  each  thousand  dollars  worth, 
gross,  of  goods  so  sold. 

Mr.  Brown :  He  pays  a  tax  of  three  dollars  ? 

Mr.  McKnight:  Yes.  This  seems  to  be  an  unfair  dis- 
crimination against  the  wholesaler  and  retailer,  who  pay 
respectively  twice  and  four  times  as  much  as  those  who 


1087 

deal  upon  the  Exchange  or  Board  of  Trade.  Actually, 
however,  the  dealer  upon  the  Exchange  or  Board  of 
Trade  who  pays  twenty-five  cents  is  usually  a  broker, 
who  sells  to  a  wholesaler  (that  pays  fifty  cents)  and  the 
latter  in  turn  sells  to  a  retailer,  who  pays  one  hundred 
cents  upon  the  $1,000,  thus  making  three  taxations  upon 
the  same  article. 

I  am  not  here  to  protest  against  the  broker  or  dealer 
upon  an  exchange  or  board  of  trade  paying  but  twenty- 
five  cents  upon  the  $1,000,  as  against  the  higher  rates 
charged  to  our  other  branches  of  membership,  but  I  would 
protest  against  the  three  assessments  upon  the  one  trans- 
action, which  under  the  present  law  must  be  paid  if  the 
law  is  observed.  The  broker,  selling  upon  commission, 
which  may  not  amount  to  more  than  $2.50  or  $5.00  at  the 
utmost,  can  scarcely  afford  to  give  one-tenth  or  one-twen- 
tieth of  his  earnings  to  the  State  for  the  privilege  of 
conducting  his  business  lawfully;  and  the  jobber  upon 
the  floor  of  an  exchange,  who  would  be  ranked  as  a 
wholesaler,  could  as  illy  afford  to  pay  the  same  proportion 
of  his  gross  earnings,  even  if  his  figured  profit  should  be 
twice  that  of  the  broker,  his  rate  being  also  double.  It 
would  also  seem  undue  discrimination  to  charge  the  small 
dealer  or  retailer,  handling  his  merchandise  by  the  petty 
quantity,  a  still  higher  or  again  doubled  rate,  for  the 
privilege  of  doing  business.  I  would  again  insist  that  it 
is  unjust  to  make  three  handlers  of  a  car  of  grain  or  feed, 
the  broker,  wholesaler,  and  the  retailer,  each  contribute 
a  tax  to  the  State,  based  upon  the  gross  price  of  the  ar- 
ticle handled. 

The  theory  of  taxation  that  is  based  upon  the  gross 
volume  of  sales  seems  to  me  to  be  entirely  wrong.  It  is 
an  incentive  to  concealment  of  figures,  or,  if  the  books  of 
the  merchants  are  to  be  investigated  under  the  law,  an 
undue  prying  into  their  business  and  its  extent.  It 
strikes  unequally  because  it  penalizes  with  an  extra  tax 
the  dealers  in  merchandise,  while  permitting  those  who 


1088 

do  not  handle  merchandise  an  immunity  that  is  prejudicial 
to  the  former.  The  dealings  upon  the  floor  of  our  ex- 
change are  in  actual  commodities,  and  every  transaction 
would  have  to  pay  its  share  of  the  tax. 

If  the  State  needs  the  money  which  this  form  of  taxa- 
tion now  provides,  it  would  seem  to  me  that  an  equal  sum 
could  be  raised  in  a  much  more  equitable  manner.  Our 
members  do  not  object  to  contributing  their  proper  quota 
to  the  expense  of  conducting  a  government,  but  they  be- 
lieve the  mercantile  tax  should  be  based  upon  a  fixed  an- 
nual payment  according  to  the  nature  of  the  business 
done,  that  is,  so  much  per  annum  for  a  broker,  so  much 
for  a  wholesaler  and  so  much  for  a  retailer.  The  latter 
takes  the  greater  risk  of  the  three,  and  should  not  be 
compelled  to  pay  the  highest  rate  for  the  privilege  of 
doing  business,  and  no  law  is  just  that  would  place  three 
rates  of  taxation  upon  the  same  article  and  collect  all 
three  upon  that  article. 

Let  me  briefly  explain  why  the  tax  is  especially  severe 
upon  our  trade,  when  compared  with  the  ordinary  or 
average  business  affected  by  the  tax.  The  merchant  in 
other  lines  buys  a  thousand  dollars  worth  of  goods,  or 
something  that  he  wholesales  or  retails  for  a  thousand 
dollars,  and  his  profit  is  from  10  to  25  per  cent., 
certainly  not  less  than  10.  That  means  a  profit  of  not 
less  than  $100.  If  a  wholesaler,  he  pays  fifty  cents  tax, 
or  if  a  retailer  one  dollar,  out  of  a  profit  of  from  $100 
to  $250.  But  in  handling  grain,  where  a  man  works  upon 
a  fraction  of  a  cent  per  bushel,  or  at  most  a  cent  a 
bushel,  and  a  thousand  dollars  does  not  represent  more 
than  a  thousand  bushels  of  wheat,  or  fifteen  hundred 
bushels  of  corn,  or  sixteen  hundred  bushels  of  oats,  the 
profit  in  handling  a  thousand  dollars  worth  of  goods  or 
grain  is  not  more  than  from  ten  to  twenty  dollars. 

Yet  the  grain  man  is  charged  fifty  cents,  if  a  whole- 
saler, or  one  dollar,  if  a  retailer,  upon  his  ten  or  twenty 
dollars  profit,  as  compared  with  the  same  charge  to  oth- 


1089 

er  merchants  upon  a  profit  of  from  one  hundred  to  two 
hundred  and  fifty  dollars,  or  more  than  ten  times  as  heavy 
a  rate  for  the  privilege  of  doing  business. 

I  would  like  to  file  a  brief,  and  in  this  connection  we 
also  claim  under  the  present  Federal  laws  any  tax  placed 
upon  interstate  sales  is  illegal. 

Mr.  Brown:  As  I  understand,  you  do  not  object  to  the 
tax,  but  you  think  there  should  be  a  separate  class  made 
of  those  in  your  business? 

Mr.  McKnight:  I  object  to  it  on  account  of  it  being 
on  the  gross  sales,  more  than  anything  else.  If  it  was 
put  upon  the  profits  of  the  business,  that  would  be  fair. 

Mr.  Brown:  Would  not  a  tax  put  upon  the  profits  in- 
volve a  lot  of  clerical  work  and  examining,  and  all  that 
sort  of  thing,  more  so  than  just  lumping  it  all  and  taking 
the  gross  sum? 

Mr.  McKnight:  That  is  right,  but  you  can  see  where 
it  affects  the  different  lines  of  profit,  and  in  our  line  of 
business  we  think  it  is  unconstitutional  in  a  certain 
sense,  although  1  am  not  a  lawyer.  I  buy  a  car  load  oi 
wheat  from  a  dealer  in  the  country;  he  pays  a  tax  on 
it.  I  sell  it  to  a  miller,  and  you  put  a  tax  on  it  which  I 
have  to  pay.  The  miller  turns  it  into  flour  and  sells  me  the 
flour  back,  and  he  does  not  pay  any  tax  at  all.  And  then 
I  sell  it  to  a  small  dealer  and  he  pays  a  double  tax  on  it, 
the  same  lot  of  stuff,  and  in  this  case  the  miller  is 
exempt.  I  think  we  ought  to  abolish  the  whole  thing. 

Mr.  Brown:  In  what  way  would  the  brokers  and  the 
men  in  your  class  of  business  pay  their  contribution  to 
the  State  in  the  way  of  revenue  ? 

Mr.  McKnight:  We  pay  a  regular  tax  for  doing  busi- 
ness. Of  course,  my  argument  here  shows  we  are  willing 
to  pay  a  certain  share  of  it.  We  ought  to  be  taxed  on 
the  profit  of  our  business,  what  we  make  on  it,  rather 
than  the  gross  sales. 

Mr.  Brown:  A  license  tax  such  as  you  suggest,  charg- 
51 


1090 

ing  one  class  so  much,  and  another  class  so  mucn,  chat 
wouldn't  hardly  be  fair  if  one  man  did  ten  times  the 
business  another  did? 

Mr.  McKnight:  I  don't  see  how  you  are  going  to  get 
at  it  any  more  fairer,  because  the  difference  in  profits  is 
so  great.  We  sell  large  quantities  of  stuff  and  it  runs  into 
money  very  quickly,  but  the  profits  on  it  are  very  small 
necessarily. 

Mr.  Brown:  Will  your  association,  through  your  coun- 
sel, prepare  such  a  bill  as  you  think  will  be  equitable? 

Mr.  McKnight :  Yes,  we  can  do  that. 

Mr.  Brown:  And  will  you  give  us  some  data  upon 
which  you  would  base  the  support  of  such  a  bill,  such 
a  proposed  Act?  You  folks  must  have  the  figures  which 
show  what  is  done  in  these  different  classes,  or  they  are 
available,  and  we  would  appreciate  the  receipt  of  that, 
which  would  be  a  help  to  us. 

Mr.  McKnight:  The  difficulty  is  in  getting  figures.  It 
is  so  hard  to  get  at  it  on  that  account,  although  the  li- 
cense tax  would  be  the  easiest. 

Mr.  Brown:  Is  this  tax  highly  burdensome  upon  your 
members? 

Mr.  McKnight:  It  is  upon  the  very  large  dealers,  be- 
cause they  work  on  such  a  small  margin  of  profit. 

Mr.  Brown :  Take,  for  instance,  a  man  who  would  make 
a  net  income  of  $10,000  a  year;  what  would  be  his  tax 
payment  to  the  Commonwealth  ?  Would  it  be  burdensome 
to  him,  the  tax  that  he  has  to  pay? 

Mr.  McKnight:  Well,  I  couldn't  answer  that,  because 
I  don't  know  how  much  business  he  did  to  make  the 
$10,000.  Some  men  might  only  sell  a  small  amount. 

Mr.  Brown:  Take  your  own  individual  case.  Has  the 
tax  been  a  burden  to  you? 

Mr.  McKnight:  Not  particularly  it  hasn't,  no,  only 
nobody  likes  to  pay  taxes  to  any  extent. 

Mr.  Brown:  As  a  general  proposition,  they  do  not.    I 


1091 

don't  like  to  ask  gentlemen  who  come  here  personal 
questions  as  to  their  incomes,  and  all  that,  but  it  seems 
to  me  if  a  man  could  tell  us  what  his  income  is  and  then 
say,  "I  pay  a  lax  of  so  much,  and  that  in  my  opinion 
is  excessive/'  then  we  would  have  something  to  judge 
from. 

Mr.  McKnight :  The  chairman  of  my  Committee  is  more 
familiar  with  figures  than  I  am.  I  would  like  you  to  ask 
him  a  few  questions — Mr.  Warner. 


1092 


MR.  GEORGE  M.  WARNER  called. 

Mr.  Warner:  In  answer  to  your  question  to  Mr.  Mc- 
Knight  I  want  to  say  this  tax  is  exceedingly  burdensome. 
Take  my  own  case,  before  it  was  construed  so  as  to  elim- 
inate business  which  we  call  interstate  business,  some 
years  ago,  personally  I  returned  everything,  whether  it 
was  interstate  or  intrastate,  I  returned  everything.  Then 
we  found  through  the  Mercantile  Appraiser's  office  here 
that  they  considered  that  the  law,  the  Federal  law,  would 
not  allow  them  to  tax  interstate  business.  Conse- 
quently they  eliminated  interstate  business  from  our 
assessments,  which,  of  course,  reduced  the  burden,  but  we 
rest  on  the  general  proposition  that  it  is  unfair  to  tax  any 
business  on  the  basis  of  its  gross  sales,  because  I  may 
be  doing  a  business  of  $500,000  and  making  only  $5,000, 
and  another  man  may  do  a  business  of  $50,000  and  make 
$10,000. 

Mr.  Brown:  Why  the  difference? 

Mr.  Warner-.  The  difference  is  in  the  nature  of  the 
business. 

Mr.  Brown :  In  the  methods  or  the  conduct  of  the  busi- 
ness? 

Mr.  Warner:  I  suppose  John  Wanamaker's  are  ten 
times  what  mine  are,  on  the  amount  of  money  I  handle.  I 
claim  the  State  has  no  right  to  tax  me  because  I  am 
doing  a  large  business,  no  right  to  tax  me  on  my  gross 
sales. 

Mr.  Brown:  Would  not  a  tax  on  the  net  sales  involve 
the  examination  of  the  methods  and  conduct  of  business, 
and  prying  into  businessmen's  affairs? 

Mr.  Warner:  I  grant  you  your  point  in  so  far  as  it 
might  affect  some  men,  but  there  would  be  no  more  pry- 
ing into  my  business  to  get  my  income  than  there  would 
be  to  get  my  gross  sales.  I  can  give  it  to  you  off  the  book. 


1093 

Mr.  Brown :  Suppose  you  come  to  a  person  who  is  not 
so  willing  to  give  it  to  the  assessor,  he  is  compelled  to 
obtain  it,  and  it  would  involve  considerable  knowledge  of 
bookkeeping,  wouldn't  it? 

Mr.  Warner :  I  don't  see  how  it  would,  because  he  would 
guess  at  the  gross  sales  right  along.  Many  of  them  do.  I 
think  the  law  in  its  present  state  fosters  iniquity.  I 
think  it  is  born  in  sin  and  conceived  in  iniquity,  in  one 
sense. 

Mr.  Brown:  Does  every  business  house  keep  an  ac- 
count of  its  gross  sales? 

Mr.  Warner:  I  doubt  if  20  per  cent,  of  the  people 
who  make  this  return  do  it,  except  at  a  guess.  I  have  done 
it  carefully  on  my  books,  adding  them  up  every  year  and 
am  still  doing  it,  but  it  is  an  unjust  burden  on  us  who 
make  an  honest  return.  The  whole  thing  itself  is  an 
injustice. 

Mr.  Brown:  Why  do  you  say  that?  Wherein  is  the 
injustice,  assuming  every  man  is  expected  to  pay  his 
share,  whatever  that  share  may  be,  towards  the  expenses 
of  his  Government  and  the  support  of  society? 

Mr.  Warner :  I  am  willing  to  do  that  and  to  do  it,  but 
I  contend  it  is  not  justice  to  tax  my  gross  sales  without 
any  reference  to  what  my  profit  is  out  of  those  gross  sales ; 
that  in  the  grain  business,  like  the  stockbrokers,  we  handle 
enormous  amounts  of  money  for  a  very  small  margin,  and 
yet  we  are  taxed  on  our  gross  sales.  The  law  seems  to 
discourage  industry  altogether ;  the  more  business  you  do, 
the  more  you  must  pay,  without  any  reference  to  whether 
you  are  making  a  profit  out  of  it  or  not. 

Mr.  Brown :  Take  your  own  case,  if  you  choose  to  say 
what  your  income  from  your  business  has  been  and  what 
tax  you  pay,  or,  if  you  do  not  care  to  give  your  own 
personal  experience,  say  what  the  result  of  your  talk  with 
your  fellows  engaged  in  this  particular  business  has  been ; 
what  proportion  do  they  pay  in  tax? 


1094 

Mr.  Warner:  I  don't  object  to  telling  you,  if  I  could 
give  it  exactly  from  memory.  Some  years  ago  when  we 
were  returning  interstate  business  as  well  as  other 
business,  I  paid  a  tax  of  about  $45.00  on  a  net  income  of 
about  $2,000.  Now,  I  pay  a  tax  of,  say  $22  or  $23,  but 
my  net  income  has  been  very  greatly  reduced.  It  was  cut 
in  half  last  year.  I  don't  mind  telling  it  at  all.  My  net 
income  was  just  cut  in  half  last  year,  owing  to  the  dull 
times,  and  yet  the  law  takes  no  cognizance  of  that  at  all. 
The  law  says  if  you  double  your  sales  and  halve  your  in- 
come, you  must  pay  us  twice  to  support  you ;  that  is,  to 
take  care  of  you. 

Mr.  Brown:  Can  you  say  from  communications  you 
have  had  with  those  in  the  same  line  of  business  what  their 
feeling  is? 

Mr.  "Warner :  I  judge  they  would  not  very  much  differ 
from  that.  We  all  suffered  last  year  and  the  year  before, 
and  I  guess  all  these  gentlemen  are  suffering  from  dull 
times,  but  we  hold  to  the  principle  that  a  tax  on  the  gross 
sales  is  not  a  correct  principle.  I  do  not  see  how  the 
gentlemen  of  this  Committee  can  sustain  it. 

Mr.  Brown :  You  think  a  tax  on  net  income  is  the  fair 
way  to  get  at  it  ? 

Mr.  Warner:  I  think  that  is  just  and  fair.  I  am  in 
favor  of  an  income  tax  all  over  the  country,  from  Maine 
to  California,  and  from  Minneapolis  to  Florida;  it  is  the 
only  just  thing,  and  every  one  ought  to  be  made  to  make 
an  honest  return.  If  we  are  going  to  make  an  honest  re- 
turn of  our  gross  sales,  we  will  of  our  income,  and  any 
man  representing  the  State  can  come  down  and  look  at 
my  books  and  see  what  my  income  was  last  month  or 
last  year.  We  think  if  we  are  making  a  large  revenue,  we 
should  pay  a  correspondingly  large  tax,  but  if  that  revenue 
is  reduced,  then  the  tax  should  be  reduced. 

Mr.  Brown:  Do  you  think  the  State  ought  to  tax  a 
house  that  has  been  vacant  for  years  and  no  income  secured 
from  it? 


1095 

Mr.  Warner :  I  do  not  think  so. 

Mr.  Brown:  You  think  all  unproductive  real  estate 
should  be  exempt  from  taxation? 

Mr.  "Warner:  I  would  not  call  that  fair,  but  I  am  not 
in  the  real  estate  business. 

Mr.  Brown:  I  assume  the  burden  should  be  placed 
somewhere  ?  How  would  you  do  in  a  case  like  that,  where 
a  man  owns  real  estate  and  gets  no  rent  from  it,  should 
he  pay  a  tax  or  be  exempt? 

Mr.  Warner:  I  think  he  should  pay  a  small  tax.  He 
has  the  property  and  the  possibility  of  income  from  it.  I 
think  he  ought  to  pay  a  small  tax  on  it.  I  think  it  should 
be  graded. 

Mr.  Brown:  I  am  trying  to  get  your  thought.  Sup- 
pose a  man  who  has  a  house  next  door  to  you  is  unable 
to  rent  it,  and  you  living  in  the  next  adjoining  house 
with  an  income,  why  would  you  tax  the  one  and  exempt 
the  other? 

Mr.  Warner:  Well,  I  think  a  man  who  has  a  large 
amount  of  real  estate  should  pay  some  tax  on  it,  whether 
the  property  is  productive  or  not,  because  he  takes  up 
ground  that  belongs  to  his  fellows,  but  that  is  a  very  dif- 
ferent thing  from  the  grain  business. 

Mr.  Sproul:  You  state  you  are  in  favor  of  an  income 
tax? 

Mr.  Warner:  Yes. 

Mr.  Sproul:  Now,  would  you  have  that  income  tax 
levied  by  the  Federal  Government  and  collected  by  it,  or 
reserved  to  the  State  for  its  income  ? 

Mr.  Warner :  Well,  Mr.  Sproul,  I  am  not  quite  enough 
of  a  lawyer  nor  a  Theodore  Roosevelt  to  answer  that  ques- 
tion. I  think  it  would  be  better  for  the  State  to  collect 
that. 

Mr.  Brown :  Mr.  Roosevelt  has  answered  that  he  thinks 
the  Federal  Government  should  get  everything  in  sight, 
the  inheritance  tax  and  the  income,  too. 


1096 

Mr.  Warner:  Please  repeat  that  question. 

Mr.  Sproul :  You  said  you  favored  an  income  tax,  and 
we  wondered  whether  you  meant  that  you  wanted  it 
collected  by  the  Federal  Government  for  Federal  purposes, 
or  if  the  State  should  reserve  the  income  tax  for  its  own 
support  ? 

Mr.  Warner :  At  first  blush  I  should  say  the  State  had 
better  collect  its  own  income  tax.  I  think  that  is  more  in 
accordance  with  American  institutions. 


1097 


MR.  WILLIAM  A.  HUEY,  representing  the  Philadelphia 
Commercial  Exchange,  called. 

Mr.  Huey :  As  one  of  those  who  pays  taxes,  this  is  a  tax 
that  I  never  understood  right.  You  have  heard  our  mem- 
bers of  the  Committee  here  explain  themselves  in  refer- 
ence to  it,  and  I  do  not  wish  to  go  over  the  same  ground 
they  have  covered,  but  I  think  the  State  could  devise 
some  other  form  of  taxation  that  would  accomplish  the 
purpose  without  inflicting  upon  us  a  tax  which  I  think  is 
not  right.  Now,  the  line  of  business  I  am  engaged  in,  I 
think,  is  bearing  what  I  would  term  excessive  taxation, 
when  you  consider  how  it  is  earned,  and  it  never  gets 
rid  of  this  tax  until  it  is  used  up  or  consumed.  If  there 
could  be  a  law  framed  that  would  get  at  the  income  of 
our  business,  I  should  think  that  would  be  a  fair  law. 

Mr.  Brown:   The  net  income? 

Mr.  Huey:  The  net  income.  I  am  one  of  those  who 
make  returns  on  my  gross  sales,  I  believe,  to  the  dollar. 
Our  chairman  said  he  did  not  think  there  were  over  20 
per  cent,  that  paid  taxes,  but  I  do  say  I  take  my  monthly 
sales  and  make  returns.  In  the  last  year  I  have  lost  some 
accounts.  The  State  has  got  its  tax  from  me.  As  my 
accounts  are  largely  credit,  I  run  the  risk  of  losing  ac- 
counts at  times,  like  all  other  business  men. 

Mr.  Brown:  Your  tax  you  pay  is  what  proportion  of 
your  net  income? 

Mr.  Huey :  I  am  not  figuring  on  the  net  income.  I  am 
figuring  on  the  gross  sales. 

Mr.  Brown :  Suppose  you  were  taxed  on  your  net  in- 
come, what  proportion  of  your  net  income  is  your  tax  ? 

Mr.  Huey :  I  am  taxed  on  it  all. 

Mr.  Brown:   I  know,  but  what  percentage? 

Mr.  Huey :  That  I  would  have  to  consider  to  see  what  I 
can  afford  to  pay. 


1098 

Mr.  Brown:   What  are  you  paying? 

Mr.  Huey :  I  am  not  paying  on  my  income. 

Mr.  Brown :  You  are  paying  on  your  gross  sales  ? 
Mr.  Huey:  Yes,  sir. 

Mr.  Brown:  No  matter  what  you  pay,  it  is  a  certain 
proportion  of  your  net  income? 

Mr.  Huey:  Yes,  I  understand  that,  but  you  asked  me 
to  say  off-hand  what  I  should  pay.  That  is  not  a  question 
for  me  to  say.  There  are  some  businesses  that  run  on  a 
very  small  margin.  Other  businesses  can  afford  to  pay 
more. 

Mr.  Brown:  You  think  it  ought  to  be  classified? 

Mr.  Huey :  Well,  I  think  if  it  is  an  income  tax  it  should 
be  classified. 

Mr.  Brown :  You  said  the  tax  was  burdensome  and  un- 
fair and  all  that.  What  proportion  of  your  net  income  is 
your  tax;  is  it  1  per  cent? 

Mr.  Huey :  Well,  I  would  have  to  go  to  my  figures — 

Mr.  Brown:    You  do  not  know? 

Mr.  Huey :  I  am  obeying  the  law,  as  far  as  I  know,  and 
paying  my  tax  according  to  the  law,  and  as  to  the  net 
income,  as  I  say,  I  would  have  to  figure  it.  I  don't  know 
that.  I  lose  bills  every  year. 

Mr.  Brown:  It  is  our  business  to  know  just  how  this 
tax  is  burdensome  and  unjust.  If  a  man  doesn't  know 
just  how  much  he  pays  and  what  proportion  his  payment 
is  to  his  net  income,  it  is  pretty  hard  for  us  to  conclude 
whether  it  is  fair  or  unfair. 

Mr.  Huey:  Wouldn't  you  think  it  is  unfair  to  tax  a 
merchant  for  a  bill  he  loses,  that  he  can't  collect? 
Wouldn't  you  consider  that  is  an  unjust  tax?  That  is 
the  present  law,  as  I  understand  it.  Don't  you  think  that 
is  an  unjust  tax? 

Mr.  Brown:  What  my  personal  thought  may  be  does 
not  cut  much  figure  in  it.  What  I  asked  is  the  result 
of  inquiries  and  suggestions  that  have  been  made  to  us 


1099 

as  we  have  traveled  over  this  State.  It  has  been  advocated 
that  the  State  ought  to  tax  not  only  on  the  sales,  but  the 
stock  in  the  stores.  The  farmers  think  the  State  ought  to 
tax  the  stocks  in  the  stores;  that  while  a  man  may  own 
a  half  million  dollar  stock  and  pay  no  tax  on  it,  yet  the 
man  who  owns  a  half  million  dollars  worth  of  real  estate 
does  pay  a  tax  on  it. 

Mr.  Huey :  I  can't  give  you  any  more  light  than  I  have. 
I  am  in  favor  of  an  income  tax. 

Mr.  Brown:   Net  income  tax? 

Mr.  Huey :  Yes.  And  whether  the  State  collects  it,  or 
the  National  Government,  that  is  a  question  for  you  legis- 
lators to  consider,  but  I  think  the  State  ought  to  con- 
sider about  her  finances.  We  are  all  interested  in  the 
development  of  our  State,  and  we  ought  to  look  after  the 
interests  of  the  State. 

Mr.  McNichol:  What  is  the  custom  in  other  States  in 
regard  to  taxing  members  of  your  association? 

Mr.  Huey:  I  do  not  know,  sir.  Some  States  have  no 
law  such  as  we  have  here,  I  understand,  the  State  of  New 
Jersey,  for  instance.  We  sell  goods  in  Trenton,  we  ship 
goods  from  the  West  and  we  deliver  in  any  State  where 
we  can  secure  a  customer.  Our  chairman  has  said  that 
would  be  interstate  business,  and  that  is  not  taxable, 
which  I  believe  is  right.  As  to  the  other  State  laws,  I  am 
not  acquainted.  It  is  only  what  I  do  with  the  goods 
after  I  get  them. 

Mr.  McNichol :  Don't  you  think  that  it  would  be  wise  for 
you  gentlemen  to  find  out  what  the  custom  is  in  other 
parts  of  the  country  and  let  us  have  your  information? 

Mr.  Huey:  As  it  is  now,  I  couldn't  tell  you. 

Mr.  McNichol:  How  much  tax  do  you  think  you  are 
paying? 

Mr.  Huey:   On  the  business  I  am  handling? 
'    Mr.  McNichol:   Yes. 

Mr.  Huey :  Well,  in  the  volume  of  my  business  it  doesn't 


1100 

pile  up  as  high  as  grain.  For  instance,  I  am  a  wholesale 
dealer  in  hay,  arid  in  the  seasons  I  do  a  large  business  yet  it 
don't  figure  largely,  but  some  years  are  higher  than 
others. 

Mr.  McNichol :  That  is  true  in  all  business,  is  it  not  ? 
Mr.  Huey:  Yes.    I  should  say  somewhere  from  fifty  to 
sixty  dollars,  I  think  I  paid  last  year. 

Mr.  McNichol :  What  was  your  profit  at  the  end  of  the 
year  on  all  that  business? 

Mr.  Huey :  Well,  now,  I  would  have  to  go  into  figures. 
I  have  accounts  laying  over  which  ought  to  be  paid,  and 
I  can't  tell  when  I  close  my  year's  business  whether  they 
are  going  to  be  paid  or  not. 

Mr.  McNichol:  Give  us  the  accounts  that  have  been 
paid.  How  much  of  a  profit  have  you  made  in  the  con- 
duct of  your  business  whereon  you  paid  the  fifty  or  sixty 
dollars  tax? 

Mr.  Huey:    I  couldn't  do  it  off-hand. 

Mr.  McNichol:  Well,  about?  Five  or  six  thousand 
dollars  ? 

Mr.  Huey:    Oh,  gross,  I  should  say  more  than  that. 

Mr.  McNichol:    Considerably  more  than  that? 

Mr.  Huey :  Yes,  but  it  is  the  expense  of  doing  it. 

Mr.  McNichol :  Do  you  think  that  is  an  unjust  burden  ? 

Mr.  Huey :  It  is  the  expense  of  doing  that  kind  of  busi- 
ness. 

Mr.  McNichol :  We  all  have  expenses  in  conducting  our 
business.  We  find  that  if  we  buy  hay  or  feed  we  have 
to  pay  an  enormous  price  for  it. 

Mr.  Huey:  And  we  have  to  pay  for  it  long  before  we 
get  it.  We  get  our  draft  long  before  we  see  the  goods. 
There  is  this  much  about  it.  I  spoke  to  one  of  our  mer- 
chants about  this  matter — more  than  two-thirds  of  my 
business  is  commission,  I  suppose — and  one  gentleman  said 
to  me,  "You  are  paying  too  much."  He  says,  ''You  ought 
only  to  pay  on  your  net  income  from  your  commissions, 


1101 

you  don't  own  these  goods."  "You  see,  you  have  a  law 
that  is  unfair. ' '  I  never  thought  of  that,  and  I  guess  that 
gentleman  was  right.  You  see  you  have  a  law  that 
wants  looking  into  very  much,  this  present  law. 

Mr.  McNichol :  I  think  you  gentlemen  are  the  ones  who 
should  look  into  this,  where  the  defects  are,  and  give  us 
your  ideas  of  where  it  should  be  corrected.  We  would 
like  to  have  that  information  from  you  gentlemen,  in  re- 
gard to  the  custom  in  other  parts  of  the  country. 


1102 


MR.  N.  B.  KELLY,  representing  the  Philadelphia 
Chamber  of  Commerce,  called. 

Mr.  Kelly:  Counsel  representing  the  Philadelphia 
Chamber  of  Commerce  is  detained  in  Court  to-day,  and 
therefore  could  not  be  present.  Mr.  Shoemaker,  who  is 
the  chairman  of  the  Philadelphia  Drug  Exchange  Com- 
mittee, will  answer  for  the  Chamber  of  Commerce  as  well 
as  the  Drug  Exchange.  I  would  like  to  say  that  the 
Chamber  of  Commerce  membership  is  not  opposed  to  the 
mercantile  tax  if  it  is  equitably  distributed  throughout  the 
State?  We  think  these  legislators  in  devising  a  law  for 
the  levying  of  taxation  should  secure  revenue  sufficient  to 
run  the  State.  "We  think  also  that  the  legislators  in  mak- 
ing those  laws  should  consider  the  laws  of  other  States, 
taking  into  consideration  the  competition  that  our  mer- 
chants and  manufacturers  have  to  contend  with  by  reason 
of  the  State  laws  throughout  the  country.  Take,  for 
illustration,  in  the  State  of  Pennsylvania;  the  manufactur- 
ing corporation  is  first  taxed  by  the  State  Government; 
he  is  again  taxed  by  the  State  of  Pennsylvania  for  his 
charter,  if  he  secures  his  charter  through  the  State  of 
Pennsylvania,  and  if  he  does  his  business  from  some  place 
other  than  his  office  he  is  again  taxed  a  mercantile  license 
tax,  which  to  my  mind  is  very  unfair  and  not  in  accord 
with  the  laws  of  many  of  the  other  States.  My  experience 
has  been  in  traveling  throughout  this  country  that  the 
States  try  to  encourage  industrial  institutions  to  do  busi- 
ness within  their  States,  and  I  think  the  State  of  Penn- 
sylvania is  as  well  able  to  do  as  much  for  its  merchants 
and  manufacturers  as  any  State  in  the  Union. 

Take,  for  instance,  the  State  of  Louisiana.  The  State 
of  Louisiana  has  passed  a  law  exempting  manufacturers 
from  taxation  for  a  period  of  ten  years,  for  the  purpose 
of  inducing  manufacturers  to  come  to  that  State  and  locate. 


1103 

There  are  other  States  that  offer  even  greater  induce- 
ments. 

Mr.  McNichol:    When  was  that  law  passed? 

Mr.  Kelly:   I  think  it  was  passed  in  1893. 

Mr.  McNichol:  How  many  manufacturers  have  they 
secured  by  the  passage  of  such  a  law? 

Mr.  Kelly:   Oh,  you  can  go  through  the  country 

Mr.  McNichol:  We  just  want  to  know  what  the  result 
has  been  from  a  beneficial  standpoint? 

Mr.  Kelly:  I  think  it  has  been  very  beneficial  to  the 
State  of  Louisiana  and  has  induced  a  number  of  manufac- 
turers to  locate  there.  I  think  the  statistics  will  show 
the  manufactures  of  Louisiana  have  increased  very  ma- 
terially in  the  last  ten  years.  The  latest  indusial  statis- 
tics are  riot  yet  published,  but  from  advance  information 
that  I  have  had  as  a  result  of  my  connection  with  the 
Census  Department,  I  may  state  that  they  have  very  ma- 
terially advanced. 

Mr.  McNichol:  Do  you  want  this  Committee  to  believe 
that  advancement  has  not  been  indicated  in  Pennsylvania 
in  the  promotion  of  industrial  interests? 

Mr.  Kelly:  I  don't  want  you  to  believe  that,  no,  sir,  but 
I  do  want  you  to  believe  that  there  are  inequalities  in  the 
law  for  taxing  corporations  in  Pennsylvania,  a  mercantile 
house  doing  business,  that  should  be  eradicated. 

Mr.  McNichol:  Have  you  got  a  table  of  such  conditions? 

Mr.  Kelly:  I  haven't  it  here  before  me,  but  I  think  you 
will  have  the  facts  before  you  get  through  with  this  in- 
vestigation. I  want  to  speak  in  a  general  way  by  saying 
that  I  believe  the  State  of  Pennsylvania  is  in  a  better  po- 
sition to  encourage  its  merchants  and  manufacturers  pos- 
sibly, than  any  other  State  in  the  Union,  and  I  think  it  is 
the  desire  of  the  legislators  to  do  that,  but  I  think  you 
will  find  upon  investigation  that  there  are  inequalities 
at  the  present  time  that  should  be  eliminated  or  some  sys- 
tem of  taxation  made  by  the  next  Legislature  that  will 
equitably  tax  all  of  the  interests  concerned. 


1104 

Mr.  McNichol:  You  are  in  a  better  position  than  any 
other  man,  I  suppose,  to  tell  us  the  industrial  increase 
in  the  last  ten  years? 

Mr.  Kelly:  I  think  it  has  been  in  the  State  of  Pennsyl- 
vania, as  well  as  a  great  many  Western  States.  I  don't 
think  the  State  of  Pennsylvania  will  show  the  same  pro- 
portion of  increase  in  its  manufactures  as  some  of  the 
other  States. 

Mr.  Brown:  Is  there  any  State  that  has  a  larger  in- 
crease, except  the  State  of  New  York  ? 

Mr.  Kelly :  You  have  got  to  take,  of  course,  into  consid- 
eration, the  population  of  your  States.  I  can't  compare 
the  State  of  Pennsylvania  with  Massachusetts  or  Ohio. 
I  have  got  to  compare  it  with 

Mr.  Brown:  You  don't  think  the  City  of  Philadelphia, 
that  is  a  hundred  and  some  miles  from  the  sea;  can  be 
compared  with  a  city  that  lies  on  the  sea? 

Mr.  Kelly:  I  don't  consider  that,  because  we  are  a  hun- 
dred miles  from  the  sea,  that  we  are  inferior  to  New  York 
ic  any  particular.  I  think  we  have  an  advantage  over 
New  York  in  a  great  many  particulars,  due  to  our  more 
economic  cost  of  transportation,  which  New  York  has  not 
got. 

Mr.  Biown:  That  would  not  make  in  any  way  a  dis- 
crimination against  manufacturers? 

Mr.  Kelly:  No,  sir,  I  don't  think  so.  I  don't  take  any 
exception  to  anybody  so  far  as  Pennsylvania  has  to  do 
business  in  competition  with  New  York. 

Mr.  Brown:  Why  has  the  City  of  New  York  taken  this 
long  stride  ahead  of  Philadelphia  in  your  opinion? 

Mr.  Kelly:  I  wouldn't  like  to  go  into  that  now.  You 
have  a  Committee  appointed  for  the  purpose  of  investi- 
gating that  point.  I  don't  care  to  inject  that  into  this 
proposition.  I  want  to  say  very  emphatically  that  the 
State  of  Pennsylvania  is  in  a  position  to  compete  with 
any  State  in  this  Union  from  a  manufacturing  or  mer- 


1105 

cantile  standpoint,  if  we  are  accorded  the  same  privileges 
accorded  by  other  States. 

Mr.  Sproul:  Don't  you  think  our  laws,  so  far  as  they 
relate  to  manufacturers  and  also  the  license  tax  on  mer- 
chants, are  more  liberal  than  in  New  York? 

Mr.  Kelly :  In  some  respects,  yes,  and  in  other  respects, 
no. 

Mr.  Sproul:  What  do  you  mean  by  that? 

Mr.  Kelly :  Taking  for  illustration  the  tax  on  manufac- 
turing corporations — 

Mr.  Sproul:  We  have  no  State  tax  on  manufacturing 
corporations. 

Mr.  Kelly :  We  have  to  make  returns  to  the  State  based 
on  the  sales  of  our  manufacturing  corporations. 

Mr.  Sproul :  But  you  pay  no  tax  on  them.  You  make 
returns  of  your  business,  but  you  don't  pay  any  tax  as  a 
manufacturing  corporation. 

Mr.  Kelly:  No,  but  you  do  tax  the  manufacturing  cor- 
poration indirectly. 

Mr.  Sproul :  If  he  pays  local  tax,  to  be  sure. 

Mr.  Kelly:  And  he  pays  the  local  tax  in  my  line  in  an 
inequitable  way.  If  he  does  his  business  through  his 
warehouse  or  through  his  mill  he  pays  no  tax,  but  if  he 
does  it  through  his  warerooms  he  pays  his  tax.  Why 
should  he  do  that?  He  doesn't  do  that  in  the  State  of 
of  New  York. 

Mr.  McNichol:  Why  does  he  have  a  salesroom? 

Mr.  Kelly:  Simply  as  a  matter  of  convenience. 

Mr.  McNichol:  Oh,  no.  He  has  it  for  the  purpose  of 
advertising  and  bringing  trade  to  that  business. 

Mr.  Kelly:  Not  at  all.  I  don't  agree  with  you.  I  will 
give  you  a  concrete  proposition.  Here  is  a  manufacturer 
who  has  a  mill  at  Twelfth  and  Snyder  avenue;  he  manu- 
factures dress  goods  at  Twelfth  and  Snyder  avenue  and 
sends  them  up  to  Kensington  to  be  dyed,  and  then  instead 
of  sending  them  all  the  way  back  to  Twelfth  and  Snyder 


1106 

avenue  lie  sends  them  to  his  office,  which  is  209  Chestnut, 
and  he  distributes  those  goods  from  that  office  or  those 
warerooms. 

Mr.  McNichol :  That  is  where  his  people  come  to  inspect 
them. 

Mr.  Kelly:  His  business  is  practically  all  done  by 
salesmen.  He  doesn't  sell  his  goods  through  the  store. 

Mr.  McNichol:  It  is  convenient  for  him  to  have  that 
central  office. 

Mr.  Kelly:  It  is  only  convenient  to  this  extent,  that 
instead  of  his  having  to  establish  his  office  where  his  mill 
is  located  and  taking  up  the  land  there  perhaps  for  his 
office,  he  has  it  located  at  a  central  point  where  it  is  more 
convenient  to  him  and  more  convenient  for  his  purposes 
of  doing  business.  I  don't  think  that  is  a  fair  tax.  I 
think  that  is  perhaps  one  of  the  inequalities  of  the  tax- 
ing of  manufacturing  corporations  which  should  be  ad- 
justed. I  have  no  complaints  to  make,  as  I  say,  about 
the  State  of  Pennsylvania  taxing  its  merchants,  manu- 
facturers and  corporations,  provided  it  is  done  in  an  equit- 
able way,  and  I  think  the  State  of  Pennsylvania,  as  I  said 
before,  is  better  equipped  than  any  State  in  the  Union  to 
take  care  of  its  citizens,  and  I  think  it  is  the  desire  of  the 
legislators  of  the  State  themselves,  so  far  as  my  exper- 
ience has  gone  in  representing  the  Chamber  of  Commerce, 
to  be  fair  to  these  manufacturers,  and  I  think  you  want 
pointed  out  to  you  those  inequalities  so  they  can  be  ad- 
justed. 

Mr.  Crown :  What  is  there  in  our  law  that  has  given  the 
preference  to  New  York  City  in  manufacturing? 

Mr.  Kelly :  I  brought  out  one  of  the  inequalities  to  you. 
Mr.  Shoemaker  will  go  into  this  matter  in  detail.  You 
take  your  rate  of  taxing  corporations  as  compared  with 
some  of  the  other  States;  take  New  Jersey  for  illustra- 
tion. They  encourage  corporations  to  take  out  charters 
in  New  Jersey,  yet  a  man  would  rather  take  out  a  charter 
in  Pennsylvania  than  in  New  Jersey. 


1107 


MR.  CLAYTON  F.  SHOEMAKER,  Chairman  of  the  Com- 
mittee on  Legislation,  Philadelphia  Drug  Exchange, 
called. 

Mr.  Shoemaker :  It  is  not  my  intention  this  morning  to 
appear  as  a  representative  of  the  Chamber  of  Commerce, 
although  I  am  a  member  of  that  association,  but  in  the 
absence  of  Mr.  Kelly's  colleague  I  wish  to  file  this  brief  in 
behalf  now  of  the  Philadelphia  Drug  Exchange  and  like- 
wise of  the  Philadelphia  Chamber  of  Commerce.  It  is 
not  my  intention  to  go  into  detail  on  the  subjects  which 
are  included  in  my  brief,  but  I  wish  to  say  a  few  words 
in  regard  to  a  few  of  the  subjects  which  have  been 
brought  out  here  this  morning  thus  far. 

In  the  first  place,  I  want  to  allude  to  the  subject  of 
sales  made  in  interstate  commerce.  was  informed 
some  time  ago  by  a  distinguished  attorney  of  Philadelphia 
that  he  had  officially  advised  his  clients  that  it  was  not 
legal  jn  the  part  of  the  State  of  Pennsylvania  to  impose 
this  tax  upon  interstate  transactions,  and  he  had  advised 
them  not  to  pay  it,  and  some  of  his  clients  were  not 
paying  it.  I  was  not  aware  that  the  Board  of  Appraisers 
had  officially  accepted  any  ruling  of  that  kind,  and  I  don't 
think  that  is  generally  understood  by  merchants  in  this 
State  or  city.  I  think  they  understood  they  were  to  pay 
the  tax  on  all  transactions,  whether  interstate  or  other- 
wise. The  question  has  been  raised  this  morning  in  re- 
gard to  the  custom  in  other  States,  and  I  have  included 
that  in  my  brief,  but  so  long  as  it  has  been  brought  up 
here  I  would  like  to  say  a  few  words  in  regard  to  it. 

Now,  I  want  it  distinctly  understood  that  so  far  as  the 
people  for  whom  I  speak  are  concerned,  they  do  not  op- 
pose this  tax  because  of  individual  hardship,  or  because 
of  the  tax  of  their  particular  line  of  business,  but  they 
oppose  it  on  the  broad  ground  that  it  is  an  occupation 


1108 

tax.  It  is  an  occupation  tax,  pure  and  simple,  a  tax  upon 
the  occupation  of  a  merchant.  When  these  gentlemen 
may  in  a  little  while  ask  me  what  sort  of  a  tax  I  propose 
shall  take  the  place  of  it,  I  do  not  believe  there  is  any 
tax  necessary  to  take  its  place,  but  if  there  is  the  mer- 
chants of  this  State  will  not  complain  if  physicians  and 
lawyers  and  all  other  people  who  earn  money  in  this  State 
are  taxed. 

Mr.  Brown :  Why  shouldn  't  they  ? 

Mr.  Shoemaker :  Then  we  will  pay  our  part  uncomplain- 
ingly. 

Mr.  Brown :  Is  there  any  reason  in  your  rnind  why  they 
should  not?  I  have  never  heard  any. 

Mr.  Shoemaker:  I  am  not  representing  them.  I  am 
only  standing  here  for  the  mercantile  community,  to  pro- 
test against  what  they  consider  an  uneqaal  tax. 

Now,  reverting  to  the  subject  of  what  has  been  done  in 
other  States.  About  four  years  ago  the  subject  was  being 
discussed,  and  I  wrote  to  the  State  Government  of  every 
State  in  the  Union,  and  I  found  there  was  only  seven 
States  in  the  whole  Union  which  imposed  a  mercantile 
tax,  and  those  States  were  unimportant  States — Dela- 
ware, Connecticut  and  far  Western  States  who  needed 
the  money.  New  York  doesn't  impose  a  mercantile  tax. 
Neither  does  New  Jersey  nor  Ohio.  If  we  are  not  re- 
quired to  pay  a  tax  on  intrastate  commerce  then  that 
robs  that  argument  of  a  good  bit  of  its  force.  Now,  the 
question  has  been  asked  as  to  what  sort  of  a  percent- 
age  

Mr.  Brown :  Is  the  tax  that  is  exacted  by  the  Common- 
wealth -of  Pennsylvania  an  important  element  in  this 
question  of  competition?  The  total  mercantile  tax  col- 
lected in  Pennsylvania,  say  for  last  year,  was  about  a  mil- 
lion dollars. 

Mr.  Shoemaker:  Yes. 

Mr.  Brown :  From  all  over  the  State.     Do  you  consider 


1109 

that  item  of  a  million  dollars  is  an  important  element  in 
this  matter  of  competition?  I  am  talking  about  what 
was  collected  by  the  Mercantile  Appraisers  throughout 
the  Commonwealth.  Has  that  item  of  one  million  dollars 
so  collected  a  substantive  effect  on  this  matter  of  compe- 
tition between  the  merchants  of  this  State  and  other 
States. 

Mr.  Shoemaker :  When  you  ask  me  that  question  I  will 
say  in  reply  that  that  particular  question  comes  up  every 
now  and  then  with  a  good  deal  of  force.  Now,  you  gen- 
tlemen do  not  realize  what  the  condition  of  a  wholesale 
merchant  is. 

Mr.  Brown :  Let  me  interrupt.  Can  you  recall  any  im- 
portant business  transaction  that  has  ever  been  had  by 
the  members  of  your  association  in  which  this  element  of 
taxation  ever  entered,  as  to  the  fixing  of  prices  or  as  to 
doing  business  with  any  one? 

Mr.  Shoemaker :  We  frequently,  when  a  very  close  piece 
of  business  comes  up,  because  at  times  a  thing  will  come 
up,  although  our  expenses  of  doing  business  are  from 
12J  to  13J  per  cent.,  we  very  often  turn  over  an  import- 
ant transaction  which  has  to  be  handled  at,  maybe,  1  per 
cent,  or  2  per  cent. 

Mr.  Brown :  But  do  you  figure  the  tax  ? 

Mr.  Shoemaker:  I  just  want  to  tell  you  if  you  are 
figuring  on  turning  over  a  big  deal  at  1  per  cent.,  then 
you  have  got  to  think  quite  seriously  about  the  mercantile 
tax,  and  you  do  think  about  it. 

Mr.  Brown :  What  is  the  total  amount  of  business  done 
by  these  different  interests? 

Mr.  Shoemaker:    In  the  City  of  Philadelphia? 

Mr.  Brown :  The  tax  is  a  million  dollars. 

Mr.  Shoemaker :  The  figures  will  show  that.  So  that,  as 
I  said  before,  it  has  always  been  my  feeling  and  under- 
standing that  the  merchants  generally,  Philadelphia  and 
the  balance  of  the  State,  really  have  returned  the  amounts 
of  their  gross  sales  regardless  of  interstate  commerce. 


1110 

The  question  has  likewise  been  brought  up  in  regard 
to  what  percentage  of  profits  was  squandered  in  this  way. 
Of  course,  you  gentlemen  will  understand  that  the  profits 
in  a  wholesale  business,  for  example,  and  the  profits  in 
a  manufacturing  line  are  very  different,  varying  in  the 
same  line  on  account  of  different  surroundings  and  dif- 
ferent conditions,  different  questions,  different  kinds  of 
management,  and  so  on,  but  in  a  general  way  I  should 
say  that  the  mercantile  tax  might  easily  constitute  from 
3  to  5  per  cent,  of  the  net  income  of  the  merchant. 

Mr.  Brown:  How  does  this  tax  bear  upon  you  person- 
ally? Of  course,  all  my  questions,  you  understand,  are 
not  for  prying.  I  am  simply  trying  to  get  the  fact. 

Mr.  Shoemaker:  It  is  a  hardship,  because  a  good  deal 
of  our  business  is  done  at  a  very  small  profit,  and  we 
have  to  average  up  on  the  profits.  We  sell  some  things 
very  close,  and  some  things  we  make  a  better  profit  on. 

Mr.  Brown:  Is  it  not  a  fact  that  men  in  your  line  of 
business  are,  on  the  average,  as  prosperous  as  those  in 
any  other  line  of  business  in  our  city? 

Mr.  Shoemaker :    No,  sir. 

Mr.  Brown:  With  the  same  capital? 

Mr.  Shoemaker:  No,  sir.  I  want  to  say  right  here,  I 
have  had  a  good  deal  of  experience  in  this  thing.  That  is 
an  exploded  idea.  People  have  the  idea  that  the  drug 
business  is  a  mine  of  wealth,  and  I  want  to  say  that  my 
individual  and  personal  knowledge  has  been  such  that  it 
makes  me  weep  salt-water  tears  to  find  that  a  wholesale 
merchant  in  another  business  was  making  a  net  profit 
of  nearly  double  ours. 

Mr.  Brown:  He  is  a  fellow-member  in  the  Chamber  of 
Commerce  with  you? 

Mr.  Shoemaker:   I  can't  help  that. 

Mr.  Brown :  When  you  are  fixing  a  price  in  your  Bus- 
iness, do  you  mean  to  say  a  small  item  of  tax  is  con- 
sidered? 


1111 

Mr.  Shoemaker :  "When  we  fix  a  general  price,  if  we  are 
going  to  buy  a  thing  for  sixty  cents  a  dozen  and  sell 
a  quarter  of  a  dozen  at  a  time,  or  sell  for  seventy-five  cents, 
it  has  no  bearing  on  that,  but  when  a  man  comes  to  me 
and  says  he  wants  to  buy  $5,000  worth,  and  you  don't 
have  to  move  it,  and  he  says  he  will  pay  you  1  per  cent., 
then  the  question  is  whether  you  want  to  take  that  trans- 
action and  pay  the  mercantile  tax,  and  you  have  to  think 
about  it  on  that  occasion  every  time. 

Mr.  Brown :  I  am  trying  to  learn  just  what  proportion 
this  mercantile  tax  bears  to  your  business? 

Mr.  Shoemaker:   You  have  our  figures  there. 

Mr.  Brown:  The  argument  has  generally  been  ad- 
vanced throughout  the  State  that  it  is  what  the  lawyers 
call  too  small  to  bother  with,  that  there  is  no  reason  why 
the  great  State  of  Pennsylvania  should  concern  herself 
with  it.  You  gentlemen  say  it  is  not  so  little,  that  it  is  an 
important  factor.  I  am  trying  to  find  out  how  important 
a  factor  it  is. 

Mr.  Shoemaker :  One  of  the  most  objectionable  features 
is  the  unjust  character  of  the  thing  in  another  direction. 
The  wholesaler  buys  goods  out  of  a  diminished  profit,  by 
the  fierceness  of  competition,  and  he  is  obliged  to  pay  so 
many  hard  dollars  he  feels  he  ought  not  to  be  obliged  to 
pay  or  asked  to  pay,  unless  a  lawyer  pays  the  same  thing, 
but  the  objection  on  the  part  of  the  small  dealer  is  more 
forcible. 

Mr.  Brown:  You  would  all  be  satisfied  if  we  lawyers 
and  doctors  paid  substantially  the  same  tax  ? 

Mr.  Shoemaker :  I  think  we  will  all  be  satisfied.  I  would 
be.  If  all  wage-earners  were  compelled  to  pay  the  same 
tax,  and  the  State  needed  it,  I  would  not  object  to  paying 
it  in  that  way.  I  do  not  think  any  fair-minded  man  would. 

Mr.  Brown :  It  is  the  inequality  that  bothers  you  ? 

Mr.  Shoemaker:  The  inequality  of  the  thing.  I  want 
the  Committee  to  distinctly  understand  I  do  not  stand 
here  and  weep,  I  do  not  plead  the  baby  act,  I  do  not  talk 


1112 

about  personal  hardship  or  the  inequalities  of  my  business, 
or  anything  else.  It  is  simply  the  character  of  the  tax, 
the  inequality  of  the  system. 

Mr.  McNichol :  How  many  men  are  engaged  in  the  drug 
business,  in  your  particular  line  of  business? 

Mr.  Shoemaker:   Wholesale  or  retail? 

Mr.  McNichol:    Wholesale? 

Mr.  Shoemaker :  The  number  of  houses  or  men  ? 

Mr.  McNichol :  Houses  ? 

Mr.  Shoemaker:  Most  of  the  business  is  done  here  by 
five  wholesale  houses.  There  are  two  or  three  smaller 
ones. 

Mr.  McNichol:  What  was  the  total  amount  of  your 
business  for  the  year  1909  ? 

Mr.  Shoemaker :  Well,  the  total  amount  of  the  business 
was  more  than  half  a  million. 

Mr.  McNichol :  What  was  your  profit  after  all  expenses 
were  paid  ? 

Mr.  Shoemaker:   I  decline  to  state  that  here. 

Mr.  McNichol :  What  was  your  tax  that  you  paid  to  the 
State  for  your  mercantile  apportionment? 

Mr.  Shoemaker:  I  don't  remember  the  exact  amount. 
I  think  it  was  three  hundred  dollars,  or  something  of  that 
kind. 

Mr.  McNichol:   On  a  business  of  $500,000? 

Mr.  Shoemaker:  Yes. 

Mr.  McNichol:  Don't  you  think  that  business  men 
should  bear  some  burden  other  than  what  you  claim  the 
wage-earners  should  bear? 

Mr.  Shoemaker:  I  am  not  talking  about  that.  I  am 
not  talking  about  the  men  who  carry  the  hod. 

Mr.  McNichol:  I  am  talking  about  the  wage-earner, 
getting  down  to  some  basis  ? 

Mr.  Shoemaker:  If  you  wish  me  to  say  whether  the 
merchants  should  be  exempted  or  should  not  be  subject 
to  a  thing  which  a  lawyer  or  physician  pays,  I  say  in  reply 


1113 

I  do  not  think  anything  should  be  asked  of  him  that  should 
not  be  asked  of  the  other,  and  I  say  it  on  the  broad  ground 
that  in  the  first  place  the  merchant — the  dangers  of  his 
occupation  are  not  to  be  compared  with  the  others. 

Mr.  Brown:  You  think  a  merchant  can't  collect  his 
accounts  as  easily  as  a  lawyer  can  collect  his  fees? 

Mr.  Shoemaker:  No,  it  isn't  that,  but  the  lawyers  and 
physicians  have  nothing  at  risk  except  their  health.  The 
merchant  has  his  entire  capital  at  risk,  and  he  doesn't  know 
when  the  tide  of  business  may  set  against  him  and  he 
may  be  fairly  wiped  out.  I  just  want  to  say  that  when 
bad  years  come  we  don't  make  anything.  Two  years  ago 
we  paid  our  mercantile  tax  when  we  didn't  make  our  ex- 
penses. That  is  a  hardship. 

Mr.  McNichol :  You  do  not  mean  to  tell  me,  as  a  practical 
business  man  of  years  of  experience,  that  if  you  find  in 
your  wholesale  business  one  year  a  depreciation  that  you 
would  shut  your  eyes  to  the  opportunity  of  the  next  year 
in  making  good  that  depreciation? 

Mr.  Shoemaker :  I  am  not  taking  into  consideration,  as 
I  said  before 

Mr.  McNichol :  We  are  taking  up  a  business  proposition 
now. 

Mr.  Shoemaker:  Certainly,  I  should  look  at  it  in  me 
way  you  state. 

Mr.  McNichol :  And  every  business  man  does  tne  same 
thing  ? 

Mr.  Shoemaker :  Of  course. 

Mr.  McNichol:  Has  the  wage-earner  that  opportunity! 

Mr.  Shoemaker :  Well,  we  don't  ask  the  ordinary  wage- 
earner  to  pay  it. 

Mr.  McNichol:  Don't  you  think  that  we  who  have  op- 
portunities that  are  beyond  the  scope  of  the  ordinary 
every-day  wage-earning  proposition,  should  bear  our  pro- 
portionate share  of  the  burden  in  the  State  of  Pennsyl- 
vania and  the  City  of  Philadelphia  ? 


1114 

Mr.  Shoemaker:   I  don't  admit  the  scope. 

Mr.  McNichol:  What  is  your  reason  for  it?  We  can- 
not sit  here  and  take  your  views  in  a  general  way  without 
some  foundation  to  place  them  on  ? 

Mr.  Shoemaker :  So  far  as  I  see  it,  the  situation  is  simply 
this:  The  question  for  this  Committee  to  decide  is 
whether  it  is  absolutely  necessary  for  the  State  to  have 
this  revenue.  If  it  is  necessary,  then  I  say  that  the  lawyer 
and  physician  should  be  ".axed.  If  it  is  not  necessary,  then 
the  merchant  should  be  exempt.  That  is  the  position  I 
stand  on. 

Mr.  McNichol :  We  go  farther  than  that.  We  are  met 
on  the  other  side  by  men  who  are  paying  taxes,  whether 
they  hare  earning  power  or  not,  on  real  estate  and  prop- 
erty and  things  of  that  kind. 

Mr.  Shoemaker :  I  pay  my  taxes  on  my  real  estate. 

Mr.  McNichol :  You  men  who  are  engaged  in  business 
come  along  and  give  us  a  general  proposition,  without 
giving  us  any  facts  or  figures  or  any  foundation  on  which 
to  base  an  argument  to  meet  the  proposition  advanced  by 
the  other  people,  and  if  we  brought  both  people  here 
in  argument,  it  would  take  months  and  months  to  over- 
come their  differences  of  opinion. 

Mr.  Shoemaker:  Permit  me  to  ask  you  why  the  State 
of  Pennsylvania  should  impose  a  tax  which  New  York 
does  not  impose  ? 

Mr.  McNichol :  I  think,  in  answer  to  that  question,  with- 
out being  familiar  with  all  the  details  of  taxation  in 
New  York,  that  the  business  man  in  Philadelphia  has 
much  more  preference  as  to  the  burdens  he  carries  in 
comparison  with  New  York,  largely  in  his  favor. 

Mr.  Sproul :  New  York  imposes  a  great  many  taxes  we 
do  not  impose. 

Mr.  Brown :  New  York  taxes  dozens  of  items  that  Penn- 
sylvania does  not  attempt  to,  and  they  make  the  same 
complaint  over  there. 


1115 

Mr.  McNichol :  If  you  gentlemen  have  the  information, 
that  is  what  we  are  after.  If  Mr.  Kelly  has  that  in- 
formation and  would  let  us  have  it,  we  would  like  to 
familiarize  ourselves  between  now  and  the  meeting  oi 
the  Legislature  so  we  can  correct  those  abuses. 

Mr.  Kelly:  You,  as  the  Chairman  of  the  Investigation 
Committee,  are  in  a  better  position  to  obtain  the  details 
than  we  are.  If  you  haven't  that  information  and  cannot 
get  it,  we  will  get  it  for  you. 

Mr.  McNichol:  In  my  business  I  don't  wait  for  any 
Legislative  Committee  or  anybody  else  to  secure  the  in- 
formation I  am  seeking.  I  have  it  in  my  possession.  Now, 
if  you  gentlemen  are  oppressed  by  the  laws  of  the  State 
of  Pennsylvania,  I  think  it  is  your  duty  to  give  us  that 
table? 

Mr.  Shoemaker:  It  isn't  so  much  a  question  of  the  par- 
ticular line  of  business  as  it  is  a  question  of  taxation  by 
the  State  of  Pennsylvania.  First  of  all,  what  is  necessary 
for  the  State,  and  secondly,  how  the  best  interests  of  the 
State  shall  be  served.  Now,  we  have  not  touched  on 
an  income  tax,  but  here  I  am  an  employe  and  own  bonds 
or  stocks  in  a  corporation,  and  I  pay  a  tax  on  it.  I  have 
life  insurance  policies,  and  I  pay  a  tax  on  them.  That 
all  goes  into  the  coffers  of  the  State  of  Pennsylvania.  In- 
directly I  am  paying  taxes  just  as  much  as  this  gentle- 
man is.  The  question  is  whether  your  system  is  correct 
or  not.  I  do  not  think  it  is. 

Mr.  McNichol:   Have  you  made  an  investigation  of  it? 
Mr.  Shoemaker:    I  certainly  have. 

Mr.  McNichol :  We  would  like  to  have  your  information, 
if  you  would  give  it  to  us  ? 

Mr.  Brown:  You  mean  the  whole  system — the  system 
as  a  whole? 

Mr.  Shoemaker:  I  think  there  are  inequalities  that 
should  be  eliminated  and  should  be  worked  out.  I  think 
the  principle  of  the  tax  of  the  citizens  of  the  State  of 


1116 

Pennsylvania,  through  either  corporate  or  mercantile  in- 
terests, should  be,  first  of  all,  based  on  the  amount  of 
tax  that  is  required  to  run  the  State,  and  then  an  equitable 
standard  of  taxation  so  it  taxes  everybody. 

Mr.  Brown :  Supposing  I  were  to  tell  you  that  the  con- 
sensus of  opinion  at  the  International  Tax  Conference, 
which  met  at  Milwaukee,  where  forty  States  were  repre- 
sented, that  the  text-writers  on  the  subject  conceded  that 
Pennsylvania  to-day  is  far  ahead  of  any  State  in  the 
country,  would  that  have  any  effect  upon  your  opinion  ? 

Mr.  Shoemaker :  I  would  be  glad  to  furnish  the  Com- 
mittee with  the  information  that  I  have. 

Mr.  Brown :  And  in  other  States 

Mr.  Shoemaker :  I  won't  promise  for  other  States. 


1117 


ME.  C.  STUART  PATTERSON,  representing  the  Western 
Saving  Fund  Society,  called. 

Mr.  Patterson :  I  am  here  ready  to  answer  any  questions 
or  give  any  information  in  my  power.  What  would  you 
like  me  to  speak  about? 

Mr.  Brown:  I  outlined  at  the  opening  of  the  meeting 
that  we  had  requested  representative  citizens  to  appear 
here  and  give  us  their  views  upon  the  propriety  of  the 
State  of  Pennsylvania  ratifying  the  proposed  amendment 
to  the  Constitution  of  the  United  States  authorizing  the 
Federal  Government  to  tax  incomes  from  whatever  source 
derived,  and  you  are  here  in"  response  to  that  invitation. 

Mr.  Patterson :  I  am  very  strongly  of  the  opinion  that 
the  State  ought  not  to  ratify  that  amendment.  In  the 
first  place,  you  have  got  to  remember  that  we  have  to  deal 
with  State  taxation  and  with  United  States  taxation.  The 
income  tax  ought  to  be  reserved  to  the  States.  The  diffi- 
culty about  an  income  tax  in  general  is  this,  that  wherever 
the  collection  of  the  tax  depends  upon  a  return  to  be  made 
by  the  individual  taxpayer,  that  tax  operates  unequally 
against  people  who  make  honest  returns.  Unfortunately, 
we  all  of  us  know  that  everybody  is  not  at  exactly  the 
same  point  of  honesty ;  certainly  not  so  far  as  regards  the 
tax  question,  and  therefore  where  the  individual  is  to  make 
his  return,  the  person  who  makes  an  honest  and  full  return 
will  pay  a  larger  proportion  of  the  tax  than  the  person 
who  does  not.  That  is  an  objection  to  the  income  tax  in 
general. 

The  income  tax  for  that  reason  ought  to  be  reserved  for 
merchants,  and  not  be  a  part  of  a  general  taxing  system. 
In  the  next  place,  as  I  said  before,  the  income  tax  ought 
to  be  reserved  to  the  States.  The  Constitution,  as  con- 
strued by  the  Supreme  Court,  has  established  that.  Now, 
this  amendment  is  objectionable  upon  two  grounds.  Even 


1118 


if  the  power  ought  to  be  given  to  the  Government  of  the 
United  States,  it  ought  not  to  be  given  by  the  adoption 
of  the  pending  amendment.  In  the  first  place,  the  language 
of  the  amendment  subjects  to  taxation  income  from  what- 
ever source  derived.  Therefore,  the  bonds  of  the  State  of 
Pennsylvania  and  the  bonds  of  all  agents,  municipal  and 
otherwise,  of  the  State  of  Pennsylvania,  would  be  sub- 
jected to  taxation,  and  the  fact  of  that  taxation  would 
necessarily  interfere  with  the  sale  of  such  bonds.  That  is 
one  point.  There  is  another  point  that  ought  to  be  borne 
in  mind,  and  that  is  this :  The  income  tax  is  a  direct  tax. 
All  direct  taxes  are  subject,  under  the  present  Constitu- 
tion, to  the  requirement  of  their  apportionment  among 
the  States.  All  direct  taxes  are  subject  to  the  requirement 
of  uniformity.  The  amendment  proposes  to  relieve  the 
imposition  of  the  income  tax  from  the  requirement  of 
apportionment,  but  it  does  not  and  they  cannot  change 
the  nature  of  the  tax.  It  can  not  convert  a  direct  tax 
into  an  indirect  tax,  and  if  it  could  it  does  not  purport  so 
to  do.  Therefore,  if  the  power  be  given  by  this  amend- 
ment to  the  United  States,  they  will  take  the  power  with- 
out any  limitation  either  as  to  the  apportionment  or  as  to 
the  uniformity,  and  therefore  it  would  be  perfectly  com- 
petent for  the  Government  of  the  United  States  under  that 
amendment  to  impose  a  greater  tax  upon  the  citizens  of 
one  State  than  upon  the  citizens  of  another  State,  or  upon 
the  citizens  of  one  part  of  the  country  than  upon  the 
citizens  of  another  part  of  the  country,  and  with  the  sec- 
tional feeling  that  exists  between  the  East  and  the  "West, 
who  is  going  to  guarantee  that  there  may  not  be,  with 
the  dominant  Western  party  in  possession  of  the  Govern- 
ment of  the  United  States,  taxes  imposed  upon  the  East 
at  a  greater  rate  than  the  tax  imposed  upon  the  West  ? 

Mr.  Brown:  What  is  the  general  impression  among 
financiers  as  to  the  result  which  you  have  just  suggested? 

Mr.  Patterson:  That  I  am  not  able  to  say,  because  I 
have  not  discussed  it  with  anybody  at  all,  but  I  think  as 
a  lawyer  you  will  see  the  force  of  that  objection. 


1119 

Mr.  McNichol :  As  a  lawyer,  would  that  be  held  consti- 
tutional ? 

Mr.  Patterson:  The  proposition  is  that  an  amendment 
to  the  Constitution  shall  be  adopted,  which  would 
specifically  authorize  that  very  thing,  and  the  Supreme 
Court  would  be  bound  by  the  amendment. 

Mr.  McNichol:  They  could  assess  the  "Western  portion 
of  the  country  at  a  particular  income  tax  rate,  as  against 
a  larger  income  tax  in  the  Eastern  part  of  the  country? 

Mr.  Patterson:  Unquestionably.  There  is  no  doubt 
about  it,  under  the  wording  of  the  amendment. 

Mr.  Brown:  In  other  words,  they  could  include  some 
and  exclude  others? 

Mr.  Patterson:   They  may. 

Mr.  Brown:  And  would  it  not  normally  bear  more 
heavily  upon  the  Eastern  States,  the  collection  of  such  a 
tax? 

Mr.  Patterson :  Yes.  "We  have  the  evidence  of  that  with 
regard  to  the  income  tax  of  1861.  If  you  will  permit  mefc 
I  will  give  you  the  exact  figures  as  to  that.  Under  the  in- 
come tax  of  1861  and  its  supplements,  where  the  amount 
exempted  was  $600,  the  tax  was  paid  by  460,000  persons, 
and  when  the  amount  exempted  under  the  supplement  was 
$1,000,  the  tax  was  paid  by  less  than  250,000  persons. 
The  State  of  New  York  paid  nearly  one-third  of  that  tax, 
and  the  States  of  New  York  and  Pennsylvania  paid  nearly 
one-half  of  the  total  collection  in  the  country,  and  an  in- 
come tax  would  now,  of  course,  as  your  counsel  has  said, 
bear  most  heavily  upon  the  Eastern  States.  But  the  main 
point  I  would  like  to  impress  upon  the  Committee  is  this : 
The  great  danger  that  we  have  got  at  the  present  time  is 
the  consolidation  of  the  States  into  one  government.  The 
great  reason  for  the  prosperity  of  this  country  has  been 
that  we  have  had  in  the  different  States  local  self-govern- 
ment, and  if  you  are  going  to  give  the  whole  power  of 
taxation  to  the  Government  of  the  United  States,  it  in- 
evitably will  result  in  consolidating  everything  into  one 


1120 

aggregate  government  and  doing  away  with  the  State 
Governments,  and  doing  away  with  and  imparing  the 
prosperity  of  the  country. 

Mr.  Brown :  In  other  words,  they  could  tax  the  citizens 
of  our  Commonwealth  and  of  our  different  political  sub- 
divisions as  they  might  see  fit  ? 

Mr.  Patterson :  Yes. 

Mr.  Brown:  And  practically,  if  they  so  chose,  tax  us 
out  of  existence  ? 

Mr.  Patterson :  The  power  to  tax  is  the  power  to  destroy. 
There  is  no  limit  other  than  the  will  of  the  taxing  power. 
I  think  the  answer  to  that,  Mr.  Chairman,  is  simply  to 
quote  a  word  from  the  somewhat  famous  letter  written  by 
Junius  to  Sir  William  Blackstone,  in  which  Junius  said: 
"Laws  are  made  not  to  trust  to  what  men  will  do,  but  to 
guard  against  what  men  may  do."  That  is  the  whole 
object  of  law.  The  whole  object  of  law  is  not  to  trust  the 
individual,  but  to  establish  a  rule  which  protects  the  com- 
munity by  putting  a  limitation  upon  the  actions  of  every- 
body. This  is  citilization.  That  is  all  I  have  to  say. 


1121 


MR.  SAMUEL  DICKSON,  called. 

Mr.  Brown:  We  have  invited,  as  I  outlined,  the  repre- 
sentatives here  of  those  who  are  directly  interested  in  the 
question  as  to  whether  or  not  the  State  of  Pennsylvania 
should  ratify  the  proposed  amendment  to  the  Constitu- 
tion of  the  United  States,  authorizing  the  Federal  Govern- 
ment to  tax  incomes  from  whatever  source  derived,  and 
also  as  to  the  levying  of  a  direct  inheritance  tax,  and  I 
have  no  doubt  the  Committee  would  be  glad  to  hear  your 
views  on  those  subjects. 

Mr.  Dickson:  I  represent  the  Clearing  House  and  the 
Fourth  Street  National  Bank,  and  also  Drexel  &  Com- 
pany. They  have  no  particular  direct  interest,  other  than 
as  citizens  in  general,  in  the  income  tax,  and  I  am  not 
authorized  to  speak  on  behalf  of  any  officer  or  stock- 
holder of  those  institutions  in  reference  to  that.  I  heard 
some  of  Mr.  Patterson's  remarks,  and  I  think  that  one 
point  that  he  made  ought  to  be  decisive  against  the  pro- 
posed amendment  giving  Congress  the  power.  That  is, 
that  it  would  be  a  tax  that  would  operate  most  unequally 
and  unfairly  upon  the  people  of  the  country.  It  would 
be  paid  practically  by  New  York,  Pennsylvania  and  the 
New  England  States,  while  the  majority  of  the  members 
of  Congress  are  probably  from  wrest  of  the  Alleghenies 
and  it  would  be  a  tax  imposed  by  the  votes  of  the  legisla- 
tors whose  constituents  would  not  feel  the  tax.  Of 
course,  there  would  be  no  check  upon  them  in  the  amount 
which  they  would  impose,  nor  is  it  necessary,  because  it 
is  always  competent  for  Congress,  if  it  needs  the  money, 
to  raise  it  not  merely  by  the  duties  on  imports,  but  also 
by  excise  tax,  stamp  tax,  and  otherwise.  Of  course,  the 
income  tax  has  been  introduced  particularly  of  late  years 
abroad.  Formerly  when  it  was  imposed  from  time  to  time 
in  England  it  was  always  on  something  that  was  tempo- 
52 


1122 

rary,  and  they  either  reduced  or  repealed  it  from  time  to 
time.  All  European  countries,  I  believe,  now  are  com- 
pelled to  revert  to  income  tax.  Certainly  we  are  not  re- 
quired to  do  that  with  the  Federal  Government,  because 
they  have  all  the  money  they  really  need,  and  there  is 
no  reason  why  Pennsylvania,  which  has  ample  revenue, 
should  resort  to  that.  In  addition  to  that,  we  know  how 
it  was  in  our  own  country  when  we  had  the  income  tax. 
It  was  one  of  the  most  odious  and  objectionable  taxes  we 
had,  as  Mr.  Patterson  pointed  out,  and  the  honest  man 
pays  a  great  deal  more  than  the  dishonest  man,  relatively. 
But  it  operates  unfairly  upon  the  people  where  they  have 
got  the  capital  invested,  and  it  is  very  hard  and  unfair 
on  them. 

Mr.  Brown :  Bight  there,  the  fact  that  these  people  have 
capital  invested  is  one  of  the  reasons  why  they  think 
you  and  I  should  be  taxed  and  their  tax  should  be  re- 
duced. 

Mr.  Dickson :  Their  capital  remains,  whereas  the  lawyer 
or  the  doctor  has  simply  his  own  person.  While  he  has  a 
capital,  it  is  made  up  of  expenditures  over  many,  many 
years  of  expenditures.  A  medical  man  to-day,  in  order 
to  qualify  himself,  not  only  spends  four  or  five  years  in 
a  medical  school,  but  he  has  a  training  in  hospitals  which 
occupies  four  or  five  years  more,  and  he  is  pretty  well  along 
in'life  before  he  is  able  to  begin  his  practice,  and  he  repre- 
sents really  a  very  large  expenditure.  No  lawyer  ever 
thinks  of  charging  off  a  certain  per  cent,  to  represent 
what  is  a  depreciation  by  reason  of  advancing  years,  or 
anything  of  that  kind.  He  never  does  it.  I  doubt  if  he 
ever  does  get  his  capital  back  in  that  way.  But  I  do  not 
propose  to  discuss  that  question.  At  the  meeting  of  the 
Clearing  House,  I  understood  there  were  a  number  of 
banks  represented  there,  but  they  all  agreed  that  this  was 
not  a  matter  the  Clearing  House  had  anything  to  do  with, 
that  it  is  not  within  the  scope  of  their  authority,  and  it 
was  the  informal  expression  of  opinion  that  they  generally 


1123 

feel  that  they  would  rather  bear  with  the  laws  they  have, 
than  fly  to  others  they  know  not  of.  They  are  quite  content 
with  things  as  they  are.  First,  we  are  accustomed  to  this 
particular  method,  and,  secondly,  we  would  not  care  to 
be  subjected  to  any  other. 

Mr.  Brown :  Would  you  care  to  give  us  your  views  upon 
the  subject  of  taxing  direct  inheritances? 

Mr.  Dickson :  I  am  not  prepared  to  discuss  that.  I  think 
there  is  one  law  which  you  would  find  strictly  unpopular. 

Mr.  Brown :  Assuming  that  direct  inheritances  are  taxed 
to-day  in  practically  every  nation  on  earth,  and  in,  say, 
twenty-five  States  of  this  Union,  what  would  be  your 
thought  on  that  condition? 

Mr.  Dickson:  I  should  not  be  convinced  by  that,  no. 
I  think,  of  course,  if  it  were  a  matter  of  absolute  necessity, 
the  people  should  have  to  submit  to  it,  but  it  is  a  great 
hardship,  it  seems  to  me,  when  the  head  of  a  family  is 
taken  away,  that  those  who  are  dependent  upon  him  and 
who  enjoy  the  benefit  of  the  income  he  is  able  to  earn, 
are  to  be  subjected  to  a  large  deduction  from  their  in- 
heritance. Of  course,  you  will  remember  that  the  collateral 
inheritance  tax,  which  is  never  paid,  I  think,  thankfully 
or  gratefully  by  the  one  who  has  to  pay  it,  was  the  result 
of  the  great  disasters  which  followed  at  that  time  the 
enormous  expenditure  of  the  State  in  public  works — 
canals,  bridges,  toll  roads,  turnpikes,  and  matters  of  that 
sort,  so  they  incurred  a  debt  of  something  like  forty  mil- 
lions of  dollars,  and  then  when  the  depression  and  dis- 
aster followed  the  panic  of  1837  and  along  in  the  early 
forties,  it  was  impossible  to  create  a  revenue  to  pay  the 
interest,  and  Pennsylvania  was  very  unjustly  charged 
with  repudiating  it.  It  was  obliged  to.  The  income  did 
not  yield  what  it  had  been  yielding  before  in  good  times, 
what  it  was  expected  to  yield,  and  at  that  time  they  created 
the  collateral  inheritance  tax.  The  Act  of  1844  imposed  it. 
Except  in  emergencies,  I  do  not  think  there  ought  to  be 
a  direct  inheritance  tax. 


1124 

Mr.  Brown :  Why  should  there  be  a  distinction  between 
the  collateral  and  the  direct? 

Mr.  Dickson:  Because  the  collaterals,  as  a  rule,  get 
something  from  the  testator  who  was  not  the  principal 
source  of  support,  whereas  if  you  tax  the  children  of  a 
man  when  he  dies,  they  are  deprived  of  his  earning  power, 
and  you  know  how  it  has  been  with  members  of  our  bar, 
where  men  engaged  in  the  active  practice  and  earning 
large  incomes,  with  large  families,  have  been  obliged  to 
spend  their  entire  income,  and  they  are  stricken  down  in 
the  prime  of  life  and  their  children  are  deprived  of  a 
means  of  education. 

Mr.  Brown :  The  law  does  not  impose  any  legal  obliga- 
tion upon  you  or  me  to  provide  for  our  children  after 
death.  The  only  obligation  is  that  we  cannot  exclude  our 
widows.  "Why  should  the  State  do  more  than  the  testator 
himself,  or  the  decedent  himself,  is  required  to  do  ? 

Mr.  Dickson :  It  is  true  that  it  has  not  been  necessary 
to  impose  a  legal  obligation  of  that  kind.  In  France  they 
do.  Very  wisely  they  provide  that  the  father  shall  not 
devise  or  bequeath  away  more  than  one-half  of  his  estate, 
as  the  children  have  a  vested  interest  in  his  estate.  I 
think  it  was  a  very  wise  lawr.  Hitherto  with  us  the  pos- 
sibility of  earning  a  livelihood  has  been  so  good  and  the 
means  of  providing  for  one 's  self  have  been  so  abundant, 
that  we  have  not  found  it  necessary  to  resort  to  that  kind 
of  legislation.  You  remember  Dr.  Franklin  in  his  day 
pointed  out  what  wras  a  very  remarkable  difference  be- 
tween conditions  here  and  abroad,  and  that  was  that  a 
widow  with  a  family  of  children  was  the  most  marriageable 
of  women,  because  a  man  could  marry  her  and  then  he 
would  have  his  wife 's  children  to  help  carry  on  the  business 
or  do  the  work  for  him.  Actually  in  those  days  children 
after  they  passed  the  age  of  five  or  six  or  seven  years 
were  an  asset  instead  of  a  liability,  but  unfortunately  that 
is  not  so  to-day. 

Mr.  Brown:  It  has  been  presented  to  us  that  the  social 


1125 

element  which  has  tended  to  contribute  so  largely  to  the 
large  fortunes  should  have  some  consideration  at  least 
at  the  death  of  the  recipient  of  those  benefits.  Mr. 
Carnegie  has  said  that  at  least  50  per  cent,  of  these  great 
fortunes  should  go  back  to  the  State,  and  a  man  who  has 
been  reported  1o  be  so  penurious,  Russell  Sage,  has 
said  that  a  large  percentage  of  these  large  fortunes  should 
go  back  to  the  State  to  represent  the  social  liberty. 

Mr.  Dickson :  In  the  case  of  Eussell  Sage,  his  widow 
has  been  using  his  estate  to  better  advantage  than  almost 
any  right  person  that  I  know  of  in  this  country. 

Mr.  Brown :  And  many  of  the  States  of  the  Union  pro- 
vide for  this  direct  inheritance  tax  to  go  to  the  universities, 
in  direct  recognition  of  their  services.  Why  should  not 
Pennsylvania,  assuming  there  is  great  need  for  more  in- 
come for  legitimate  purposes,  such  as  building  roads  and 
improving  the  school  system,  etc.,  levy  a  direct  inheritance 
tax  for  those  purposes? 

Mr.  Dickson:  As  I  say,  large  inheritances,  of  course, 
could  afford  it,  but  then  they  do  bear  their  portion  of  taxa- 
tion on  property  of  different  kinds,  and  it  is  certain  to  be 
a  hardship  on  the  average,  and  you  have  got  to  be  governed 
by  averages.  It  would  be  a  great  hardship  on  the  aver- 
age family,  who  are  deprived  of  the  support  they  have 
been  having. 

Mr.  Brown :  You  are  a  man  of  large  affairs  and  repre- 
sent very  large  interests.  Assuming  that  there  is  need 
for  more  revenue  and  that  the  present  taxables  are  taxed 
to  the  limit,  what  is  your  thought  upon  the  propriety  of 
the  State  levying  such  a  tax?  Do  you  feel  it  is  unrea- 
sonable. 

Mr.  Dickson:  I  am  going  to  simply  say  this,  it  is  a 
subject  which  I  have  only  given  superficial  consideration 
to,  and  my  impressions  have  been  from  the  circumstances 
which  have  come  to  my  observation,  and  the  cases  under 
my  observation  have  been  those  where  the  inheritance  tax 
would  have  been  a  very  great  hardship.  I  am  not  pre- 


1126 

pared  to  say  that,  taking  it  by  and  large,  it  would  be 
so,  or  any  other  tax,  but  I  think  that  on  the  whole  it 
would  be  an  unjust  and  unfair  tax,  for  a  man  pays  his 
tax  during  his  lifetime,  and  if  the  property  does  come  into 
the  hands  of  his  children  they  will  have  to  pay  his  tax 
after  they  inherit  it. 

Mr.  Brown :  You  think  a  man  ought  to  accumulate  to- 
day a  large  fortune  and  transmit  that  to  others,  probably 
years  and  years  to  come,  who  have  no  part  or  parcel  in 
it  and  make  no  contribution  to  the  State,  whereas  he  prob- 
ably in  amassing  that  fortune  has  used  the  resources  of 
the  State  which  can  never  be  returned  to  her? 

Mr.  Dickson:  Your  Question  is  a  double-barreled  one. 
I  think  you  are  dealing  with  very  larere  fortunes.  Now, 
the  number  of  very  larere  fortunes  is  not  so  very  great. 
Really,  I  think  a  law  which  misrht  be  modified  to  advantage 
is  the  spendthrift  law.  I  think  it  is  a  srreat  mistake  and 
a  great  misfortune  to  allow  these  great  fortunes  of  many, 
many  millions  to  be  put  in  trust  and  held  practically  in- 
tact, and  to  foster  absenteeism,  which  is  becoming  quite 
as  bad  as  it  was  in  Ireland.  Undoubtedly  Ireland  did 
suffer  from  the  fact  that  the  landlords  took  their  rents 
and  spent  them  in  London.  Now,  with  us,  we  know 
where  the  fortunes  are  supposed  to  be  measured  by  the 
hundreds  of  millions,  and  where  children  are  able  to  live 
not  merely  in  idleness,  which  perhaps  is  no  erreat  difficulty 
with  the  State,  and  they  are  probablv  better  off  than  if 
they  were  at  work,  but  where  they  are  able  to  set  such 
examples  of  extravagance  as  to  endanger  the  community 
very  much — Newport. 

Mr.  Brown:   They  are  a  menace? 

Mr.  Dickson:  They  are  a  menace.  If  you  will  direct 
your  attention  to  modifying  the  law  of  special  trusts,  then 
you  can  depend  upon  their  coming  back  in  a  comparatively 
short  time. 

Mr.  Brown :  We  are  trying  to  gather  information  upon 
this,  and,  of  course,  there  are  numbers  of  interests  that 


1127 

insist  upon  this  direct  inheritance  tax  being  levied.  That 
is  why  we  are  making  this  inquiry  here. 

Mr.  McNichol :  Then  you  believe,  Mr.  Dickson,  that  we 
should  look  for  our  tax  in  other  directions  without  the 
direct  inheritance  tax? 

Mr.  Dickson:  Yes,  sir.  Really,  Mr.  Chairman,  I  think 
you  should  look  rather  to  the  reduction  of  the  expen- 
ditures. I  think  you  have  enough  sources  of  taxation  now 
to  raise  enough  revenue,  and  I  think  if  the  affairs  of  the 
State  were  economically  administered,  you  would  have 
all  the  income  we  need.  There  is  one  line  of  expenditure 
as  to  which  the  State  of  Pennsylvania  has  been  rather 
niggardly,  and  that  is  in  regard  to  its  institutions  of 
learning.  Now,  the  State  of  Michigan  has  maintained  the 
University  of  Michigan  year  after  year,  no  matter  what 
the  condition  of  the  State  has  been,  and  has  been  making 
a  full  appropriation  to  carry  on  that  great  university, 
one  of  the  greatest  in  the  country.  The  University  of 
Pennsylvania  has  received  now  and  then  a  petty  appro- 
priation to  pay  for  part  of  the  expenses  of  building  a 
hospital  ward,  or  something  of  that  kind. 

Mr.  McNichol:  Wherein  have  you  the  knowledge  that 
there  should  be  a  curtailment  of  expenses  in  any  par- 
ticular direction? 

Mr.  Dickson:  I  only  know  generally  from  reading  the 
newspapers,  and,  of  course,  the  newspapers  are  not  satis- 
fied with  anything,  we  know. 


1128 


SAMUEL  B.  SCOTT,  Esq.,  representing  Germantown 
Business  Men's  Association,  called. 

Mr.  Seott:  The  Germantown  Business  Men's  Associa- 
tion is  one  of  the  constituent  members  of  the  United 
Business  Men's  Association.  I  only  want  to  make  two 
points  about  the  mercantile  license  tax,  which  have  al- 
ready been  brought  out  here  more  or  less  in  detail,  but  as  I 
am  not  a  merchant, but  simply  a  lawyer,!  cannot  speak  as  a 
witness,  as  some  of  these  other  men  have  done,  but  sim- 
ply present  two  of  the  theoretical  and  general  objections 
to  the  mercantile  license  tax.  The  first  objection  is  on 
the  ground  of  its  discriminatory  nature.  That  is  to  say, 
the  objection  which  you  have  heard  urged  here  against 
the  merchants  paying  tax,  while  other  forms  of  business 
activity,  from  the  professions  to  manufacturing  corpora- 
tions, are  exempt.  Now,  in  the  long  run,  it  is  undoubt- 
edly true  that  if  you  tax  anybody  unjustly,  somehow  or 
other  they  will  succeed  in  throwing  the  burden  to  some- 
body else,  but  in  the  long  run,  in  the  course  of  decades 
or  hundreds  of  years,  it  is  probable  the  thing  will  work 
itself  out  more  or  less  adequately,  but  in  the  meantime 
you  who  have  been  discriminated  against,  have  suffered. 
There  seems  to  be  an  idea  prevalent,  which  I  think  is  a 
totally  false  economic  idea,  that  there  is  some  particular 
virtue  in  the  economic  function  of  manufacturing,  which 
should  get  special  consideration  from  the  State.  My  be- 
lief is  this,  that  everything  which  is  necessary  for  society 
today  is  necessary,  and  that  one  is  no  more  necessary 
than  another,  and  that  the  economic  work  of  vending 
wares  is  exactly  as  important  to  a  community  as  that  of 
manufacturing  wares,  and  that  the  exemption  not  only 
from  mercantile  tax  but  from  even  a  capital  stock  tax, 
which  is  granted  in  favor  of  the  manufacturer,  is  a  totally 
unwarranted,  uneconomic  discrimination  in  his  favor. 


1129 

That  is  the  theoretical  base  upon  which  all  these  objec- 
tions which  you  have  heard  voiced  by  different  individ- 
uals here  is  finally  founded.  I  think  when  you  are  con- 
sidering the  general  scheme  of  taxation  it  ought  to  be 
directed  as  far  as  posible  towards  eliminating  the  ques- 
tions of  discrimination  which  are  not  based  upon  real 
economic  foundations. 

The  second  general  point  is  that  it  is  the  wrong  meth- 
od of  taxation  to  tax  industry  as  against  property.  The 
objection  I  think  you  have  mentioned  as  having  been 
made  by  the  State  about  the  stocks  of  stores  not  having 
been  taxed,  whilst  that  is  well  taken}  each  merchant 
ought  to  be  taxed  not  upon  his  business,  not  upon  the 
amount  of  business  which  he  does,  but  upon  the  amount 
of  property  or  capital  which  he  has  invested.  It  is  no 
more  difficult  to  ascertain  that  than  it  is  to  ascertain  the 
value  of  the  property  of  a  corporation. 

Mr.  Brown:  He  is  taxed  that  now,  if  he  is  a  corpora- 
tion? 

Mr.  Scott:  Yes,  if  he  is  a  corporation.  The  question 
if  he  is  a  corporation  adds  a  totally  new  subject  of  taxa- 
tion, which  on  a  mercantile  business  is  a  third  tax.  First, 
his  local  and  real  estate;  second,  his  capital  stock  tax 
to  the  State,  and,  third,  on  top  of  all  that,  his  mercantile 
license  tax.  For  the  moment  I  am  leaving  out  the  ques- 
tion of  whether  or  not  he  is  a  corporation,  because  I  think 
that  is  an  addition  and  does  not  touch  the  economics.  It 
has  been  brought  out  here  by  the  men  who  are  more  in- 
timately in  touch  with  the  facts  that  a  tax  on  gross  sales 
is  a  very  inequitable  method  of  arriving  at  the  tax  upon 
a  man's  property.  The  theory  of  the  law  was  that  if 
you  took  his  gross  sales  you  got  a  pretty  accurate  esti- 
mate of  how  much  he  was  worth,  but  it  has  been  shown 
that  enormous  sales  may  go  on  and  with  enormous  profits, 
and  with  no  capital  whatsoever.  For  instance,  take  the 
broker.  Suppose  I  was  to  make  a  contract  with  a  large 
mining  firm  for  half  a  hundred  thousand  tons  of  coal, 


1130 

and  I  should  go  to  a  large  consumer  and  negotiate  that 
contract.  I  have  no  capital  involved  whatsoever.  I  might 
make  a  very  large  profit,  if  I  was  fortunate  in  making 
a  good  turn;  I  might  make  ten  cents  a  ton  and  I  might 
not  make  such  a  great  profit,  but  out  of  that  enormous 
difference  the  mercantile  license  tax  takes  no  account 
whatever. 

Mr.  McNichol:  "Why  shouldn't  he  pay  something,  say 
a  mercantile  tax,  to  the  State? 

Mr.  Scott:  Because  I  think  he  only  ought  to  pay  on 
the  money  which  he  finally  succeeds  in  making  and 
saving.  I  don't  think  as  a  general  proposition  that  men's 
efforts  should  be  taxed.  He  may  have  started  as  an  office 
boy  and  gradually  by  his  industry  and  efforts  got  himself 
in  such  a  position. 

Mr.  McNichol:  Those  are  remote  conditions, 
Mr.  Scott:  Those  are  only  illustrations,  perhaps  inade- 
quate ones,  but  the  general  proposition  I  am  trying  to 
lay  down  is  that  the  tax  ought  to  be  on  property,  and 
not  on  men's  efforts. 

Mr.  Brown:  You  don't  believe  men's  efforts  alone  pro- 
duce results  in  business,  do  you?  Are  you  not  forgetful 
of  the  social  feature  of  it?  A  man  may  have  a  monopoly 
of  the  business  and  manufacturers  are  compelled  to  buy 
from  him.  He  may  be  specially  favored  in  a  hundred 
ways. 

Mr.  Scott:  That  is  the  principle  upon  which  public 
franchise  taxes  are  estimated,  but  the  ordinary  business 
man  who  enters  in  open  competition  with  every  oiher 
business  man — some  men  are  more  successful,  usually 
because  they  are  better  men — if  his  success  is  so  great 
that  he  accumulates  property,  tax  him  on  it.  If  he  spends 
it,  somebody  else  gets  it  and  is  taxed  on  it. 

Mr.  Brown:  Wouldn't  you  do  that,  if  you  taxed  net  in- 
come instead  of  gross  sales? 


1131 

Mr.  Scott :  Net  income  is  only  palliative.  It  is  what 
the  merchants  have  suggested  as  better  than  gross  sales. 
I  don't  think  it  comes  up  to  the  requirements  of  the 
theory.  What  you  ought  to  tax  is  the  value  that  man  has 
used  in  his  business.  Not  necessarily  money,  but  what- 
ever he  has. 


1132 


WELLINGTON  M.  BERTOLET,  ESQ.,  representing  the 
Pennsylvania  Retail  Coal  Merchants'  Association,  called. 

Mr.  Bertolet:  We  are  opposed  to  the  mercantile  tax. 
In  the  first  place,  we  are  speaking  for  the  Pennsylvania 
Retail  Coal  Merchants'  Association,  a  body  of  about  seven 
hundred  and  fifty  retail  coal  merchants,  of  whom  one  hun- 
dred and  ten  are  doing  business  in  the  City  of  Philadel- 
phia. These  men  we  estimate  handle  approximately  two 
million  tons  of  anthracite  coal  per  year,  at  an  estimated 
sale  value  of  ten  million  dollars,  on  which  they  are  pay- 
ing the  one  mill  tax  under  the  mercantile  license  tax  law, 
as  well  as  the  individual  license  tax  of  $2.00.  These 
men,  in  the  first  place,  appreciate  the  fact  that  the  mer- 
cantile license  Act  is  a  revenue  Act,  pure  and  simple, 
but  at  the  same  time  it  has  not  been  made  clear  to  us 
that  as  a  revenue  measure  it  is  at  all  necessary.  We 
assume  that  the  Legislature  does  not  wish  to  tax  anybody 
unless  they  need  the  money  for  revenue  purposes,  and  an 
examination  of  the  Auditor  General's  report  for  1909 
seems  to  show  that  the  debt  of  Pennsylvania  is  small,  and 
what  small  debt  we  have  is  more  than  covered  by  our 
sinking  fund,  and  moreover  that  at  the  end  of  the  fiscal 
year  of  1909  there  seems  to  have  been  a  balance  of  six 
millions  dollars  in  her  Treasury,  which  is  the  case  of  the 
four  or  five  years  previous.  So  if  it  turns  out  to  be  the 
fact  that  we  have  enough  revenue  in  our  Treasury  without 
the  mercantile  license  tax,  without  the  $1,200,000  which 
was  paid  in  last  year  under  this  Act,  it  seems  to  me  there 
ought  to  be  a  very  good  reason  why  a  tax  of  this  kind 
should  be  discontinued. 

Mr.  McNichol :  Do  you  think  it  is  a  wise  policy  to  spend 
from  jive  to  seven  years  in  the  construction  of  roads  and 
buildings,  when  there  is  not  enough  money  in  the  State 


1133 

Treasury  to  complete  them?  As  a  business  man,  you 
would  not  enter  into  an  enterprise  unless  you  had  the 
money  to  do  it  with? 

Mr.  Bertolet :   I  might  borrow  it. 

Mr.  McNichol :  Well,  you  would  borrow  it,  but  the  State 
doesn't  have  access  to  that  borrowing  proposition,  be- 
cause the  Constitution  prohibits  it.  If  you  were  barred 
from  borrowing  money,  you  would  have  to  go  in  some 
other  direction. 

Mr.  Bertolet:  Yes. 

Mr.  McNichol:  What  about  the  roads?  You  see  if  we 
allowed  our  conditions  to  exist  in  Pennsylvania  today, 
which  is  practically  worse  than  any  other  State  in  the 
Union,  almost,  if  we  allowed  them  to  continue  for  a  period 
of  years 

Mr.  Bertolet:  I  think  if  the  people  of  Pennsylvania 
want  their  roads,  they  ought  to  tax  their  people  for  roads, 
but  the  question  is  whether  the  mercantile  license  tax  law 
is  the  proper  method  to  do  it.  1  am  taking  the  report  of 
the  Auditor  General  to  show  that  as  the  finances  of  the 
State  today  are  considered,  we  do  not  need  any  more 
revenue  for  our  current  expenses. 

Mr.  McNichol:  But  the  Constitution  prohibits  the 
Legislature  from  borrowing  any  money  for  any  improve- 
ments. Where  are  you  going  to  get  the  money?  That 
ia  what  we  want  to  hear  from  you  gentlemen;  how  we 
are  going  to  get  the  money. 

Mr.  Bertolet:  We  desire  to  show  that  the  mercantile 
tax  law  is  not  the  best  method  of  getting  it>  and  I  am 
speaking  merely  for  the  retailers,  and  I  think  it  ought 
to  be  pointed  out  that  the  retail  end  of  the  mercantile 
business  has  been  paying  three-fourths  of  this  tax.  I  am 
reading  from  the  Auditor  General's  report  of  1909,  and  I 
find  the  retailers  paid  $908,000  of  that  tax  that  year, 
whereas  the  wholesalers  paid  $314,000,  and  the  brokers 
$48,000.  We  cannot  understand  why  any  distinction  of 
that  sort  should  be  made  between  the  retailer  in  business 


1134 

and  the  wholesaler.  We  think  that  the  majority  of  this 
tax,  if  it  is  to  be  imposed  at  all,  should  be  imposed  upon 
the  men  who  have  the  least  risk  in  business,  and  at  the 
same  time  are  generally  understood  to  make  the  greatest 
net  profit.  It  seems  to  me  that  it  is  well  understood,  and 
it  is  borne  out  by  the  reports  of  Bradstreet  and  Dun, 
that  the  retailer  in  business  today  undergoes  the  greatest 
risk  of  any  branch  of  business,  and  at  the  same  time  his 
percentage  of  profit  is  the  smallest.  I  think  you  gentle- 
men will  agree  with  me  that  the  retailer  today  who  makes 
a  profit  of  10  per  cent,  is  doing  a  good  business  and  it  is 
exceptional.  Therefore,  why  should  the  retailer  be  asked 
to  pay  a  mill  on  the  gross  volume  of  business,  whereas 
the  wholesaler  pays  one-tenth.  Therefore,  we  say  this 
measure  is  unequal  in  that  respect. 

Another  point  we  wish  to  make  is  that  the  retailer 
stands  as  a  distributor  between  the  wholesaler  and  the 
public.  He  is  the  man  who  is  compelled  to  supply  the 
public  with  the  necessaries  of  life,  and  therefore  he  must 
incur  all  the  risk  of  credit,  which  naturally  comes  by 
supplying  that  class  of  people.  In  the  second  place,  we 
take  exception  to  this  measure  because  it  taxes  the  gross 
volume  of  business.  To  take  an  isolated  instance,  I  was 
connected  professionally  with  a  small  corporation  who 
did  a  business  of  $43,000  in  the  year  1908.  That  year  that 
business  lost  $1,200,  and  still  they  paid  their  mercantile 
tax  of  $43,  plus  the  $2.00  in  fees.  That  is  an  illustration 
to  show  exactly  what  happened  to  a  losing  retailer  under 
this  Act,  and  we  think  if  this  tax  is  necessary  at  all  it 
should  tax  the  net  income  and  not  the  gross  volume  of 
business.  It  seems  to  me  it  is  not  an  answer  to  that  prop- 
osition to  say  that  the  net  profit  is  more  difficult  to  deter- 
mine. It  is  not  any  more  difficult  than  the  present  meth- 
od of  going  into  a  man's  books.  Under  the  mercantile 
license  Act  if  the  mercantile  appraiser  is  not  satisfied  with 
the  return,  he  can  call  the  merchant  before  the  County 
Treasurer  and  open  his  books  and  show  up  his  private 


1135 

affairs  just  as  much  as  if  he  required  a  report  upon  the 
net  income.  We  do  not  desire  to  shirk  necessary  taxa- 
tion, but  if  the  tax  is  necessary  we  feel  the  Act  should  be 
so  amended  as  to  tax  only  the  net  income  or  net  profit 
of  the  business,  rather  than  the  gross  sales.  We  have 
some  objection  to  this  Act  on  the  score  of  its  administra- 
tion. A  careful  study  of  the  cost  of  collection  under  this 
Act  seems  to  show  that  it  costs  about  10-J  per  cent,  of  the 
amount  collected  to  bring  in  this  $1,200,000  to  the  State. 
We  are  astounded  to  find  that  of  the  $156,000  which  it 
cost  to  collect  this  tax,  $67,000  last  year  were  spent  in 
advertising  the  mercantile  list  in  the  newspapers  of  the 
State. 

Mr.  Brown:    Outside  of  Philadelphia? 

Mr.  Bertolet :  Outside  of  Philadelphia,  which,  I  believe, 
gets  along  without  any  advertisement.  I  cannot  under- 
stand what  good  advertisements  of  that  character  do.  It 
serves  no  notice  to  the  public.  The  only  good  that  the 
public  can  gain  from  a  list  of  that  sort  is  that  there  are 
twenty  coal  merchants  in  Reading,  etc.,  and  it  does  not 
do  the  merchants  any  good.  They  have  no  advertisement 
to  gain.  In  fact,  to  us  it  seems  the  only  persons  who  are 
benefited  by  that  tremendous  expenditure  of  over  one- 
third  of  the  cost  of  collecting  this  tax  are  the  newspapers 
themselves,  and  we  feel  that  this  Act,  if  it  is  to  remain 
in  force,  should  be  amended,  and  furthermore,  as  a  gen- 
eral proposition,  representing  these  business  men,  we  feel 
that  beyond  the  desire  to  increase  our  taxes  for  the  pur- 
pose of  building  roads  or  making  other  public  improve- 
ments, there  are  opportunities  (as  this  $66,000  item)  to 
gain  revenue  by  retrenchment. 

Mr.  Brown:  How  are  you  to  do  that,  unless  you  cut 
off  the  appropriations  to  the  hospitals  and  other  chari- 
table institutions?  Are  you  in  favor  of  that? 

Mr.  Bertolet:  I  am  certainly  in  favor  of  curtailing  ap- 
propriations to  charitable  institutions  other  than  those 
fully  controlled  by  the  State. 


1136 

Mr.  Brown:  Take  the  schools.  The  Superintendent  of 
Public  Instruction  says  there  is  need  for  the  expenditure 
of  from  twelve  to  fifteen  millions  of  dollars  more  for  the 
payment  of  teachers'  salaries.  Now,  that  would  only 
bring  her  school  system  up  to  date.  What  is  your  thought 
on  that?  Do  you  think  that  we  ought  to  bring  the  school 
system  up  to  what  it  is  in  other  places,  and  furnish  the 
money? 

Mr.  Bertolet:  I  think  we  ought  to  bring  it  up  to  the 
quality  of  other  States,  but  I  don't  see  how  that  method 
would  do  it.  I  think  the  appropriation  for  the  schools 
is  going  to  be  made.  My  only  criticism  is  that  large  ap- 
propriations seem  to  be  made  to  semi-public  hospitals,  you 
might  call  them ;  hospitals  which  are  governed  by  business 
men,  which  are  not  under  the  control  of  the  State,  and 
my  experience  has  been  that  a  good  business  man  who 
is  on  the  board  of  directors  of  a  hospital  will  make  it  a 
matter  of  personal  interest  to  go  to  Harrisburg  and  ap- 
pear before  a  committee  in  order  to  get  an  appropria- 
tion for  that  hospital.  It  is  a  matter  of  business  pride. 

Mr.  Brown :  And  then  he  goes  out  in  the  community  and 
raises  how  much  money  to  help  it? 

Mr.  Bertolet:  He  may  go  out  and  help  raise  some 
money,  but  on  the  other  hand  he  may  not  appear  at  the 
hospital  to  find  out  how  that  money  is  being  spent.  The 
Auditor  General's  report  shows  the  tremendous  cost  of 
semi-public  institutions,  as  compared  with  purely  State 
hospitals.  I  think  he  goes  into  the  question  of  clothing 
the  inmates  and  all  that,  and  it  shows  by  careful  business 
management  the  cost  of  conducting  these  institutions 
could  be  lessened.  It  seems  to  me  that  is  a  method  of 
retrenchment,  and  it  doesn't  necessarily  follow  from  that 
argument  that  we  object  to  the  support  of  charitable  in- 
stitutions by  the  State,  but  if  the  State  is  going  to  sup- 
port them,  it  seems  to  me  it  is  the  duty  of  the  State  to 
see  that  they  are  properly  managed.  I  have  a  short 
brief  I  would  like  to  file. 


1137 

Mr.  McNichol :  If  you  iiave  any  particular  information 
that  any  particular  institution  is  not  being  properly  man- 
aged, I  would  like  to  have  it. 

Mr.  Bertolet:  I  haven't  it.  I  have  only  gathered  it 
from  general  information. 

Mr.  John  Cadwalader,  Jr. :  I  have  asked  permission  of 
Mr.  Brown  to  read  a  letter  my  father  sent.  He  takes  a 
great  deal  of  interest  in  this  matter,  and  asked  me  to  read 
it,  and  with  your  permission  I  will  do  so. 

York  Harbor,  Maine,  October  4,  1910. 

Mr.   Francis   Shunk  Brown,   Esq., 
Room  496,  City  Hall, 
Philadelphia. 
Dear  Sir : — 

I  regret  extremely  that  rny  absence  prevents  my 
being  present  tomorrow  at  the  public  meeting  to  be  held 
by  the  Committee  you  represent,  in  regard  to  the  ratifi- 
cation by  Pennsylvania  of  the  proposed  amendment  to 
the  Constitution  of  the  United  States  authorizing  the 
taxation  of  income  from  whatever  source  derived. 

I  trust  the  Committee  will  report  adversely  on  this 
question. 

The  wisdom  of  the  framers  of  the  Federal  Constitution 
was  nowhere  more  clearly  shown  than  in  the  provisions 
relating  to  taxation.  Realizing  the  great  importance  of 
avoiding  a  conflict  and  duplication  by  Federal  and  State 
authorities,  the  provision  for  aii  exclusive  source  of  reve- 
nue for  the  Federal  Government,  the  first  paragraph  of 
the  8th  Section  of  Article  1  provides  that  Congress  shall 
have  the  power  to  lay  and  collect  taxes,  duties,  imposts 
and  excises  to  pay  the  debts  and  provide  for  the  common 
defence  and  general  welfare  of  the  United  States.  And 
by  the  second  paragraph  of  Section  10,  Article  1,  it  is 
provided  that  no  State  shall,  without  the  consent  of  Con- 
gress, lay  any  imposts  or  duties  on  imports  or  exports. 
The  fourth  paragraph  of  Section  9,  Article  1,  which  pro- 


1138 

vides  that  no  capitation  or  other  direct  tax  shall  be  laid 
unless  in  proportion  to  the  census  directed  to  be  taken, 
gives  the  power  then  absolutely  necessary  to  lay  an  in- 
come tax;  but  in  such  a  way  that  the  States  would  be 
called  upon  to  make  their  pro  rata  contribution,  and  thus 
avoid  the  confusion  and  injustice  that  will  arise  if  this 
power  of  levying  direct  taxes  and  especially  the  direct 
tax  known  as  an  income  tax  is  devolved  upon  Congress. 
The  wisdom  of  separating  the  subjects  of  taxation  for  the 
different  communities  entitled  to  lay  taxes  has  been  rec- 
ognized by  our  State  with  admirable  results.  The  reliet 
of  all  real  estate  from  taxation  for  State  purposes  and 
placing  that  all-important  source  of  revenue  under  the 
control  of  the  various  counties  by  which  a  just  and  equal 
appraisement  and  rate  can  be  secured  by  those  directly 
interested  has  been  most  advantageous.  The  exclusive 
power  to  raise  revenue  by  taxing  imports  for  the  Federal 
Government  can  be  exercisd  in  a  manner  to  secure  a 
greatly  increased  revenue  above  that  now  secured  by  Act 
of  Congress.  The  suggestion  that  it  is  important  for  the 
purpose  of  obtaining  necessary  revenue  for  the  Federal 
Government  that  the  enormous  centralized  power  of  levy- 
ing taxes  upon  individuals  be  given  to  it  is  antagonistic 
to  every  theory  upon  which  the  separation  of  State  and 
Federal  authority  is  based.  The  equal  representation  of 
any  State  in  the  United  States  Senate  at  once  becomes 
entirely  unjust  and  unreasonable.  Four  States,  New 
York,  Pennsylvania,  Ohio  and  Illinois,  contain  about  one- 
third  of  the  whole  population  and  probably  more  than 
three-fifths  of  all  the  taxable  wealth  of  the  United  States. 
It  direct  taxation  of  the  people  of  these  four  States  is 
to  be  lett  to  Congress,  except  as  now  provided,  then  their 
representation  of  but  eight  Senators  will  be  grossly  in- 
sufficient to  protect  their  proportionate  rights  from  un- 
equal legislation.  It  is  remarkable  that  this  subject  of 
taxation  of  incomes  should  have  become  so  widely  con- 
sidered as  a  proper  power  for  the  Federal  Government 
when  no  important  State  has  ever  exercised  it  within 


1139 

their  own  bounds,  though  free  to  do  so.  While  it  is  a 
relief  to  have  the  proper  method  of  securing  Constitu- 
tional powers  obtained  by  an  amendment  to  the  instru- 
ment rather  than  by  a  strained  interpretation  or  misin- 
terpretation of  the  plain  language  used  therein,  it  seems 
to  be  the  result  of  mere  sensational  excitement  rather 
than  of  sober  thought  that  this  amendment  has  been 
proposed.  Theoretically  there  is  much  to  be  said  in  favor 
of  such  taxation.  Practically  it  is  not  only  almost  im- 
possible to  have  an  equitable  basis  for  the  tax,  but  from 
its  necessarily  inquisitorial  character  nothing  could  be 
more  offensive.  In  England  the  returns  are  strictly  con- 
fidential. In  this  country  the  prevalent  thought  in  re- 
gard to  the  tax  is  publicity.  In  our  city  real  estate  pays 
a  tax  equal  to  about  30  per  cent,  upon  the  annual  pro- 
ductiveness, either  actual  or  estimated.  It  can  hardly 
be  contended  that  this  is  not  an  extreme  burden.  If  a 
federal  income  tax  is  to  be  added  to  this  the  loss  of 
taxing  value  to  the  community  will,  of  course,  follow, 
and  general  derangement  of  revenue  will  follow.  The 
great  objection  to  the  amendment  is  the  great  addition 
to  centralization  of  power  in  the  United  States  Govern- 
ment and  the  surrender  by  the  States  of  their  sovereign 
power  of  taxation  to  an  extent  they  are  not  carefully 
considering.  That  so-called  socialism  is  at  the  bottom  of 
the  movement  is  evident,  and  it  appears  very  attractive 
to  a  class  to  imagine  that  they  will  not  bear  the  burden. 
It  is  always  difficult  to  instruct  the  average  citizen  so 
that  he  can  understand  that  all  burdens  of  taxation  are 
shifted  from  one  class  to  a  lower  until  finally  resting  upon 
the  lowest,  which  cannot  transfer  it. 

I  have  written  this  without  time  even  to  read  it  over, 
and  it  is  necessarily  crude,  but  I  wish,  however  imper- 
fectly, to  express  my  earnest  hope  that  Pennsylvania 
will  reject  a  measure  so  injurious  to  her  best  interests  as 
well  as  the  best  interests  of  every  other  State. 
Very  respectfully  yours, 

JOHN  CADWALADER. 


1140 

Mr.  Brown :  In  that  connection  I  might  read  two  let- 
ters which  may  be  of  interest  to  the  Committee,  one  from 
Mr.  John  G.  Johnson,  and  one  from  Mr.  Jos.  G  Rosen- 
garten. 

September  30,  1910. 
Francis  Shunk  Brown,  Esq., 

Counsel,  Joint  Committee  of  the  Senate  and  House  of 

Representatives  of  Pennsylvania. 
Dear  Mr.  Brown : — 

I  beg  to  acknowledge  receipt  of  yours  of  the  29th  of 
September. 

I  tried  to  find,  but  have  failed,  a  paper  signed  by  sev- 
eral New  York  lawyers,  which  was  addressed  to  the  New 
York  Legislature  in  opposition  to  the  adoption  of  the 
Income  Tax  Amendment  to  the  Constitution  of  the 
United  States.  It  very  clearly  puts  the  points  of  objec- 
tion. 

I  regret  I  cannot  be  present  at  the  meeting  of  the  Com- 
mittee ;  but  I  think  the  imposition  of  an  Income  Tax  is 
very  greatly  to  the  prejudice  of  Eastern  interests. 

It  will  serve  to  inaugurate  socialistic  or  semi-socialistic 
plans  and  principles. 

I  see  no  reason  why  the  Constitution  of  the  United 
States,  which  was  worked  out  by  men  who  thoroughly 
understood  the  needs  of  the  Nation,  should  be  altered  in 
this  respect. 

Very  sincerely  yours, 

JOHN  G.  JOHNSON. 

October  1,  1910. 
Francis  Shunk  Brown,  Esq., 

Counsel   for   Pennsylvania   Committee    on    Corpora- 
tion Revenue  Laws. 
Dear  Sir:— 

Yours  of  September  27th,  inviting  me  to  attend  your 
meeting  on  October  5th,     is     at     hand.     Absence     from 


1141 

Philadelphia  will  prevent  my  doing  so.  Let  me,  however, 
make  my  earnest  protest  against  any  favorable  action 
by  your  Commission  on  the  proposed  amendment  to  the 
Constitution  of  the  United  States  authorizing  the  Federal 
Government  to  tax  incomes  from  whatever  source  de- 
rived. It  is  high  time  that  the  States  should  conserve 
their  own  resources  and  maintain  the  exclusive  right  to 
tax  incomes,  wherever  necessary.  The  expenditures  of 
the  Federal  Government  have  increased,  are  increasing 
and  ought  to  be  diminished.  To  do  that  effectually  the 
best  course  is  to  limit  its  sources  of  revenue,  not  to  en- 
large them  by  an  income  tax.  That  should  be  reserved 
for  the  States.  Then,  for  example,  the  State  of  Pennsyl- 
vania could  surrender  its  tax  on  personal  propert;T  to  the 
cities,  just  as  it  has  given  them  the  tax  on  real  estate. 
Municipal  expenses  must  and  ought  to  increase  to  meet 
the  proper  demands  of  our  urban  population  for  proper 
outlays  for  improvements,  e.  g.,  better  water  supplies,  bet- 
ter water  fronts,  better  sanitation,  and  other  such  needs 
of  our  great  and  growing  cities.  Our  rural  population, 
too,  ought  to  get  the  personal  taxes  within  their 
counties  for  better  roads,  better  schools  and  better 
sanitation  through  modern  methods.  The  State  of 
Pennsylvania  can  now  meet  all  just  demands  with 
the  income  from  taxes  on  corporations,  franchises, 
etc.,  easily  raised  and  steadily  increasing.  All  other 
taxes  are  needed  by  and  ought  to  be  given  to  counties 
and  cities  and  the  use  of  such  income  strictly  supervised 
by  competent  State  inspectors.  The  improved  sanitation 
by  the  Health  Department  of  the  State  shows  what  State 
experts  could  do  for  roads  and  other  needs  of  rural  dis- 
tricts. The  Federal  Government  ought  to  limit  its  grow- 
ing expenditures,  and  the  best  way  to  do  that  is  to  limit 
its  revenue.  The  tariff  is  and  should  be  its  main  supply, 
and  by  maintaining,  or,  if  need  be,  increasing  the  present 
rates  of  duty  on  imports,  domestic  manufactures  and 
commerce  will  be  increased  and  the  country  enriched 


1142 

from  its  own  resources,  and  not  impoverished  by  impor- 
tation of  articles  that  can  be  grown  or  made  here.  To 
amend  the  Constitution  so  as  to  allow  the  Federal  Govern- 
ment to  levy  an  income  tax  would  weaken  the  resources 
of  the  States  and  lessen  their  ability  to  provide  for  the 
just  demands  and  pressing  needs  of  their  population.  A 
Federal  income  tax  means  an  increase  of  Federal  tax 
gatherers,  now  an  unpleasant  feature  of  our  daily  life. 
The  methods  of  collecting  State  and  county  and  city  taxes 
are  now  familiar  and  easily  applied.  Any  change  back 
to  the  Federal  income  tax  of  war  times  could  only  be 
justified,  but  until  that  unhappy  state  of  affairs  arises, 
let  us  restrict  Federal  revenues  to  Federal  needs  and  keep 
an  income  tax  for  the  States. 

Yours  truly, 
J.  R.  ROSENGARTEN. 


1143 


MR.  CHARLES  L.  FLUCK,  President  Northwest  Business 
Men's  Association,  called. 

Mr.  Fluck:  Mr.  Chairman  and  Gentlemen  of  the  Com- 
mission:— I  have  been  asked  to  represent  the  Northwest 
Business  Men's  Association  in  opposition  to  the  mercantile 
tax. 

Through  no  fault  of  mine,  I  am  not  in  a  position  to 
hand  a  brief  to  this  Commission  to-day,  but  I  have  the 
thoughts  and  suggestions  which  have  been  thrown  out 
by  some  of  the  questions  that  I  believe  the  Commission 
is  anxious  to  know.  They  can  have  them  for  what  they 
are  worth.  And,  in  stating  that  the  Northwest  Business 
Men's  Association  is  comprised  of  a  membership  of  some- 
thing like  three  hundred  and  fifty  business  men  of  North- 
west Philadelphia,  I  believe  their  opposition  would  be 
the  same  as  mine,  personally,  in  this  respect :  That  if  the 
payment  of  the  mercantile  tax  is  necessary  to  maintain  our 
schools,  or  asylums,  or  our  homes  and  institutions,  then 
we  do  not  object  to  paying  that  tax. 

But  we  believe  that  the  tax  is  not  necessary  to  main- 
tain these  institutions. 

The  gentleman  who  preceded  me  spoke  on  the  question 
of  Treasury  balance,  and  I  will  not  worry  the  Commis- 
sion by  going  over  that  thing  again,  because  that  is  the 
position  I  was  going  to  take. 

Now,  Mr.  Counsel  and  gentlemen  of  the  Commission,  in 
relation  to  the  mercantile  tax,  I  wish  to  present  to  you 
my  process  of  reasoning.  This  is  the  point: 

I,  to-day,  might  be  a  mechanic;  that  is,  I  might  make 
my  living  by  some  kind  of  labor.  If,  tomorrow,  I  go  into 
the  business  of  selling  merchandise,  although  I  apply 
the  same  industry  in  making  my  livelihood,  my  standing, 
so  far  as  the  State  is  concerned,  would  be  entirely  changed ; 
because  the  State,  which  did  not  tax  me  for  my  industry 


1144 

in  making  my  living  in  a  mechanical  way,  would  im- 
mediately step  in  and  say,  "We  are  going  to  tax  you  now, 
because  you  are  in  business."  I  submit,  gentlemen,  that 
if  I  have  stepped  out  of  the  mechanical  field  into  the 
business  field,  the  State  gives  me  no  more  protection,  it 
gives  me  no  more  privileges,  than  I  had  when  I  was  a 
mechanic.  I  may  be  called  upon  to  devote  a  great  deal 
more  industry  and  time  and  work  to  make  my  living  in  the 
selling  merchandise  business,  either  wholesale  or  retail ; 
and  yet  the  State  comes  along  and  says,  "We  need  some  of 
that  money  to  maintain  the  State."  That  is  the  position 
that  every  business  is  taking  on  the  question  of  the  mer- 
cantile tax — that  it  is  an  unjust  levy;  that  he  is  not 
getting  any  more  than  a  man  who  is  not  doing  business  as 
far  as  the  State  is  concerned  in  the  shape  of  privileges. 

Now,  if,  instead  of  an  individual  going  into  business, 
I  combine  with  three,  or  four,  or  five  other  men  and  apply 
to  the  State  for  a  charter  to  engage  in  a  mercantile  busi- 
ness, I  am  then  getting  a  special  privilege  from  the  State, 
in  the  fact  that  the  minute  we  become  an  incorporated 
body  in  the  transaction  of  business,  my  personal  re- 
sponsibility ceases. 

Now,  in  the  nature  of  corporations,  there  are  two  classes 
of  corporations.  That  is,  the  State  will  grant  incorpora- 
tion to  men  who  want  to  go  clearly  into  the  mercantile 
business.  They  do  not  give  it  to  them  as  an  exclusive 
privilege  for  going  into  that  particular  business.  But 
there  is  a  class  of  people  who  have  gone  to  the  State  and 
have  become  incorporated  to  do  certain  things,  and  to  do 
these  same  things,  the  State  of  Pennsylvania  will  not  give 
the  same  privilege  to  any  other  group  of  men.  By  that, 
I  mean  particularly,  as  an  example,  the  corporations  such 
as  the  street  railway  companies  of  the  City  of  Philadel- 
phia. That  is,  the  State  will  charter  a  combination  of 
men,  making  them  an  incorporated  body,  to  relieve  them 
of  personal  responsibility,  but  it  will  not  give  the  same 
right  to  any  other  group  of  men.  That  is  an  exclusive 
privilege. 


1145 

The  question  I  want  to  ask  this  Commission  now,  is 
this :  Why  not  determine  where  the  revenues  of  the  State 
shall  come  from,  beginning  at  the  point  of  asking  the 
question,  Who  are  the  specially  benefited  people  in  the 
State?  Who  are  the  people  that  have  received  benefits 
greater  than  any  other  individual  or  any  other  corpora- 
tion in  the  State  of  Pennsylvania.  Why  don't  these  peo- 
ple who  have  received  exclusive  privileges  also  be  made  to 
bear  the  burden,  if  necessary,  to  a  reasonable  degree  in 
replacing  the  revenues  that  are  unjustly  imposed  upon  us 
as  small  business  men? 

I  want  to  give  you  just  one  example  of  what  I  mean.  For 
instance,  a  great  many  years  ago  there  was  a  company  in- 
corporated— a  concern  known  as  the  Ridge  Avenue  Pas- 
senger Railway  Company ;  its  authorized  capital  stock  was 
seven  hundred  and  fifty  thousand  dollars — fifteen  thou- 
sand shares  at  fifty  dollars  a  share.  There  was  paid  in 
on  that  stock  four  hundred  and  twenty  thousand  dollars, 
or  twenty-eight  dollars  a  share.  That  concern — that  is, 
the  property  of  that  concern  (and  the  only  property  it 
has  remaining  to-day,  gentlemen)  is  the  exclusive  right 
that  the  State  gave  it  to  run  a  street  railway  on  Ridge 
avenue.  It  has  no  property  of  its  own  at  all  so  far  as  rolling 
stock  is  concerned;  it  has  been  leased,  and  leased,  and 
leased.  That  property  to-day  is  bringing  one  hundred 
and  eighty  thousand  dollars  a  year  on  those  fifteen  thou- 
sand shares  of  stock,  and  the  business  proposition  is 
worth  three  millions  of  dollars.  In  other  words,  the  con- 
dition of  affairs  is  that  the  company  has  been  given  an 
exclusive  right  to  do  a  certain  thing,  and  the  State  pro- 
tects it  in  that  privilege ;  it  was  originally  authorized  to 
be  capitalized  at  seven  hundred  and  fifty  thousand  dol- 
lars, only  four  hundred  and  twenty  thousand  ever  paid 
in  on  it,  but  is  worth  today  three  millions  of  dollars. 

Mr.  Brown :  What  is  it  taxed  at,  Mr.  Fluck  ? 
Mr.  Fluck :   I  cannot  give  you  tax  figures.    They  pay  a 
tax  on  capital  stock  the  same  as  others. 


1146 

Mr.  Brown:    It  is  taxed  away  above  the  money  yoi 
say  is  paid  in? 

Mr.  Fluck :  Yes.  I  only  question  this  point.  Since  May, 
I  have  been  trying  to  get  some  Government  reports  to  be 
able  to  answer  such  questions  as  you  have  put  at  me — to 
be  able  to  come  here  and  give  you  the  necessary  proof  of 
what  I  may  say. 

Mr.  Brown:  I  think  this  was  all  published  some  time 
ago  by  the  Transit  Company? 

Mr.  Fluck:  I  am  not  speaking  about  the  Philadelphia 
Rapid  Transit  Company.  I  am  talking  about  the  people 
who  own  the  franchises  for  Ridge  avenue.  These  are  the 
people  you  are  not  getting  at.  I  say  there  is  something 
that  calls  for  correction,  and  it  is  in  the  value  of  the 
capitalization.  For  instance,  the  enormous  difference  in 
the  value  of  the  capitalization — between  the  seven  hun- 
dred and  fifty  thousand  authorized  capitalization,  of 
which  four  hundred  and  twenty  thousand  dollars  was 
paid  in,  and  the  three  millions  of  dollars  that  the  proposi- 
tion is  worth  to-day  on  a  6  per  cent,  basis. 

Mr.  McNichol :  Are  you  in  business,  Mr.  Fluck  ? 

Mr.  Fluck :  Yes. 

Mr.  McNichol :  How  long  have  you  been  in  business  ? 

Mr.  Fluck :  About  fourteen  or  fifteen  years. 

Mr.  McNichol:  What  was  the  capitalization  of  your 
business  at  the  start? 

Mr.  Fluck:   It  was  very  small — it  was  nothing. 

Mr.  McNichol :  Approximately — ten  dollars,  a  hundred 
dollars,  a  thousand,  or  what  ? 

Mr.  Fluck :  Nothing. 

Mr.  McNichol :   What  would  you  sell  it  at  to-day  ? 

Mr.  Fluck:  I  would  sell  it  at  a  figure  that  I  would 
not  care  to  mention  here  to-day,  but  a  great  deal  more  than 
nothing. 

Mr.  McNichol :  Will  you  tell  us  what  brought  about 
that  enormous  increase  of  to-day  over  fifteen  years  ago 
in  your  business? 


1147 

Mr.  Fluck :  I  will  say  that  it  was  through  no  exclusive 
privilege  given  to  me  by  the  State  of  Pennsylvania. 

Mr.  McNichol :  Getting  back  to  Mr.  Carnegie,  how  can 
you  get  at  him?  He  has  derived  all  the  benefits  of  the 
times,  the  demand  for  a  particular  material  and  things  of 
that  kind  without  the  question  of  exclusive  privilege.  A 
man  who  has  a  particular  business  is  going  to  make  his 
future  by  his  exclusive  industry? 

Mr.  Fluck:  Yes,  but  Carnegie  had  opposition,  and  he 
has  it  to-day  and  should  have  it.  I  have  had  opposition 
in  all  the  years  that  this  thing  has  been  brought  about. 
That  is  what  my  business  represents  to-day  as  compared 
to  years  ago — my  industry,  my  hard  work. 

Mr.  McNichol :  Isn  't  it  true  that  the  Ridge  avenue  line 
has  had  competition  and  opposition  for  years  and  years 
up  to  the  time — a  certain  period — when  they  consoli- 
dated? 

Mr.  Fluck:  No.  There  was  no  opposition  on  Ridge 
avenue. 

Mr.  McNichol :  But  there  was,  until  the  Union  Traction 
Company,  I  think  it  was,  opened  these  lines.  I  remember 
the  railway  situation  there  ? 

Mr.  Fluck:  Yes,  but,  Mr.  McNichol,  the  opposition  I 
mean  is  this:  That  no  other  group  of  men  will  get  from 
the  State  of  Pennsylvania  the  right  to  run  a  railway  on 
Ridge  avenue. 

Mr.  Brown :  It  would  be  inconsistent  to  run  two.  How 
do  you  distinguish  between  your  individual  efforts  and 
the  united  element  in  the  running  of  a  business?  No 
matter  how  hard  you  work,  if  the  State  of  Pennsylvania 
did  not  build  schools  and  churches,  and  do  all  sorts  of 
other  things  to  bring  the  people  here  to  buy  your  goods, 
you  would  not  profit.  Shouldn't  you  make  some  con- 
tribution on  that  account  ? 

Mr.  Fluck :  I  have  stated,  Mr.  Brown,  that  I  am  willing 
to  make  that  contribution.  I  stated  that,  personally,  if 
the  payment  of  the  mercantile  tax  was  necessary  to  main- 


1148 

tain  our  schools,  asylums,  homes,  and  other  institutions,  I 
am  willing  to  pay  it.  But  I  believe  the  State  is  going  about 
placing  its  hands  in  the  pockets  of  some  merchants 
throughout  the  State  of  Pennsylvania  for  various  sums 
running  from  five,  ten  and  twenty  dollars,  when  they  are 
overlooking  certain  people  that  have  obtained  exclusive 
privileges  from  the  State,  and  could  easily  bear  the  burden 
that  the  small  men  are  called  upon  to  bear. 

Mr.  Brown :  You  mean  those  with  these  exclusive  privi- 
leges are  not  paying  their  share  today.  They  all  say 
they  are.  You  would  be  surprised  to  read  some  of  the 
complaints  filed.  The  small  men  demand  a  tax  from  every 
man  in  the  Commonwealth,  and  they  would  put  them  in 
jail  for  not  paying  it. 

Mr.  Fluck :  Mr.  Brown,  the  position  I  am  taking  is 
one  that  I  have  clearly  set  forth,  and  I  am  clearly  trying 
to  set  forth  that  you  gentlemen  are  looking  for  places 
to  place  burdens  that  other  people  object  to. 

Mr.  Brown :  As  I  understand  you,  your  thought  is  those 
with  exclusive  privileges  should  bear  the  burdens.  Are 
you  figuring  in  that  the  element  of  convenience  to  the 
public?  If  you  didn't  have  a  traction  company  in  Phila- 
delphia it  would  not  amount  to  shucks.  If  you  hadn't 
the  Ridge  avenue  line,  a  large  portion  of  Philadelphia,  for 
instance,  would  be  inaccessible. 

Mr.  Fluck:  If  we  hadn't  the  Ridge  avenue  line  we 
would  have  had  a  better  one  long  ago. 

Mr.  Brown:  The  higher  you  tax  them,  the  more  you 
may  have.  Is  that  your  idea? 

Mr.  Fluck :  There  are  certain  people  to-day  who  are  do- 
ing nothing  for  the  community. 

Mr.  McNichol:  Have  you  knowledge  to  that  effect? 

Mr.  Fluck :   They  exist  as  a  corporation. 

Mr.  McNichol:  Can  you  give  us  the  corporation  you 
especially  refer  to? 

Mr.  Fluck :  I  will  do  it  willingly. 


1149 

Mr.  McNichol:  We  will  be  glad  to  have  you  file  your 
proof. 

Mr.  Brown:    Do  you  consider  the  mercantile  tax  as 
bothersome  to  the  merchants  to-day? 
Mr.  Fluck:    Undoubtedly. 

Mr.  Brown :  Is  it  an  element  you  fix  in  doing  business, 
and  competition  with  others? 
Mr.  Fluck :   No. 

Mr.  Brown:   It  is  a  diminutive  tax,  isn't  it? 

Mr.  Fluck :  Yes,  it  is  so  small  it  is  bothersome.  I,  as  a 
small  man,  will  say  the  mercantile  tax  I  pay  is,  for  in- 
stance, twenty  dollars  a  year.  I  don't  object  to  paying 
that.  But  when  the  State  comes  along  and  says  they 
want  that  twenty  dollars  from  me  when  it  is  clear  that 
they  do  not  absolutely  need  it,  and  if  they  do  need  it, 
there  are  other  sources  of  revenue  where  people  have 
gotten  exclusive  privileges  from  the  State  which  I  have 
not,  I  feel  like  saying  that  that  twenty  dollars  is  unjustly 
taken  out  of  my  pocket. 

Mr.  Brown :  As  a  matter  of  fact,  outside  of  the  corpora- 
tions which  are  exempted,  there  is  no  advantage  in  a  cor- 
poration except  if  suit  is  brought 

Mr.  Fluck :    That  is  right. 

Mr.  Brown :  Is  it  not  so  that  a  corporation  offers  no  ad- 
vantage to  a  man  who  goes  into  the  corporation  except 
for  his  interest  fixed  by  his  shares  of  stock? 

Mr.  Fluck :   Yes. 

Mr.  Brown :  Is  that  any  special  advantage  over  the  other 
man  in  the  same  line  of  business? 
Mr.  Fluck :    I  won't  argue  that. 

Mr.  Brown:  Do  you  consider  a  corporation  any  better 
(being  a  corporation)  than  the  individual  who  does  the 
same  business? 

Mr.  Fluck :  There  is  the  advantage  in  the  fact  that  he 
is  relieved  from  personal  responsibility. 


1150 


Mr.  Brown :  The  officers  are  sued  if  it  amounts  to  any- 
thing ? 

Mr.  Fhick:  I  won't  argue  that.  There  are  some  cor- 
porations in  the  State  of  Pennsylvania  which  have  been 
greatly  benefited  by  the  State.  These  stockholders  have 
been  greatly  benefited;  they  are  enjoying  exclusive 
privileges  which  mean  millions  of  dollars  a  year  to 
them. 

Mr.  McNichol :  Don't  you  refer  to  fifty  years  ago? 

Mr.  Fluck:   The  conditions  are  so  to-day. 

Mr.  McNichol :  "Where  are  they  now — the  conditions  to 
which  you  refer  as  to  the  Ridge  avenue  line? 

Mr.  Fluck :  I  am  not  asking  this  Commission  to  correct 
the  conditions,  but  I  am  suggesting  to  this  Commission 
that  there  are  to-day  in  existence  certain  corporation 
bodies  which  are  enjoying  exclusive  privileges  from  the 
State  of  Pennsylvania,  and  which,  under  the  circum- 
stances, I  don't  believe  are  bearing  their  share  of  the 
burden. 

Mr.  Brown:  I  think  it  is  true  that  Pennsylvania,  with 
possibly  a  few  corrections  here  and  there,  is  taxing  its  cor- 
porations fairly  considering  the  franchises.  It  is  included 
in  the  capital  stock.  The  Pennsylvania  Railroad  pays  a 
tax,  in  the  capital  stock,  of  lour-fifths  of  1  per  cent,  on 
the  gross  receipts,  and  is  locally  taxed  on  its  buildings. 
What  more  tax  would  you  put  on  them  ? 

Mr.  Fluck :  I  must  confine  myself  to  the  street  railway 
conditions,  because  I  have  not  been  able  to  get  statistics 
together  to  make  argument  except  along  these  lines. 

I  am  willing  to  state  that  the  greater  part  of  the  revenue 
comes  from  the  tax  on  corporations.  I  have  before  me 
the  platform  of  the  Republican  party,  the  governing 
party  of  Pennsylvania  in  the  year  1909,  which  brings  that 
out  very  clearly. 

Mr.  Brown:  The  governing  expenses  of  the  State  of 
Pennsylvania  are  as  low  as  any  State  in  the  Union.  Do 
you  know  that  ? 


1151 

Mr.  Fluck :  I  am  on  this  statement  now,  and  that  state- 
ment is  a  good,  strong  statement. 

Mr.  McNichol :  We  want  you  to  give  us  your  views  and 
file  your  papers  and  we  will  take  the  matters  up.  When 
it  comes  to  a  question  of  politics,  we  will  adjourn  from 
this  building  and  take  up  the  matter  in  another  room. 

Mr.  Fluck :  I  only  wish  to  read  this  statement. 

Mr.  McNichol :  We  ask  you  to  give  your  views  and  file 
your  papers  and  we  will  be  glad  to  take  them  up. 

Mr.  Fluck:  The  mercantile  tax  represents  one  million 
dollars,  which  represents  one-twenty-eighth  of  the  reve- 
nue of  the  State  of  Pennsylvania  at  the  present  time,  and 
niy  position  is  that  the  one-twenty-eighth  of  the  revenue 
of  the  State  of  Pennsylvania  is  placed  upon  people  who 
are  getting  no  special  consideration  from  the  State  and 
should  not  be  called  upon  to  pay  that  tax. 

Mr.  Brown:  Don't  you  get  the  same  consideration  from 
the  State  that  I  would  get  if  I  had  money  at  interest  on 
which  I  paid  a  tax.  If  I  pay  four  mills — two-fifths  of  1 
per  cent,  on  my  money  at  interest — what  more  benefit 
do  I  get  than  you? 

Mr.  Fluck:  I  am  not  talking  about  that. 

Mr.  Brown :  You  say  you  do  not  reap  any  benefit  from 
the  State,  and  hence  you  should  not  pay  a  tax. 

Mr.  Fluck:  Why  should  I  pay  this  special  tax  which 
is  imposed  upon  me?  Why  should  it  be  imposed  upon 
me? 

Mr.. Brown:  You  get  the  united  benefit  which  must  be 
figures  in  other  men's  individual  efforts.  A  man  living 
on  an  island  means  nothing,  but  in  the  City  of  Philadel- 
phia he  has  all  manner  of  possibilities.  That  element 
should  be  considered  in  systems  of  taxation. 

Mr.  Fluck:  I  am  willing  to  pay  for  that  element  if  I 
am  in  a  location  which  has  great  possibilities.  My 
place  in  which  I  do  business  is  already  taxed  by  the  City 
of  Philadelphia. 


1152 

Mr.  McNichol:  For  which  it  gives  you  greater  returns 
than  any  other  section  of  the  country.  Isn't  that  so,  Mr. 
Fluck? 

Mr.  Fluck:  I  believe,  Mr.  Chairman,  that  we  have  the 
greatest  city  in  the  country. 

Mr.  McNichol :  And  you  are  glad  to  be  in  business  here  T 

Mr.  Fluck :  I  expect  to  stay  here  in  business. 

Mr.  Brown :  Does  your  business  give  a  fair  return,  so 
far  as  a  small  business  is  concerned? 

Mr.  Fluck :  I  have  no  complaint  to  make  with  the  return 
from  my  business;  but  I  do  complain  that  the  State  of 
Pennsylvania  comes  to  me  and  says  to  me,  "We  want  you 
to  pay  a  tax,"  and  I  believe  that  it  is  an  unjust  tribute 
that  I  am  paying  to  the  State  of  Pennsylvania.  If 
there  are  people  who  have  received  a  great  deal  more 
from  the  hands  of  the  State  than  the  small  business  man, 
those  people  should  be  willing  to  bear  the  burden. 

Mr.  McNichol :  What  is  your  business  ? 

Mr.  Fluck:  The  drug  business. 

Mr.  McNichol:  Can  you  tell  us  the  volume  of  your 
business  for  the  year  1909? 

Mr.  Fluck :  I  will  tell  you  privately.  It  is  none  of  the 
public's  affairs.  I  would  state  that  some  of  the  argu- 
ments that  have  been  presented  against  the  mercantile 
tax  were  intended  to  demonstrate  the  extent  of  dishon- 
esty. I  don't  know  that  anybody  has  ever  been  dishonest 
m  making  a  return  of  the  volume  of  his  business.  I  wil\ 
say  for  myself,  that  when  the  mercantile  assessors  come 
along,  I  carry  my  books  out  before  them,  and  they  have 
the  privilege  of  computing  the  columns  for  themselves; 
and  I  believe  the  majority  of  the  small  merchants  do  the 
same.  If  this  Commission  wants  the  volume  of  my  busi- 
ness, they  can  readily  ascertain  it  at  the  office  where  my 
returns  are  made. 

No  further  questions  by  the  Commission. 


1153 


Mr.  Brown :  I  believe  we  have  with  us  Mr.  Purvis,  of  the 
Philadelphia  Saving  Fund.  We  would  be  pleased  to  hear 
from  him. 

MR.   G.   COLESBERRY  PURVIS,  of    the    Philadelphia 
Saving  Fund. 

Mr.  Chairman  and  Gentlemen: — I  believe  that  every- 
body should  pay  a  tax.  The  only  question  is,  how  to 
'make  it  fair,  so  as  to  have  it  fall  in  an  equitable  manner. 
Therefore,  I  am  not  here  to  say  anything  against  the  tax 
of  the  Philadelphia  Saving  Fund,  although  I  represent 
two  hundred  and  seventy-two  thousand  of  the  wage  earn- 
ers of  Philadelphia — the  working  people — who  gather 
together  a  large  sum  of  money,  averaging  about  four 
hundred  dollars  apiece;  and  we  pay  a  3  per  cent,  tax  on 
the  net  earnings. 

What  I  am  here  to  say  is  that  we  are  glad  to  pay  that 
tax,  for  we  represent  these  wage  earners.  As  I  said 
before,  everyone  should  pay  a  tax,  and  I  say  that  the  tax 
law  should  be  as  it  stands  today. 

Mr.  Brown:  It  has  been  suggested  that  the  deposits 
in  your  saving  fund  should  pay  a  four  mill  tax. 

Mr.  Purvis :  The  answer  to  that  is  that  the  Legislature 
at  their  last  session  repealed  that  tax  for  the  very 
reason  that  it  was  unjust — they  relieved  us  of  that  tax. 
We  pay  this  one  tax,  now,  of  3  per  cent. 

Mr.  Brown :  Why  should  the  depositor  in  your  institu- 
tion who  received  interest  be  exempted  from  the  pay- 
ment of  a  tax  on  that  interest,  when  the  depositor  in  some 
other  institution  of  another  character  has  to  pay  a  tax 
on  the  moneys  which  he  has  at  interest? 

Mr.  Purvis :  This  is  a  tax  on  savings.  In  reference  to 
that,  if  you  take  the  Act  of  Assembly  literally,  it  would 
apply  to  all  deposits  of  savings  funds,  banks,  trust  com- 
53 


1154 

panies  and  banks  of  every  form;  but  there  has  been, 
from  the  time  of  the  enactment  of  that  Act,  the  consensus 
of  opinion  that  the  Legislature  did  not  intend  to  include 
money  that  was  moved  backward  and  forward,  that  was 
here  today  and  tomorrow  might  be  drawn  out.  In  review- 
ing that  law,  Mr.  Eastman,  in  his  tax  book,  says  that 
while  it  is  within  the  letter  of  the  law,  he  does  not  believe 
it  was  intended  by  the  Legislature,  and,  consequently,  I 
may  add  here,  there  are  very  few  returned. 

Mr.  Brown:  Why  shouldn't  they  be  returned? 

Mr.  Purvis :  Suppose  we  give  the  return  of  tax,  and  the* 
next  day  they  draw  it  out — then  it  is  not  paid  until  the 
following  August? 

Mr.  Brown:  Suppose  the  treasurer  of  your  institution 
pays  tha  tax  based  on  the  average  deposits.  Thai  is,  you 
pay  the  interest  on  the  deposits,  and  then  take  it  from  the 
depositors  again. 

Mr.  Purvis:  That  is  just  the  tax  that  the  Legislature 
has  removed  from  us. 

Mr.  Brown:  I  am  asking  now  why,  in  justice  to  all 
who  are  not  depositors  and  who  pay  taxes,  you  should 
be  exempted? 

Mr.  Purvis:  For  the  reason  that  we  pay  one  tax  of  3 
per  cent. 

Mr.  Brown:  You  pay  that  tax? 

Mr.  Purvis :  Yes. 

Mr.  Brown:  As  an  incorporated  society,  you  pay  that? 

Mr.  Purvis:  Now,  you  take  the  annual  savings  banks; 
with  a  tax  of  1  per  cent,  on  the  surplus,  I  don't  think 
that  would  be  as  good  as  the  3  per  cent,  on  the  net  earn- 
ings, because  there  is  the  investment,  and  it  might  not  be 
the  surplus  that  it  ought  to  be  applied  to.  Then  you 
take,  as  was  suggested  in  your  circular — suppose  you  put 
a  tax  on  the  assets.  You  must  recollect  that  the  great 
bulk  of  our  assets  are  composed  of  bonds,  on  which  the 
corporation  has  already  paid  a  tax,  so  that  you  would 


1155 

be  imposing  another  tax  again  when  they  are  considered 
as  assets  of  the  savings  bank. 

There  are  only  nine  savings  banks  without  capital 
stock.  We  pay  the  depositors'  tax  and  expenses  and  all 
the  rest;  whatever  is  over  goes  to  surplus  and  deposits. 
There  are  only  nine  savings  banks  in  Pennsylvania  with- 
out capital  stock,  which  represent,  in  the  City  of  Phila- 
delphia, over  three  hundred  and  fifty  thousand  of  the 
wage  earners — that  means  about  one-quarter  of  the  pop- 
ulation represented  by  the  depositors. 

Mr.  Brown :  What  do  the  deposits  amount  to  ? 

Mr.  Purvis:  One  hundred  and  eighty-seven  millions  in 
the  whole  State.  They  are  subject  to  this  3  per  cent.  tax. 
Now,  what  I  suggest  is  that  the  tax  as  it  stands  is  a 
perfectly  just  and  right  one ;  and  the  wage  earners,  whom 
we  represent,  are  taxed  as  high  as  working  people  ought 
to  be. 

Mr.  Brown:  Mr.  Purvis,  what  is  your  thought  on  the 
income  tax? 

Mr.  Purvis :  An  income  tax,  I  think,  if  it  could  be  fairly 
taxed,  is  the  fairest  tax  in  the  world. 

Mr.  Brown:  By  the  Federal  Government  or  reserved 
by  the  State? 

Mr.  Purvis :  I  think  it  should  be  reserved  for  the  State. 
There  is  a  reason.  I  think  the  present  tax  on  the  cor- 
porations is  the  proper  tax  for  the  Federal  Government. 
A  corporation  is  a  modern  institution  in  which  you  have 
gathered  together  the  stockholders  from  whom  you  get 
the  income  tax,  and  those  are  the  ones  who  can  afford 
to  pay  it.  It  seems  to  me  that  when  you  tax  a  corpora- 
tion, or  the  stockholders,  you  have  gotten  at  it  in  the 
fairest  way. 

Mr.  Brown :  What  is  your  thought  on  the  direct  inheri- 
tance tax,  Mr.  Purvis? 

Mr.  Purvis:  I  would  exempt  small  estates  if  it  could 
legally  be  done.  Then  have  a  trifling  tax  regulated  as 


1156 

the  estate  increased  in  amount.     I  see  no  reason  why  it 
could  not  be  done. 

Mr.  McNichol:  What  would  you  call  a  small  estate, 
Mr.  Purvis? 

Mr.  Purvis:  I  would  say  I  would  not  tax  anything  un- 
der ten  thousand  dollars. 

Mr.  McNichol:  How  about  ten  thousand  dollars  for  a 
man  with  four,  five  or  six  children? 

Mr.  Purvis:  I  would  raise  it. 

Mr.  McNichol :  In  other  words,  you  would  exempt  large 
families. 

Mr.  Purvis:  I  would  if  it  could  be  legally  done.  I 
think  everyone  should  bear  his  burden  according  to  his 
ability. 

Mr.  McNichol:  How  about  the  State  providing  a 
bounty  for  the  raising  of  children?  It  would  give  a  de- 
served measure  of  relief  to  those  who  are  doing  their 
duty  to  the  State  and  society  generally. 

Mr.  Brown :  I  see  no  reason  why  that  suggestion  should 
not  be  adopted,  Mr.  Chairman.  Mr.  Dooley  says  the 
State  taxes  dogs,  and  he  sees  no  reason  why  bachelors 
should  not  be  taxed. 

Mr.  McNichol:  I  believe  in  people  going  along  and  en- 
joying the  pleasures  of  life,  and  where  a  man  has  a  cer- 
tain amount  of  money  distributed  between  too  many 
people,  there  would  not  be  much  in  it  for  any  one  of  them. 

Mr.  Purvis :  There  is  another  thought  I  want  to  throw 
out,  which,  I  suppose,  would  not  be  met  with  favor,  and 
yet,  at  the  same  time,  it  would  count,  I  think.  We  tax 
in  the  collateral  inheritance  tax,  5  per  cent  on  all  legacies. 
Wouldn't  it  encourage  legacies  to  hospitals  and  homes  if 
they  were  made  free  from  the  collateral  tax?  We  tax 
these  legacies,  and  yet  they  are  all  in  relief  of  the  State. 
They  are  all  in  aid  of  the  State,  and  the  State  taxes  them. 
All  these  moneys  go  to  support  and  build  up  things  that 


1157 

the  State  would  otherwise  have  to  build  and  maintain.    If 
it  was  freed  from  that,  wouldn't  it  encourage  legacies? 

Mr.  Brown:  "We  have  a  brief  on  that  subject,  Mr. 
Purvis. 

No  further  questions  by  the  Commission. 

Mr.  McNichol:  It  is  the  desire  of  the  Commission  at 
this  time  to  have  lunch.  If  there  are  any  gentlemen  who 
desire  to  be  heard,  we  shall  be  glad  to  return  this  after- 
noon for  that  purpose. 

Mr.  Brown:  Well,  Mr.  Chairman,  there  are  quite  a 
number  to  be  heard. 

Mr.  McNichol:  "We  will  then  adjourn  until  two-thirty 
this  afternoon. 

ADJOURNED  AT  ONE-THIRTY  P.  M. 


INDEX  TO   REPORT. 


Amendments  to  Constitution.  PAGE. 

Graded    inheritance    taxes 150 

Income    tax     (Federal) 228 

State    debt    for    roads 130 

Anthracite   coal   tax 161 

Substitution   for  local  taxes 162 

Act    165 

Notes    166 

Appeals  from  tax   settlements 214 

Act    216 

Appropriations   to   charitable    institutions 45 

(See  CHAEITABLE  INSTITUTIONS.) 
Artificial  gas  companies. 

Tax  on  capital   stock 180 

Act 181 

Tax  on  gross  receipts 181 

Act   183 

Attorney  General,  suggestions  by 230 

Auditor  General. 

Appeals  from  tax  settlements 214 

Act    216 

Board  of  Revision  of  Taxes   in  Philadelphia,  appoint- 
ment by 205 

Act    206 

Note  to  Act 208 

Clerks,  additional   201 

Act    209 

Corporation  taxes,  collection  of 201,  214 

Corporations  not  for  profit 191 

Investigation,    additional    powers    of 202 

Lien  of  State  taxes  in  his  office 232 

Escheats,  additional  powers  of  investigation 220 

Personal  property  tax. 

Collection    of,   by   Auditor    General 201,  203 

Acts    209,  212 

Notes  210 


1160  INDEX. 

Personal  property  tax — Continued.  PAGE. 

Centralization      of      assessment      under      Auditor 

General    194,  201 

Suit    f o'r    by    Auditor    General 203 

Act    212 

Recommendations   of    232 

Reports  to    214,  215,  218 

Uniformity  of    218 

Act    219 

More  detailed  reports  to  be  required 214 

Act    216 

Stock  transfer  tax  suggested  by 232 

Automobile   tax    156 

Act    157 

Bar  Association,  Pennsylvania. 

Committee  on  Revision  of  Statutes 12 

Bituminous    coal    164 

Conference  of  States  with  regard  to 164 

Board  of  Public  Charities. 

Abolition  of  100 

Present  work  of 99 

Recommendations  of 97 

Statistics    furnished    by 59 

Board  of  Revision  of  Taxes  in  Philadelphia. 

Appointment  by)  Auditor  General 203 

Building  Commissions  abolished 99 

Acts    101 

Census,  by  State 235 

Charitable  Institutions  45 

Act  providing  lien  of  appropriation  for  construction. . .  5? 

Act  creating  Department 99 

Acts  transferring  completion  of  to  Department 101 

Appropriations  to   45,  54 

Construction    56 

Table  of  appropriations  for 69 

Lien  of  appropriations  for 56 

Act    57 

Defects  of  present  system 52 

Method  of  making 54 

Methods  of  other  States 48 

Recommendations  as  to  method 95 

Tables  of    46,  55,  59 

Beds  occupied,  tables 80 

Department  of  State  Charitable  Institutions 93,  99 


INDEX.  1161 

Charitable  Institutions — Continued.  PAGE. 

Free  treatment. 

Cost   of    59 

Methods  of  determining 93 

Table    59 

Dispensary    93 

History   of    48 

Local  sick  poor,  aid  of 95 

Patients   treated,    tables 80 

Eeal  estate  of,  tables 80 

State   institutions    95 

Coal. 

Anthracite   161 

Bituminous    164 

Conference  of  States  with  regard  to 164 

Collection  of  revenue 191 

Conference,  State  conference  on  taxation 208 

Conference  with  Ohio,  Maryland  and  West  Virginia  on  oil, 

gas  and  bituminous  coal 164 

Continuation  of  work  of   Committee 13,  205 

Corporation  Laws    11,  191 

Uniform  Business  Corporation  Law 12 

Corporations  not  for  profit. 

Report  by  Prothonotary  to  Auditor  General 191 

Act    193 

Department   of    State    Charitable    Institutions 93,  99 

Act  creating    105 

Acts  transferring  duties  of  Building  Commissions  to..  101 

Departments  of  State  Government. 

Suggestions  by   230 

Deposits  in  bank,  collection  of  tax  on 196 

Erie,   meeting  at 7 

Escheats 220 

Acts     209,  221,  225 

Notes    224 

Expenditures  of  State  generally 45 

Necessity  of  increased  expenditures 127 

Pamphlet  Laws,  printing  of 226 

Act    227 

Table  of    132 

Factory  Inspector,   suggestions  by 234 

Fisheries,  Department  of,   suggestions  by 234 


1162  INDEX. 

PAGE. 

Foreign  corporations  14 

Act  regulating-  generally 14,  16 

Notes  27 

Act  validating  contracts 15,  17,  36 

Notes  36 

Act  revising  law  regulating  holding  of  real  estate 36 

Agents  of 16,  17 

Contracts  of 15,  17,  36 

Definition  of  19 

Federal  Courts,  resort  to  by  foreign  corporations.  .16,  19 

Jurisdiction  over  17,  19 

Real  estate  held  by 15,  18,  36 

Registration  of  16 

Eepeal  of  Acts  relating  to 20 

Service  of  process  on 17 

Forestry,  Department  of,  suggestions  by 234 

Gas  , 164 

See  ARTIFICIAL  GAS  COMPANIES 180 

Conference  of  States  with  regard  to 164 

Grange,  Pennsylvania   State,  requests  of 131,  178,  200 

Highways  (see  ROADS)    127 

Income  tax,  amendment  to  Federal  Constitution 228 

Inheritance  Tax. 

Act  laying   direct  tax 141 

Act  exempting  charities 150 

Charity,  Act  exempting 140,  150 

Comparison    with   other    States 134 

Constitutional  amendment   136 

Resolution   for    150 

Direct    133 

Exemptions     136,  140 

Grading 136 

Constitutional  amendment   for 150 

History    133 

Resolution  to  amend  Constitution 150 

Table  of    152 

Insurance  Commissioner,  suggestions  by 234 

Insurance  Companies. 

Surplus  and  reserves 176 

Act    170 

Tax  on  premiums 169 

International  Tax   Reform  Association 10,  209 

Letters   sent  by   Committee 3,  9 


INDEX.  1163 

PAGE. 

Lien  of  State  corporation   taxes 231 

Act    232 

Lunacy,  Committee  on,  abolition  of • 100 

Manufacturing  Companies. 

Tax  on  capital  stock 178 

Act    181 

Meetings,   public,   held  by   Committee 6 

Mercantile  licenses    167 

Advertising   of 168 

Act    168 

Mines,  Department  of,  suggestions  by 235 

National   Civic   Federation 209 

Oil    164 

Conference  of  States  with  regard  to 164 

Pamphlet  Laws,  expense  of  printing 226 

Act 227 

Personal  property  tax. 

Act  authorizing  suit  for 212 

Act  empowering  Auditor  General  to  investigate 209 

Act  regulating  Board  of  Eevision  in  Philadelphia 205 

Note 210 

Act  repealing  exemption  of  savings  institutions 176 

Act  requiring  school  districts  to  report 193 

Board  of  Revision  of  Taxes  in  Philadelphia 205 

Centralization    of   assessment    and    collection 194,  201 

Collection    of,    generally 195,  232 

Deposits  in  bank,  collection  of  tax  on 196 

Evasion    of    195,  199,  204 

Exemptions  from. 

Savings  institutions    175 

Small   estates    140 

Rate,    change    of 197 

School  districts,  collection  by 192,  193 

Success  of  Pennsylvania  methods    195 

Suits    for    203 

(See  AUDITOR  GENERAL) 

Philadelphia,   meeting   at 6 

Pittsburgh,  meetings  at 6,  9 

Premiums  of  insurance,  tax  on 169 

Provident  Life  and  Trust  Co.,  attempt  to  tax 179 

Public  Service  Corporations. 

Tax  on  real  estate 187 

Act    188 

Notes    .  189 


1164  INDEX. 

PAGE. 

Railroad  Commissioners,   suggestions  by 234 

Report   of    Committee   to    Governor 2 

Reports  to  Auditor  General,  uniform 218 

Act    219 

Note    219 

Resolution   constituting   Joint    Committee 1 

Revenue  laws  generally 44 

Revision  of  statute  law 12 

Roads    127 

Automobile  tax  applied  to 157 

Expenditures    of    other    States 127,  136 

Mileage  of  improved  roads,  table 128 

State  debt  for  improved  roads,  amendment  to  Consti- 
tution      130 

Savings  Institutions. 

Exemption  from  four  mills  tax 175 

Act  repealing   exemption    176 

School  districts. 

Collection  of  four  mills  tax  by  Treasurers  of 192 

Act    193 

Schools,  expenditures  for 131 

Scranton,  meeting  at 7 

Secretary  of  Agriculture,  suggestions  by 234 

Secretary  of  the  Commonwealth,  suggestions  by 234 

State   Charitable   Institutions 95 

Acts  transferring  completion  to  Department   of   State 

Charitable  Institutions    101 

Amounts  necessary  to  complete 132 

Appropriations,    lack   of 96 

Department  of   (see  DEPABTMENT  OF  STATE  C HABITABLE 
INSTITUTIONS). 

New  institutions  needed 98 

Stock  transfer  tax 232 

Subjects  of  taxation  133 

Tables. 

Appropriations  to  charity    46 

Charitable    institutions    59 

Inheritance  taxes  152 

Mileage  of  improved  roads 128 

Taxation,  change  of  subjects  of 133 

Timber,  exemption  from  taxation 163 

Transfer  companies,  tax  on  gross  receipts 172 

Act    172 

Williamsport,  meeting  at   6 


INDEX  TO   TESTIMONY. 


PAGE. 

Albright,   Haines   D 516 

Allegheny  County  Bar  Association,  Pittsburgh 649 

Allegheny    County    Laundrymen's    Association 797 

Allegheny   General   Hospital,   Pittsburgh 750 

Allen,    George    549 

Alexander,    Dr.    Maitland 750 

American   Fire   Insurance   Co 1040 

Association  of  Life  Insurance  Presidents 571 

Baldy,    Dr.    J.    M 371 

Barber,    P.    J 863,  909 

Barnes,  John  Hampton 617 

Barney,    Charles    D 282,  327 

Bartow,   Henry   B 520 

Beath,   Eobert   B 1037 

Beaver,    James   A 696 

Bertolet,    Wellington    M 1132 

Black,   Samuel  W 736,  749 

Blewitt,   Senator  Edw.   F 937 

Board  of  Assessment  and  Revision  of  Taxes,  Pittsburgh . . .  660 

Board  of  Associated  Charities,   Scranton 919,  926 

.board   of   Mercantile   Appraisers,   Philadelphia 998 

Board  of  Revision   of   Taxes,   Philadelphia 498 

Bodine,   Samuel  T 1032 

Boyle,  Patrick  C 773 

Brown,    C.   E 784 

Brown,  Major    878 

Brown,    Wilson    H 581 

Bucks    County    Commissioners 543 

Bucks    County    Treasurer 542 

Cadwalader    John    314 

Cadwallader,   W 543 

Callin,  W.  W.    (U.   S.  Express   Co.) 1028 

Canfield,  A.   C 797 

Carrol,    Mortimer   F 1016 

Cattell,  Henry  W 335 

Caven,    Frank    H . .  553 


1166  INDEX. 

PAGE. 

Cessna,  Judge  J.  B 875 

Chalf ant,    George    L 727 

Chamber  of  Commerce,  Pittsburgh 801 

Children's    Aid    Society,    Philadelphia 378 

City   Solicitor,  Pittsburgh 784 

Clearing    House,    Philadelphia 1 12 1 

Clement,   Samuel  M.,  Jr 396 

Cochran,    Acting    Mayor 909 

Continental  Title  and  Trust  Co 1054 

Cornell,    William    W 542 

County  Commissioners,  Berks    County    456 

County  Commissioners,  Bucks  County    543 

County  Commissioners,  Delaware    County    486.  549 

County  Commissioners,  Montgomery  County    473,  484 

County  Commissioners,  Lackawanna    County    942 

Creasy,  William  T 803,  835,  847,  848 

Crocker,  Judge  W.  B 855 

Dallem,  David  E 553,  586,  587,     988 

Daly,    T.    M 1054 

Davenport,   Mr 892,     894 

Dennison,  Judge  A.  W 836,  843,     844 

Desmond,   J.    J 883 

Develin,    James   Aylward 1063 

Dickson,    Samuel    1121 

Diehl,    Samuel    G 564 

Drexel  &   Co 1121 

Edgar,   Mark   K 911 

Edwards,    Judge,    Scranton 929 

Ellwood  Lee  Manf ' g  Co 980 

Emergency    Hospital,    Scranton 912 

Episcopal    Hospital,    Philadelphia 353 

Erie  City  Iron  Works 895 

Erie   City  Treasurer 873 

Erie    County    Commissioners 888 

Erie    County    Solicitor 904 

Erie   Lithographing   Co 863 

Erie  Manufacturers'  Association 892 

Erie,  Mayor   909 

Erie  Railroad  Company 1084 

Eschlemann,  H.  Frank 430,  459,  464 

Etting,   Theodore  M 378 

Farmers'  and  Mechanics'  Bank,  Philadelphia 520 

Federal  Furnace  League 589* 


INDEX. 


1167 


PAGE. 

Fidelity  Mutual  Life  Insurance  Co.,  Philadelphia 571 

Fidelity  Trust  Co.,  Philadelphia. 1042 

Fleitz,  F.  W 945,  958,  959 

Flick,  Dr.  Lawrence 297 

Fluck,   Charles  L 1143 

Fourth  Street  National  Bank,  Philadelphia 1121 

Fouse,   L.    G 571 

Frederick  Douglass  Memorial  Hospital,   Philadelphia 416 

Garrett,  George  S 1027 

Garwaite,   Robert   A 980 

George,   W.   D 779 

Germantown  Business   Men's   Ass'n,   Philadelphia 1128 

Gest,  William    1042 

Girard  Trust  Co.,  Philadelphia 617,  1046 

Gratz,  Simon 489 

Griswold.    Marvin    871 

uriswold  Manf ' g  Co 871 

Gynecean  Hospital,  Philadelphia 371 

Hackenburg,   William    B 328 

Hagginbotham,    William    M 470 

Hahnemann  Hospital,   Philadelphia 282.  323 

Hardy,  R.  J 782 

Harrison,    Dr.    Charles    C 260 

Heckert,    H.    F 735 

Hensel,   W.   U 1061 

Himrod,  Ray    892 

Home   for   Friendless   Children,    Scranton 919 

Homoaopathic   Hospital,   Pittsburgh 686 

House  of  Refuge.  Philadelphia 358 

Huey,    William    A 1097 

Imbrie,  A.  M 649 

Israel,    Rev.    Rogers 926 

Jackson,    John    J 733 

Jefferson  Hospital,  Philadelphia 276 

Jewish   Hospital,    Philadelphia. 328 

Johnson,    John    G ' 1140 

Jones,    S.    S 912 

Jones  &  Loughlin 730 

Keil,  H.  S 730 

Keller,  W.  H 1061,  1074 

Kelly,    N.    B 1102 


1168  INDEX. 

PAGE. 

Kendrick,   Murdock    998 

Kenny,  John  F 486 

Kingsley,    William    H 1065 

Klein,   M 859 

Knapp,  Judge  Henry  A 919,  935 

Krewson,  James   473 

Lacey,  Mrs  A.  C 369 

Lackawanna   County   Commissioners 942 

Lancaster  Trust  Co.,  Lancaster 1061,  1062 

Learn,  Harry  L 1076 

Lehigh  Valley  Railroad  Co 1028 

Lewis,  Francis  A 353 

Lewis,  John  T.,  Jr 365 

Lippert,  Dr.  M.  G 423 

Logan,  Col.  Albert  J 752 

Logan,  George  B 757 

Lord,  H.  V.  S 1085 

McKnight,    Samuel   L 1086 

McLaren,  M.    (State  Grange) 850 

MacLaughlin,  Dr.  George  W 411 

McClintock,    Oliver    685 

McConnick,   Samuel  B 635 

McFadden,  Mr.,  University  of  Pennsylvania,  Philadelphia..  274 

McNair,  William  N 782 

McSparren,    James     804 

McSparren,  John  A 827 

Magee,    William  A.,    Mayor   Pittsburgh 739 

Manufacturers'  Association  of  Erie,  Pa 892 

Manufacturers'  Association,   Montgomery  Co 970 

Manufacturers'    Club,    Philadelphia 581 

Mattern,  William,  Reading,  Pa 456,  461,  464 

Mayor    of    Erie,    Pa 869 

Medical  Notes  and  Queries,  Philadelphia 335 

Medico-Chirurgical    Hospital,    Philadelphia 286 

Meetings. 

Philadelphia,  Jan.   28,    1910 239 

Philadelphia,  Feb.    4,    1910 378 

Philadelphia,  Feb.    18,    1910 489 

Philadelphia,  Feb.    25,    1910 553 

Pittsburgh,  March  24,   1910 622 

Pittsburgh,  March  25,   1910 696 

Pittsburgh,  March  26,   1910 784 

Williamsport,  April  8,   1910 803 


INDEX. 


1169 


PAGE. 

Erie,  April   15,  1910 863 

Scranton,  April  16,  1910 911 

Philadelphia,  May  13,    1910 961 

Philadelphia,  October    4,    1910 1019 

Philadelphia,  October    5,    1910 1085 

Mercantile   Appraisers,   Philadelphia 998 

Mercy    Hospital,    Pittsburgh 680 

Miller,    W.    S 722 

Montgomery  County  Treasurer 470 

Montgomery    County    Commissioners 473,  484 

Moon,    Dr.    Robert    C 426 

Moore,    Edward    C 895 

Morrow,   Eustace   S 776 

Mortgage   Trust   Co.,  Philadelphia 1063 

Moscrip,  George    821,  847 

Mossell,    Dr.    N.    F 416 

Moyer,    Dr.     (Mercy    Hospital,    Pittsburgh) 680 

Nichols,  H.  S.  P 1021 

Nolan,   James    363 

iNorthwest  Business   Men's  Ass'n,   Philadelphia 1143 

Old  Ladies'  Home,  Philadelphia 369 

Page,  Edward  Sydenham 1046 

Patterson,    C.    Stuart 597,  1117 

Penn  Mutual  Life  Insurance  Co 1065 

Pennsylvania  Home  Teaching  Society  for  the  Blind,  Phila. .  426 

Pennsylvania  Hospital,  Philadelphia 365 

Pennsylvania  Institution  for  the  Instruction  of  the  Blind, 

Overbrook    314 

Pennsylvania    Lines    West    of    Pittsburgh 691 

Pennsylvania  Manufacturers'   Association 961,    962,  970 

Pennsylvania   Railroad    Co 1021 

Pennsylvania  Retail   Coal   Merchants'   Association 1132 

Pennsylvania   Seamen's  Friend   Society,   Philadelphia 411 

Pennsylvania  State  College   696 

Pennsylvania  State  Grange   803 

Pennsylvania  Tax  Reform  Association 516 

People's    Trust    Co.,    Lancaster 1074 

Philadelphia  Chamber  of  Commerce 1102 

Philadelphia  Clearing  House    1121 

Philadelphia  Commercial  Exchange    1086 

Philadelphia  Drug  Exchange    1107 

Philadelphia  and  Reading  Coal  and  Iron   Co 1027 


1170  INDEX. 

PAGE. 

Philadelphia  and   Reading   Railway   Co 1025 

Philadelphia  Board  of  Revision  of  Taxes 498 

Philadelphia  Museums   404 

Philadelphia  Real  Estate    Brokers'   Association 553 

Philadelphia  Saving    Fund    Society 607,  1153 

Phoenixville   Hospital,   Phoenixville 423 

Pinney,  City  Treasurer 873 

Pittsburgh  Board  of  Assessment  and  Revision  of  Taxes.  . . .  660 

Pittsburgh  Board  of  Trade   722,  727 

Pittsburgh  Chamber  of  Commerce 801 

Pittsburgh  City  Solicitor    784 

Pittsburgh  Controller    778 

Pittsburgh  Mayor    739 

Pittsburgh  Real  Estate  Dealers 736 

dorter,   Clarence  E 1040 

Postal   Telegraph   Co 1070 

Potter,   William    276 

Presbyterian    Hospital,    Pittsburgh 757 

Private   Bankers'   Association,   Philadelphia 613 

Prixer,  Charles  S 589 

Public  Meetings. 

Philadelphia,  Jan.   28,    1910 239 

Philadelphia,  Feb.  4,   1910 378 

Philadelphia,  Feb.   18,   1910 489 

Philadelphia,  Feb.   25,    1910 553 

Pittsburgh,  March  24,  1910 622 

Pittsburgh,  March  25,  1910 696 

Pittsburgh,  March  26,   1910 784 

Williamsport,  April   8,    1910 803 

Erie,  April  15,  1910 863 

Scranton,  April  16,  1910 911 

Philadelphia,  May   13,   1910 961 

Philadelphia,  October  4,   1910 1019 

Philadelphia,  October  5,  1910 1085 

Purvis,   G.   Colesberry 1153 

Rambo,  Joseph  S 970 

Ransley,  H.  C ' 1002 

Real  Estate  Brokers'  Association,  Philadelphia 553,  988 

Real  Estate  Dealers,  Pittsburgh 736 

Reed  Manufacturing  Co.,  Erie 894 

Rhone,    Leonard    804,  809 

Roberts,  Samuel   962 

Robinson,  J.  A 888 


INDEX.  1171 

PAGE. 

Rosengarten,    Joseph   G 358,  1140 

Ryder,  Mr 856 

Saint  Francis'  Hospital,  Pittsburgh 735 

Saint  Joseph's  Hospital,  Reading,  Pa 363 

Saylor,    Adams    F 484 

Shamokin  Trust  Co 1076 

Schaperkotter,  J.  F 1028 

Scott,   Samuel  B 1128 

Scranton  Board  of  Trade 911 

Scranton    County   Commissioners 943 

Scranton  Street  Railway  Co 957 

Seabrook,   Dr.   Alice   M 350 

Seller,  Ernest,  McKees  Rocks,  Pa 782 

Shattuck,    Frank    R 1070 

Shoemaker,   Clayton  F 1107 

Shoemaker,  Harry  J 961 

Singer,    Walter    C 1084 

Single    Tax    Society   of   Pennsylvania 624 

Sisson,  Hon.  A.  E 863 

Smith,  Edgar  F.,  University  of  Pennsylvania,  Philadelphia.  .  271 

Smith,  E.  Z 660 

Smith,   Lee   S 801 

Snyder,  Dr.  O.   J 311 

Sparks,  Dr.  Edwin  E 719 

State  Board  of  Charities 244,  761,  773 

State  College 696,  719 

Stephens,    Frank    624,  648 

Stevenson,  George    613 

Stewart,    D.    J 686 

Strawbridge,   Dr.    George 489 

Taylor,    W.    R 1025 

Tax  Reform  Association  of  Pennsylvania 516 

Temple   College,  Philadelphia 396 

Thomas,  J.  C 904 

Tingley,  C.  L.  S 957 

Torrence,  Francis  J 761 

Tustin,  Ernest   L 323 

United  Firemen's  Insurance   Co.,   Philadelphia 1037 

United  Gas  Improvement  Co.,  Philadelphia 1032 

United  States  Express   Co 1028 

University  of  Pennsylvania,  Philadelphia 260,  271,  274 

University  of  Pittsburgh 635 

Urquhart,   George   C 691 


1172  INDEX. 

PAGE. 

Van  Gleet,  Mr 902 

Van  Valkenburg,    F.    A 1009 

Walton,  Henry  F 286 

Warner,   George 1092 

West   Penn   Hospital,   Pittsburgh 752 

Western  Savings  Fund  Society,  Philadelphia 597,  1117 

Western  Union  Telegraph  Co 1078 

West   Side   Hospital   Association,    Scranton 929 

Westinghouse  Interests,  Pittsburgh 733 

Wharton,    Bromley 244 

White  Haven  Sanitorium 297 

Whitney,    Francis    S 1078 

Witt,   Peter    778 

Wilcox,  J.  M 607 

Wilson,  Dr.  W.  P 404 

Women's   Hospital,   Philadelphia 350 

Wright,  P.  D 894 


DUNLAP  PRINTING  COMPANY 
1315-29  Cherry  St.    rgjjjljjj&a    Philadelphia,  Pa. 


RETURN  TO  the  circulation  desk  of  any 
University  of  California  Library 


YC  '344S5L 

34406 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


